When a tenant rents a home in New Jersey, it is likely that the landlord will ask for a security deposit. This is standard practice, but it is still good to educate yourself whether you are a landlord or a tenant about the basics of security deposits in New Jersey and what your security deposit rights are.
The security deposit
In New Jersey, a landlord can require a security deposit of up to 1.5 months’ rent. A security deposit is collected and retained to pay for any damage to the property caused by the tenant or to cover any rent owed after the lease is over and the tenant vacates the premises or is evicted.
The security deposit must be placed in an interest-bearing account. The tenant is entitled to know the bank where the deposit is being kept, the type of account their deposit has been placed in and the interest rate currently assigned to that account. The landlord has 30 days to do this once they receive the deposit from the tenant.
Landlords in New Jersey must update tenants on the state of their security deposit once a year. The tenant is entitled to 30 days’ notice if the deposit is being transferred to another account or bank or if there is a bank merger.
After the tenant vacates
Landlords cannot use a tenant’s security deposit for repairs or rent payment until the tenant vacates the premises either through eviction or at the end of the term of the lease. The landlord must give the tenant 30 days’ written notice if they plan on using the security deposit to pay for repairs or past-due rent.
If the amount of repairs needed is beyond normal wear and tear and the security deposit is not enough to cover all costs, or if the tenant owes more in past-due rent than the amount of the security deposit, the landlord can pursue a legal claim against the tenant for the additional amount.
Know your rights
Paying a security deposit is usually part and parcel of renting a home in New Jersey. Still, both landlords and tenants should be aware of their rights and duties regarding that money. It is important that it is managed properly, used properly and returned properly to avoid the need for legal action.