Many of the landlord and rental property owner clients that we work with struggle to understand New Jersey security deposit law. It is important to have your facts straight and to understand your obligations as a property owner because in the case of a dispute between you and your tenant, there is a good chance it will pertain to the security deposit.
Collecting a Security Deposit from New Jersey Tenants
Many states have restrictions in place on how much you can collect from a tenant for the security deposit. New Jersey is no different. In New Jersey, you cannot ask for more than the equivalent of one and a half month’s rent. This means if you charge $2,000 per month in rent, your security deposit cannot exceed $3,000. Typically, the landlord would charge the full amount that is permissible by law. However, landlord would have the option to charge less depending on circumstances.
If you raise the rent, you can also raise the security deposit amount. However, that increase cannot be any more than 10 percent in a year.
Timelines for Security Deposit Returns
There is a deadline concerning the obligation to return the tenant’s security deposit and/or advise of any appropriate off-sets. This is an easy thing to miss and we strongly encourage you to get the security deposit back sooner rather than later. Do not wait until the last possible minute because something could happen that will result in you missing the deadline. Then, the tenant can take you to court and you may find yourself refunding more than the entire deposit, regardless of the condition that the property was left in.
At the conclusion of the lease term and a clean move out in accordance with your rental contract, you have 30 days within which to return the deposit. Make sure you get a forwarding address when they return the keys. If your tenant has to move out suddenly because the property becomes unhabitable, you must return their deposit within five days. It is unlikely this will happen, but if there is a flood or a fire or some catastrophic reason that your tenant must immediately leave, be prepared to return the security deposit right away.
New Jersey law also dictates that the deposit must be given back to the tenants within 15 days if that tenant is a victim of domestic violence and therefore forced to move.
How to Determine What to Withhold from a Security Deposit
If there is going to be a legal dispute, it will likely concern deductions made that the tenant finds unjust.
Landlords in New Jersey can make deductions from the deposit if there is unpaid rent that is due or if there is damage left behind that exceeds normal wear and tear. Make sure you have documented the condition of the property well, both at the beginning of the tenancy and at the end of the tenancy. If you make a deduction, you want to be able to demonstrate without any doubt that there was damage caused by the tenant.
If you are keeping all or part of the tenant’s security deposit, you are required to send an itemized list of what you deducted and why within 30 days of your tenant’s departure.
The New Jersey security deposit law seems pretty straightforward, but there is plenty of room for error, especially when it comes to determining what normal wear and tear is and what will qualify as tenant damage.
If you find yourself in a dispute with your tenants over the security deposit or you would like some help in avoiding those legal disputes, please contact us at Robert A. Gleaner, P.C. We are your legal experts when it comes to managing your property and landlord/tenant law in New Jersey.