Small security deposits are adding up to big trouble for a Brooklyn landlord.
New York Attorney General Letitia James on Thursday announced an agreement with SGW Properties to return nearly $300,000 of security deposits to tenants. James found the company, founded by Yeshaya Wasserman in 2008, didn’t comply with a 2019 change to the rental law that required a written, itemized list of reasons for a withheld security deposit.
SGW will return the security deposits to 129 tenants. The landlord will also train its staff to comply with the security deposit law and pay an additional $10,000 penalty.
James’ office launched an investigation into SGW in May 2021 following tenant complaints about the withholding of security deposits. Besides not giving an itemized reason for security deposit withholdings, the AG also found the landlord didn’t put the security deposits into a separate escrow account, required by law.
While the $10,000 penalty may not seem significant, it could be the start of more penalties for SGW if it commits future violations. James said the company will be subject to a $2,000 fine for each significant violation to occur in the future.
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An attorney for SGW told the Commercial Observer it fully cooperated with the AG’s investigation and blamed Covid and short-staffing for its inability to comply with the updated law.
“SGW Properties is now compliant with the legal requirements and is committed to being in compliance with the law,” the attorney said in a statement.
The firm’s website doesn’t list buildings in its portfolio, but the tenants affected by James’ decision reside in Crown Heights, Bedford-Stuyvesant, Midwood, Stuyvesant Heights.