If you rent an apartment in New Jersey, you likely had to pay a security deposit before you moved in. While you may have paid your security deposit, you may not be fully aware of the rights and rules related to the security deposit and how they affect you.

Security deposits, in New Jersey, are governed by the Rent Security Deposit Act, N.J.S.A. 46:8-19. Under the law, landlords are permitted to require you to pay a security deposit for the unit you live in. There is a limit to how much money they can require. However, the maximum a landlord can require a tenant to pay for a security deposit is one and a half times the monthly rental amount. Once the tenant pays the security deposit, the landlord is required to deposit it into a bank to accrue interest. A landlord must notify the tenant(s) who have paid the security deposit, in writing, of the bank that the deposit was placed into, the branch address, and the interest rate that will accrue on the deposit, within thirty (30) days of receiving the security deposit. The landlord must provide notice of the interest accrued on an annual basis, either on the anniversary of the lease or on January 31st of each year.

If a landlord fails to deposit the security deposit pursuant to the Rent Security Deposit Act, then the tenant may provide written notice to the landlord that the security deposit plus an amount equaling seven (7%) percent interest per year, shall be applied toward rent. Additionally, the landlord can require no further security deposit. Before the security deposit amount plus interest can be applied toward rent, the landlord has thirty (30) days to pay the interest owed on the security deposit and/or provide the proper notice of the deposit of the security deposit money.

When a tenant leaves their rental unit, the law requires the landlord to return the security deposit, plus interest, less any damages or rental amounts owed, within thirty (30) days of the move-out date. N.J.S.A. 46:8-21.1. If the landlord makes any deductions from the security deposit or claims any damages, they must be in writing and delivered to the tenant by personal delivery or certified mail. The writing must be delivered within thirty (30) days of the move-out date.

Landlords cannot deduct damages that constitute “ordinary wear and tear”. Damages that a tenant causes such as putting holes in the wall can be charged against the security deposit.

If a landlord fails to return the security deposit within thirty (30) days, the law allows a tenant to file a complaint for the return of the security deposit. Under the law, the tenant may file the complaint for the return of twice the amount of the security deposit. This means that if the tenant paid a security deposit of $1,500.00 and the security deposit is not returned as required, the tenant can file a lawsuit for $3,000.00 against the landlord. An action for the return of a security deposit can be filed in Small Claims Court as long as the total amount of the suit (including court costs and fees) is $5,000.00 or less.

For example, if your security deposit was $2,750.00 and the landlord has not returned it or provided you the required notice, by law you can sue the landlord for $5,500.00, plus court costs and fees. Since the amount is over $5,000.00, you would most likely have to file in the Special Civil Part. If you filed your action in Small Claims, you could only recover up to $5,000.00.

Matthew R. Tavares focuses his practice in Litigation, Employment Law, Workers Compensation and Municipal Court matters. He is a trained mediator and has successfully mediated small claims and special civil part matters.

Mr. Tavares received his Juris Doctor from Western New England University School of Law in 2013, and obtained licensure in New Jersey in the same year. He received a Bachelor of Arts degree in American History and Criminal Justice in 2010 from the University of Delaware. Matt is a member of the Hunterdon County Bar Association, is a member of the New Jersey State Bar Association. Matthew was sworn in as a member of the New York State Bar in February 2016. You may contact Matt at (908) 751-1551, or [email protected]