At the end of their lease, it would be great if every tenant left their dwelling in the same condition as when the lease began. Unfortunately, that isn’t always the case, and the landlord has to spend time and money making repairs before they can start receiving rental income from a new tenant.
The purpose of a security deposit is to cover any costs a landlord incurs to repair or replace anything that the renter damaged. And while some of these repairs can be costly, New Jersey has regulations in place when it comes to security deposits.
Limits on security deposit amounts
In New Jersey, a landlord can’t require more than one and a half month’s rent for a security deposit. Additional yearly security deposits can’t exceed 10% of the current one.
Landlords with ten or more units must also store the security deposit in an interest-bearing account. The landlord must notify the tenant in writing within 30 days of receiving the deposit, detailing the banking institution’s name and address and the deposit amount. The accrued interest belongs to the tenant which can be paid in cash or applied towards the rent.
Landlords have 30 days to return the security deposit when the lease is terminated. If the tenant has caused damage to the dwelling, the landlord can use some or all of the security deposit to cover the costs, but they must provide an itemized list of deductions.
If the landlord sells or transfers the property, they must inform the tenants. The security deposits with accumulated interest will be moved to the new owner.
There are some instances where the damage to the property is so extensive that the security deposit won’t cover the expenses. In that event, the landlord can sue the tenant for the additional damages.