N.Y. Real Property Law § 238-a

Twenty Dollar Fee Cap: N.Y. Real Property Law § 238-a

N.Y. Real Property Law § 238-a caps background checks at twenty dollars, limits late fees to fifty dollars or five percent of rent, and regulates check fees.

Official text N.Y. Real Property Law § 238-a — New York

§ 238-a. Limitation on fees. In relation to a residential dwelling unit:

  • 1. (a) Except in instances where statutes or regulations provide for a payment, fee or charge, no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks as provided by paragraph (b) of this subdivision, provided that this subdivision shall not apply to entrance fees charged by continuing care retirement communities licensed pursuant to article forty-six or forty-six-A of the public health law, assisted living providers licensed pursuant to article forty-six-B of the public health law, adult care facilities licensed pursuant to article seven of the social services law, senior residential communities that have submitted an offering plan to the attorney general, or not-for-profit independent retirement communities that offer personal emergency response, housekeeping, transportation and meals to their residents. Nothing in this paragraph shall prohibit a cooperative housing corporation, other than a cooperative housing corporation subject to the provisions of article two, article four, article five or article eleven of the private housing finance law, from demanding from a prospective tenant any payment, fee or charge which is necessary to compensate a managing agent and/or transfer agent for the processing, review or acceptance of such prospective tenant's application where such prospective tenant would become a dwelling unit owner or shareholder of such cooperative housing corporation.
  • (b) A landlord, lessor, sub-lessor or grantor may charge a fee or fees to reimburse costs associated with conducting a background check and credit check, provided the cumulative fee or fees for such checks is no more than the actual cost of the background check and credit check or twenty dollars, whichever is less, and the landlord, lessor, sub-lessor or grantor shall waive the fee or fees if the potential tenant provides a copy of a background check or credit check conducted within the past thirty days. The landlord, lessor, sub-lessor or grantor may not collect the fee or fees unless the landlord, lessor, sub-lessor or grantor provides the potential tenant with a copy of the background check or credit check and the receipt or invoice from the entity conducting the background check or credit check. Notwithstanding the provisions of this paragraph, a cooperative housing corporation shall be permitted to charge a fee or fees to reimburse costs associated with conducting a background check and credit check in excess of twenty dollars, where the potential tenant would become a dwelling unit owner or shareholder of such cooperative housing corporation, provided the cumulative fee or fees for such checks is no more than the actual cost of such background check and/or credit check. Further, with regard to a cooperative housing corporation subject to the provisions of article two, article four, article five or article eleven of the private housing finance law, all such fees must be reasonable and approved by the agency supervising such cooperative housing corporation.
  • 2. No landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the late payment of rent unless the payment of rent has not been made within five days of the date it was due, and such payment, fee, or charge shall not exceed fifty dollars or five percent of the monthly rent, whichever is less; provided a cooperative housing corporation, other than a cooperative housing corporation subject to the provisions of article two, article four, article five or article eleven of the private housing finance law, shall be permitted to charge a tenant that is a dwelling unit owner or shareholder of such cooperative housing corporation a fee of up to eight percent of the monthly maintenance fee for the late payment of the monthly maintenance fee if the proprietary lease or occupancy agreement provides for such fee.

2-a. (a) No landlord, lessor, sub-lessor or grantor shall demand any payment, fee, or charge from a tenant for the delivery of a check, draft or like instrument that was given in payment for rent and subsequently dishonored by the tenant's financial institution for insufficient funds except as provided in paragraph (b) of this subdivision.

  • (b) Notwithstanding any contrary provision herein, a landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge from a tenant for the delivery of a dishonored check only if such payment, fee, or charge was provided for in the lease or contract between landlord, lessor, sub-lessor or grantor and the tenant; provided, however, that:
  • (i) such payment, fee, or charge shall not exceed the actual costs, charges or fees incurred by landlord, lessor, sub-lessor or grantor for the return of such dishonored check or the amount set forth in subdivision three of section 5-328 of the general obligations law, whichever is greater; and
  • (ii) if the payment, fee or charge exceeds the amount set forth in subdivision three of section 5-328 of the general obligations law, the landlord, lessor, sub-lessor or grantor shall provide to the tenant upon request evidence substantiating the equivalence between the payment, fee or charge and the amount of actual costs, charges or fees incurred for the return of the dishonored check.
  • (c) As used in this subdivision, "dishonored check" shall have the same meaning as such term is defined in section 5-328 of the general obligations law.
  • (d) The provisions of this subdivision shall not apply to a shareholder of a cooperative housing corporation, provided, however, that the provisions of this subdivision shall apply with respect to any tenant or subtenant of such a shareholder.
  • 3. Any provision of a lease or contract waiving or limiting the provisions of this section shall be void as against public policy.

Text as published in the 2026 snapshot of the code.

Source: Vaquill Open US Law, compiled from official state publishers (huggingface.co), reproduced under license CC BY 4.0.

Read this provision at the official source →

What it actually says

Three limits, all expressed in figures. Up front: no landlord may demand any payment, fee or charge for processing, reviewing or accepting an application, or any other payment before or at the beginning of the tenancy, except background and credit checks - and those are capped at the actual cost or twenty dollars, whichever is less. The landlord must waive even that if the applicant supplies a check conducted in the past thirty days, and may not collect it at all unless the applicant is given a copy of the check and the invoice from the company that ran it. Statutory or regulatory payments, and certain licensed retirement and adult-care communities, are excepted, as are co-op transfer and managing-agent fees for a purchaser who becomes a shareholder.

Late rent: no fee at all unless the rent is more than five days late, and then no more than fifty dollars or five per cent of the monthly rent, whichever is less. Not five per cent per month, and not fifty dollars per week - whichever of the two figures is lower, once. Co-ops may charge up to eight per cent of the monthly maintenance to shareholders where the proprietary lease provides for it.

Bounced checks: subdivision 2-a bars any fee for a dishonoured rent check unless the lease provided for one, and then caps it at the landlord's actual costs or the amount in General Obligations Law § 5-328, whichever is greater, with an obligation to substantiate anything above that figure on request. Subdivision 3 makes any lease provision waiving or limiting the section void as against public policy - so a lease that sets a hundred-dollar late fee does not thereby create one.

When it applies

  • A landlord or agent charges a two hundred dollar application fee to view or apply for an apartment.
  • A late fee of a hundred dollars or more appears on the ledger for rent paid a few days late.
  • A fee is charged for a rent check returned unpaid where the lease says nothing about it.
  • A tenant is charged for a credit check without being shown the report or the invoice.
  • An applicant offers a credit report obtained last week and is charged for a new one anyway.

What this section does not say

  • It is not a cap on rent or on the security deposit. The deposit limit is General Obligations Law § 7-108.
  • It does not forbid the first month's rent being collected before occupancy. Rent is not a fee for processing an application.
  • It does not stop a landlord from running a background or credit check - it caps what may be charged for one and conditions the charge on disclosure.
  • It does not apply to the co-op purchase fees and licensed retirement and adult-care community entrance fees the section expressly carves out.
  • It does not say what happens to fees already paid. The section makes the demand unlawful and the waiver void; it does not itself set a refund mechanism or a penalty.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

A tenant is charged two hundred dollars to apply for an apartment and then a hundred-dollar late fee in any month the rent lands after the first.

How the wording applies

No payment may be demanded for processing, reviewing or accepting an application except background and credit checks, capped at the actual cost or twenty dollars, whichever is less. A late fee is barred unless the rent is more than five days late and is then capped at fifty dollars or five per cent of the monthly rent, whichever is less. Subdivision 3 voids any lease provision waiving or limiting the section, so a lease that sets a hundred-dollar fee does not create one. For the late fee, the fact that decides it is the date the rent actually arrived relative to the fifth day.

How the parties settled it

The over-charged late fees are credited against future rent, the application fee is refunded less the documented cost of the credit check, and the ledger is reissued with the invoice attached.

Illustrative example

An applicant offers a credit report obtained the week before. The agent charges for a fresh one anyway and never shows either the report or the invoice for it.

How the wording applies

The landlord must waive the charge where the applicant supplies a background or credit check conducted within the past thirty days, and may not collect it at all unless the applicant is given a copy of the check and the invoice from the company that ran it. So it turns on the date of the report the applicant offered, and then on whether the disclosure was actually made.

How the parties settled it

The charge is refunded and the agent agrees to accept reports under thirty days old from any applicant, saying so in the viewing materials so nobody has to ask.

Illustrative example

A rent check is returned unpaid and the landlord adds a charge to the ledger. The lease says nothing at all about returned payments.

How the wording applies

Subdivision 2-a bars any fee for a dishonored rent check unless the lease provided for one, and where it did, caps it at the landlord's actual costs or the amount in General Obligations Law § 5-328, whichever is greater, with anything above that figure to be substantiated on request. It turns on whether the lease provided for the fee at all.

How the parties settled it

The charge comes off the ledger, the tenant re-pays by transfer within three days, and both agree rent is paid electronically from now on.

Related sections

N.Y. General Obligations Law § 7-108 GOL § 7-108: one month's security, itemized in fourteen days N.Y. Real Property Law § 235-c Refuse unfair lease clause: N.Y. Real Property Law § 235-c N.Y. Real Property Law § 234 RPL § 234: if the lease gives the landlord legal costs, the tenant gets them too N.Y. Real Property Law § 227-f No Housing Court Rejection: N.Y. Real Property Law § 227-f

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We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.

This page reproduces the text of N.Y. Real Property Law § 238-a in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in New York.

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