Take The Proper Steps With A Security Deposit
Security deposits for rental housing are governed by the Security Deposit Act in New Jersey. This is a complicated statute that controls how a landlord collects, maintains and returns a security deposit.
When a landlord takes a security deposit from a tenant, the money must be placed in an interest-bearing savings account. Additionally, a landlord must provide the tenant with written notification, including the following information, within 30 days of receipt:
- Address of the bank
- Account number
- Amount of the deposit
- Interest rate
Further, the landlord must pay the interest earned on the security deposit to the tenant on a yearly basis and at the same time provide the bank information and any updates.
If a landlord fails to do so, he or she has violated the Security Deposit Act and could be liable to the tenant for double damages, or twice the amount of the security deposit.
If a landlord does not provide proper notification to the tenant, the tenant may apply that money toward rent. Landlords should consider consulting with an attorney to determine how to handle a security deposit.
We Can Help You Understand Security Deposit Regulations
A security deposit is collected to protect a landlord from:
- A tenant’s breach of the rental contract
- Nonpayment of rent
- Damage to the unit
The landlord may collect up to one and one-half times the monthly rent as a security deposit and must clearly state under what conditions the security deposit will be returned to the tenant when the unit is vacated.
If there is a monthly rent increase, an additional 10 percent of the current deposit may be collected.
When the tenant pays the security deposit, the landlord must provide a written receipt to the tenant with the date, landlord’s signature and the amount paid.
At Robinson & Robinson, LLC, our lawyers are experienced with handling security deposits. We can also draft your rental leases or review and make necessary updates to your existing rental leases.
Call Us For Knowledgeable Landlord Advocacy
Landlords must comply with strict security deposit statutes. Our real estate attorneys can help you follow all applicable laws. Please call our office in Millville at 856-413-5791 or complete our online form to arrange for a free consultation.