The Village of New Paltz has proposed a law that would penalize landlords for not returning security deposits in a timely manner, but a tenant advocate threatened Aug. 23 to sue the village over the law, and experts are split on whether the ordinance would benefit renters.

The Village of New Paltz, located off the New York State Thruway in the foothills of the Shawangunk Ridge, is a college town, and therefore a renter’s town. Seventy percent of the denizens rented their property in 2016, according to Census data, and some of these people were given the cold shoulder when attempting to get information about where their deposits had went.

The proposed law would level financial penalties against landlords who do not return deposits within 14 days with an itemized statement detailing any deductions from the deposit. The penalties, which would be paid to the tenants, start at 25 percent of the original security deposit in the third week of an unreturned deposit, and rise until they top out at 150 percent on the sixth week.

The penalty could be awarded by a court if the tenant files suit, according to the proposed law.

New Paltz Village Mayor Tim Rogers and members of the village’s Landlord-Tenant Relations Board said the law would go through a tweaking process before being voted on.

The law came out of a series of recommendations made by New Paltz Tenant Union Founder Celeste Tesoriero, who has now threatened to sue the village under the Civil Rights Act.

Many parts of Celeste’s proposed legislation weren’t feasible, said Village of New Paltz Landlord-Tenant Relations Board member Amanda Sisenstein.

“[We] were like, ‘What of this do we like?’ because a lot of the stuff we [felt] was not going to work, but there’s some stuff in here that we would really support and push for, and [a two week limit on returning deposits] was one of them,” Amanda said.

Amanda, who is in a non-voting advisory position on the board, said there were concerns from some landlords, but the landlords on the board felt it was reasonable.

Kenny Slatterlee, a member of the board until moving this July, said the penalties would “give teeth” to state law that states deposits should be returned in a “reasonable” amount of time.

“There was no real recognition that [landlords] were out of compliance,” Kenny said. “All states really have language that says that the security deposit needs to be given back in a reasonable manner, and sometimes we’re seeing people a year afterwards still fighting to try to get back some money.”

Some renters would just get “silence on the mic” when trying to collect their deposits, Kenny said.

“This would really put a responsibility on [these] landlords and, possibly, a fiscal consequence if they don’t to really own up to what’s going on,” he added.

Celeste said landlords not returning deposits was the most common complaint she heard in her position.

The Landlord-Tenant Relations Board was “legally ignorant” about the consequences of the law, Celeste said, and claimed the landlords, who hold several positions on the board, had bent the law to serve their purposes.

Celeste’s main issue with the law is the section awarding legal fees if a deposit case goes to court. If the tenant was awarded everything they were suing for in court, the landlord would have to pay any of the tenant’s attorney’s fees, on top of returning the deposit in question and the additional penalty. If the tenant lost the case outright, the tenant would pay the landlord’s attorney’s fees, according to the law.

If some of the deposit was awarded to the tenant, and some was deemed to be legitimately withheld by the landlord, the tenant would also have to pay the landlord’s attorney’s fees, according to the law.

This could result in a tenant having to pay for their landlord’s attorney if a single part of the deposit they were suing to get back was deemed to be legitimately withheld, Celeste said.

“It’s limiting legal access to a group of people, so it’s discouraging them from getting review from court,” Celeste said. “Court isn’t something that’s supposed to be punitive.”

Village Mayor Tim Rogers said he supported the law, and there was a lot of support on the village board.

“I think the vast majority of landlords do the right thing, but there are probably some landlords that take advantage of the fact that we have a transient population, where there might be a young person who rented a place and then has to take off, so is not around to collect their security deposit, and they really have little recourse especially if they live away from New Paltz,” he said.

Celeste threatened to sue the village over the law during an Aug. 23 village board meeting, saying the law would disproportionally affect racial minorities, who represent a disproportional number of renters in the U.S.

During a later interview, Celeste said she would not be able to sue claiming the proposed law had a disproportional effect on poor people, because they are not a protected class under Civil Rights Law, but racial minorities were.

She did not know if she would win the suit, but the law would be held up in court long enough for new Village Board members to be elected, she added.

The exchange between the board and Celeste was heated, with Celeste telling the board to “bite me,” and grabbing the microphone off a table for a second go at the board after briefly leaving, according to video of the meeting.

This was “typical Celeste behavior,” Mayor Tim Rogers said.

“Oh yeah, Celeste regularly threatens us and regularly makes pretty outrageous accusations,” he said.

I talked to two outside experts, Visiting Professor of Law at the Albany Law School Lianne Pinchuk and Director of SUNY New Paltz’s Benjamin Center Gerald Benjamin about the proposed law to see if Celeste’s protests had any credence.

Lianne, who has extensive experience working Pro Bono for low-income tenants in Albany, said the law would benefit landlords.

Traditionally, landlords can insert a clause into leases stating the tenant is liable for any of the landlord’s attorney’s fees if the tenant sues for a deposit and loses, Lianne said, and New York law states this must apply the other way around, so that landlords pay the attorney’s fees of the tenants if the landlords lose.

However, if this clause is not present, both parties pay for their own lawyers.

Landlords are much more likely to have paid representation, Lianne said — and therefore the part of the proposed law awarding attorney’s fees would disproportionally affect tenants.

The law also puts tenants at another disadvantage, Lianne said.

“What courts have done is…let’s say a tenant brings a small claims (court) action for return of security deposit, and the landlord claims that they’re using the security deposit to offset damage to the apartment, or to offset rent that was owed, and you get into this back-and-forth, and courts will sometimes split the baby,” Lianne said. “Under the existing law, some courts have said ‘alright, it’s not substantially favorable to either side, we’re going to sort of look at this whole case and, even though they both won some part of their claim, nobody won the case, and so were not going to grant (anyone) attorney’s fees.’”

Under the proposed law, the tenant would have to pay the landlord’s attorney’s fees in these situations.

Lianne also questioned the wisdom of the penalties increasing week-by-week, arguing it would cause tenants to delay court action to get a bigger payout, undermining the whole intent of the law.

“I don’t think this solves anybody’s problems,” Lianne said. “I don’t think it’s going to solve landlords’ problems, I don’t think it’s going to resolve tenants’ problems. The thing is, it kind of looks facially good, but is filled with problems.”

Gerald Benjamin said the law favors tenants.

“I think it’s pretty progressive, and it’s an attempt to assure that tenants are fairly treated,” he said.

The section awarding attorney’s fees to landlords if the tenant lost part of the suit would stop “frivolous lawsuits,” Gerald said.

“If you feel if you want to recover your entire security deposit, you take action toward that end, if you feel you want to recover some portion of it that was unfairly retained, then you take that action, but you don’t overreach in your litigation because there’s a potential penalty there to pay the consequences,” Gerald said.

A lack of penalty would encourage tenants to sue for the entirety of the deposit instead of only what was illegitimately withheld, he said.

Anne Muller, a landlord who rents 14 apartments to students and others in the village, said the two-week window would not be prohibitive, since she returns deposits or statements within two weeks anyway.

“The law wouldn’t affect me, personally,” she said.

Landlords with more properties might have a harder time, she theorized.

A public hearing on the proposed law will be held 7 p.m. Sept. 13 at the Village Hall.