Security deposits are traditionally an area where owners get themselves into a lot of trouble. New Jersey courts do not take kindly to landlords who fail to abide by the Security Deposit Law found in N.J.S.A 46:8-21.1. All landlords who accept security deposits must put them into a bank in New Jersey, notify the tenant where it is located and the rate of interest on the account. A security deposit cannot be more than one and half month’s rent. If you fail to provide the requisite notice letter to your tenant, the law gives your tenant the right to increased interest on that deposit. That interest is payable at the end of each lease term, or it may be applied to the rent. Interest rates on these accounts are typically low, but you must still turn them over to the tenant and do it in writing!
Be very careful if you are holding on to a security deposit because of damages to the home or unpaid rent. An experienced attorney will be able to caution you about the penalties you can be subject to if you have wrongfully withheld any part of a security deposit. The financial penalties are stringent.
At the Law Offices of Sadaf Trimarchi, your concerns about a security deposit are taken seriously. Please contact the office for a free consultation.