Brooklyn Landlord to Pony Up $300K in Security Deposits to Tenants: AG James

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Brooklyn landlord SGW Properties allegedly tried to take the money and run, but it’s now paying back $296,272 to tenants looking to get their security deposits.

New York Attorney General Letitia James said the landlord failed to comply with 2019 changes to the law that require itemized deductions explaining why a security deposit is being withheld and a return of funds within 14 days of the tenants vacating.

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Up to 129 tenants will be getting money back after closing out their leases with SGW Properties in Crown Heights, Bedford-Stuyvesant, Midwood and Stuyvesant Heights buildings. On top of returning the money, the firm must pay a $10,000 penalty to the state and will be required to train all staff to comply with the updated security deposit law. .

“As housing, health and affordability crises continue, it’s more important than ever to put money back into the pockets of New Yorkers,” James said in a statement. “Tenants deserve transparency and accountability from their landlords, and New Yorkers should trust that their security deposit will be returned to them as required by their leases and the law.”

SGW Properties, founded by Yeshaya Wasserman in 2008, focuses on acquiring residential properties that include rent-stabilized and market-rate units, according to the company’s website.

The attorney general’s office launched an investigation into the firm in May 2021 after multiple reports from tenants.

The attorney general’s office also found that SGW was not keeping the security deposits in an escrow account, separate from the rest of its finances, as required by law. If the company is found responsible for making the same mistake, it will have to pay a $2,000 penalty for each violation.

“SGW Properties is fully committed to servicing its tenants and upholding the law. Regrettably, during COVID times and short staffing, with people unable to work, SGW could not in all cases comply with the deadlines provided in the newly enacted tenant deposit law,” Jacob Laufer, an attorney for SGW Properties, said in a statement. “SGW appreciates the attorney general’s efforts to ensure compliance with the 2019 law and has fully cooperated with the Office of the Attorney General. SGW Properties is now compliant with the legal requirements and is committed to being in compliance with the law.”

“It is unethical for property managers to not return security deposits after tenants vacate their homes,” New York City Councilmember Farah Louis, who represents East Flatbush, Flatbush, Flatlands, Marine Park and Midwood, said in a statement. “When tenants move their family, security deposits often serve as additional funds to support in the transition process, and without them many families face financial burdens. Moving is costly, and failure to comply with real estate laws is unacceptable.”

Mark Hallum can be reached at mhallum@commercialobserver.com.