Tenant who did not give Landlord Keys still surrendered apartment: Landlord needed to return Securit

In Pezzo v. 26 Seventh Avenue S., LLC, 2016 NY Slip Op 07310 (2d Dep't. Nov 9, 2016), the Court held that the fact that the tenant did not return the keys did not show a failure

to surrender the apartment. The tenant sued for the recover of the security deposit. The Supreme Court granted a motion for summary judgment in favor of the landlord. The tenant appealed:

In August 2012, the plaintiff (hereinafter the tenant) entered into a one-year lease with the defendant 26 Seventh Avenue South, LLC (hereinafter the landlord), for a rent-stabilized apartment in Manhattan, and paid the landlord a security deposit in the sum of $6,300. The lease provided that the security deposit would be returned to the tenant within "60 days after" the lease was terminated as long as the tenant did not breach the lease. After the lease terminated, the tenant requested the return of his security deposit. When the landlord failed to return it, the tenant commenced this action alleging that the landlord breached the lease. In its answer, the landlord asserted counterclaims alleging that the tenant had breached the lease by vacating the apartment after the expiration of the lease and had damaged the apartment, necessitating repairs in the sum of $12,000.

Under General Obligations Law § 7-103, "Whenever money shall be deposited or advanced on a contract or license agreement for the use or rental of real property as security for performance of the contract or agreement or to be applied to payments upon such contract or agreement when due, such money, with interest accruing thereon, if any, until repaid or so applied, shall continue to be the money of the person making such deposit or advance and shall be held in trust by the person with whom such deposit or advance shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same, but may be disposed of as provided in section 7-105 of this chapter."

The tenant's failure to vacate/return the keys was not dispositive here. The third cause of action alleging breach of the lease for failing to return the security deposit pursuant to General Obligations Law Section 7-103 should have been granted. The failure to return the keys is prior to the expiration of the lease did not constitute a failure to surrender. The landlord could have contracted around this - could have provided provisions in a lease to anticipate such a situation.

On review of summary judgment, the Court reverses the Supreme Court: "ORDERED that the order is modified, on the law and the facts, (1) by deleting the provision thereof denying that branch of the plaintiff's motion which was for summary judgment on the third cause of action, and substituting therefor a provision granting that branch of the motion, and (2) by deleting the provision thereof denying that branch of the plaintiff's motion which was to dismiss the counterclaims of the defendant 26 Seventh Avenue South, LLC, and substituting therefor a provision granting that branch of the motion; as so modified, the order is affirmed insofar as appealed from, with costs to the plaintiff."


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