New Jersey

Security Deposit Amount

Landlords in New Jersey may require a security deposit of up to one and a half (1.5) times the monthly rent.

Options for Holding

Landlords in New Jersey have two options for legally holding a tenant's security deposit:

• Separate Account: Landlords must place the security deposit in an interest-bearing account in a federally insured bank or savings institution in New Jersey. The account must be separate from the landlord's personal or business accounts.
• Interest-Bearing: The account must earn interest, and any interest accrued is the property of the tenant, although the landlord can retain 1% of the interest as an administrative fee.

Notification Requirements

Initial Notice: Within 30 days of receiving the security deposit, the landlord must notify the tenant in writing of the name and address of the financial institution where the deposit is held, the type of account, and the current interest rate.

Annual Notice: The landlord must provide an annual statement to the tenant, detailing the amount of the deposit and any interest earned.

Payment of Interest Earned

Interest earned on the deposit must be paid to the tenant annually, either as a payment or as a credit toward rent. The landlord may retain 1% of the interest as an administrative fee.

Timeline for Returning

Upon termination of the lease, the landlord must return the security deposit, along with any accrued interest, within 30 days. This includes providing an itemized list of any deductions made from the deposit for damages or unpaid rent.

If demanded by the tenant, the landlord must return within 15 days.

Claims Process

If the landlord makes any deductions from the deposit, they must provide the tenant with an itemized statement detailing the damages or unpaid rent and the amount deducted. This statement must be sent along with the remaining balance of the deposit within the 30-day period.

Landlords in New Jersey may lawfully deduct costs from a tenant's security deposit for:

• Unpaid Rent: Landlords can deduct any unpaid rent from the security deposit.
• Damage to Property: Deductions can be made for damages beyond normal wear and tear. This includes damage to the premises, fixtures, or appliances.
• Cleaning Costs: If the property is not returned in a clean condition, reasonable cleaning costs may be deducted.
• Other Costs: Any other legitimate charges specified in the lease agreement, such as costs for repairs or replacements due to tenant negligence, can also be deducted.

Double Damages: If a landlord fails to return the deposit within the required 30 days or fails to provide an itemized statement of deductions, the tenant may be entitled to recover double the amount of the security deposit, plus attorney's fees and court costs.

Legal Costs: If the tenant takes legal action and wins, the landlord may be required to pay the tenant's legal fees.

Transfer of Ownership: If the property is sold or ownership is transferred, the landlord must transfer the deposit to the new owner and notify the tenant in writing of this transfer. The new owner assumes responsibility for the security deposit and must provide the tenant with updated notification regarding the deposit's status.

Eviction: In the event of eviction, the landlord must follow the same procedures for returning the security deposit and providing an itemized list of deductions.