N.Y. Comp. Codes R. & Regs. tit. 9 § 2105.5
L. 1964, ch. 244
Regardless of any contract, agreement, lease or other obligation heretofore or hereafter entered into, no person shall demand, receive or retain a security deposit for or in connection with the use and occupancy of housing accommodations, except (a) if the demand, collection, or retention of such security deposit was permitted under the rent regulations promulgated pursuant to the federal Act, and said security deposit does not exceed the rent for one month in addition to the authorized collection of rent; or (b) if the demand, collection, or retention of such security deposit was pursuant to a rental agreement with the tenant and said security deposit does not exceed the rent for one month (or for one week where the rental payment period is for a term of less than one month) in addition to the authorized collection of rent and provided (1) that said security deposit shall be deposited in an interest-bearing account in a banking organization on and after September 1, 1970; (2) the person depositing such security money shall be entitled to receive, as administration expenses, a sum equivalent to one percent per annum upon the security money so deposited; (3) the balance of the interest paid by the banking organization shall be held in trust until repaid or applied for the rental of the housing accommodations, or annually paid to the tenant; and (4) so long as the landlord complies with the provisions of section 7-103 of the General Obligations Law.
N.Y. Comp. Codes R. & Regs. Tit. 9 § 2105.5