• AJ Cardile

A Security Deposit that is withheld or untimely returned to the tenant


A Landlord taking a security deposit must be aware of the regulations in New Jersey. There are many rules that must be complied to avoid penalty under the law. In some circumstances if a security deposit is wrongfully withheld the Landlord may be liable for double the amount of the deposit collected.


In addition, The Security Deposit Act applies to all rental premises except owner occupied premises with 2 units or less. However, the act may be applied to a landlord in an owner occupied premises if the tenant provides 30 days written notice to the landlord invoking the provisions of the Security Deposit Act. N.J.S.A. 46:8-26.


Upon receiving the initial deposit from the tenant the landlord is obligated to place the security deposit from the tenant in an interest bearing account pursuant to N.J.S.A. 46:8-19(a)(1). In addition, within 30 days of receipt of the security deposit the landlord must notify the tenant in writing of the name and address institution that is holding the deposit. N.J.S.A. 46:8-19(c). We recommend that Landlords specify in the lease the name and address of the institution where the deposit will be held. 


The landlord is obligated to account for the security deposit to a tenant upon vacating the leased premises within 30 days of the tenant vacating. The landlord is obligated to account for any monies that the landlord believes is owed by the tenant either for damages or rent in writing. Should any of these deductions from the tenant’s security be improper or untimely the tenant is entitled to have the amount wrongfully withheld doubled and paid to the tenant from the landlord. There is statutory and caselaw to support this result. Furthermore, only deductions allowed for in the lease can be made against the security deposit. For example, if the lease is silent on whether the Landlord or tenant makes repairs then it will not be an allowable deduction against the security deposit. We recommend that the landlord inspect the premises immediately after the tenant vacates and send a detailed letter clearly outlining the reasons the deposit is being withheld.


In the event that the landlord wrongfully withholds the security deposit or any portion of it after the tenant vacates, the landlord can be liable for double damages and attorney’s fees if the landlord does not provide an itemized written statement to the tenant within 30 days of the tenant vacating the premises. N.J.S.A. 46:8-21.1 

 

If you are a Landlord and considering taking a security deposit from a tenant be aware that you must comply with statute. The Security Deposit Act is designed to protect the tenant so the Landlord should be cautious when proceeding as the courts will most likely favor the tenant. If you are a landlord or tenant and are unsure about the rules regarding the Security Deposit Act consult an attorney.

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Lawyer Serving Montville, NJ, Morris County, Bergen County, Passaic County, and Hudson County