The Rent Security Deposit Act caps a deposit at one and a half months' rent, requires it to be held in an insured interest-bearing account, requires written notice to the tenant within 30 days naming the institution, the account, the rate and the amount, and requires the deposit plus the tenant's interest to be returned with an itemisation within 30 days of the tenancy ending. Wrongful failure to return it is double damages, costs and, at the court's discretion, the tenant's legal fees.
The Act applies to every rental dwelling except owner-occupied premises with not more than two rental units where the tenant has not given the landlord 30 days' written notice invoking it — so an owner-occupied two-family is exempt only until a tenant asks for the protection, and then it is not.
The half of this that catches buyers is the transfer. On a conveyance the seller must hand the deposits plus accumulated interest to the purchaser at delivery of the deed or within five days and notify each tenant by registered or certified mail — and the purchaser has an affirmative duty to obtain them. Liability follows the building whether or not the money actually moved, so a deposit the seller kept is a deposit the buyer owes, at double damages. Get the deposit schedule and the interest history in diligence and take the cash at closing. An additional annual security may not exceed 10% of the current deposit; a landlord holding money for ten or more units has the tighter investment rules; a seasonal rental of 125 days or fewer is exempt from the interest-bearing requirement, on the landlord's proof.
- Unit counts
- 1+ units
- Owner-occupied exemption
- Yes
- Damages
- 2× the deposit, plus fees
- Cap
- 1.5 months' rent
- Additional annual security
- 10% of the current deposit
- Notice deadline
- 30 days from receipt, and again within 30 days of a transfer of ownership
- Return deadline
- 30 days from the end of the tenancy
Sources
- NJ DCA — Rent Security Deposit Act (statutory reprint) — Rent Security Deposit Act, N.J.S.A. 46:8-19 to 46:8-26 — §46:8-19 (investment and notice), §46:8-20 and §46:8-21 (change of ownership), §46:8-21.1 (return and double damages), §46:8-21.2 (the 1.5-month cap), §46:8-26 (exemption)