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3 reasons landlords can lawfully retain security deposit funds

On Behalf of | Mar 22, 2024 | Landlord Rights

New Jersey landlords often require sizable deposits when renting out properties to new tenants. State law limits security deposits to one-and-a-half month’s rent. Generally, there is an expectation that a landlord should return security deposit funds in full shortly after a tenant ends their tenancy.

However, in a limited number of scenarios, landlords have legal justification to retain some of the security deposit. Occasionally, landlords may even have reason to take legal action against a former tenant because the security deposit funds do not adequately cover the landlord’s losses.

When the tenant leaves rent unpaid

One of the most common reasons for security deposit claims is a tenant falling behind on their rent prior to leaving the rental unit. Someone unable to pay rent might leave the unit so that the landlord can rent it to someone else, but they may have missed one or more rental payments already. Landlords can retain security deposits as a way to recoup rent not paid in full. If someone leaves before the end of a rental contract, landlords could retain security deposit funds for those remaining months.

When a tenant doesn’t pay appropriate fees

Many New Jersey leases include clauses that outline certain fees that landlords can charge. There might be a late rent fee if someone does not make their payments by a certain date. There could be fees for pets assessed on a monthly basis. Landlords might even assess fees for lease violations. Provided that landlords have documentation that certain fees applied and a tenant never addressed those costs, the landlord could potentially retain security deposit funds to cover fees accrued during the tenancy that a tenant did not directly pay.

When a tenant damages the unit

Landlords have a responsibility to engage in regular maintenance and to cover basic wear and tear to the premises. Someone living in a space inevitably uses the facilities in a way that requires ongoing maintenance and investment from the property owner. Addressing standard unit degradation related to age and use does not justify the retention of security deposit funds. However, if there are unusual damages, such as holes burned in the carpet or punched in the walls, then landlords can request security deposit funds for necessary repairs. Typically, landlords must send an inventory of damages to tenants outlining what happened to a property and the cost to make necessary repairs shortly after a tenant leaves to comply with New Jersey state law.

Disagreements about security deposit funds can complicate landlord-tenant relationships and might even lead to court proceedings. Landlords who understand New Jersey rules about security deposits are less likely to make mistakes that could lead to legal action.