Reasons to Keep a Tenant’s Security Deposit in New Jersey
Not all states designate what you can and can’t do with a security deposit once it is received—but New Jersey does. The state of New Jersey has laws that determine what landlords can do with the deposit, how much the deposit can be, and how the tenant can use it.
There are also limits on when a landlord may keep a deposit and the timeframe in which the deposit must be returned to the tenant. In order to protect your own finances as a landlord, it is a good idea to assume that all of the security deposit will be returned to the tenant after the lease.
However, depending on what happens, you may have legal reasons to keep a tenant’s security deposit in New Jersey. To be certain you are operating within your rights as a landlord, consult with one of Jean Baptiste & Associates’ qualified real estate lawyers.
Using a Security Deposit in New Jersey
New Jersey law does not allow landlords to simply put a security deposit in an envelope and set it aside. Landlords who do this may end up paying more interest to tenants than the banks are paying to them. This is because even the interest on security deposits is regulated.
Once a landlord receives a deposit, he or she needs to invest it in appropriate accounts. Tenants can use the deposit later to cover the costs of rent. If and when they do, they can also ask for up to 7 percent interest on the deposit if you have not invested it correctly.
Keeping the Deposit
Every landlord expects some wear and tear that does not indicate mistreatment of the property or poor maintenance. When the cost of repairs exceeds normal wear and tear, the landlord may retain that amount from the deposit.
Landlords can also keep any rents due, but these numbers can only be assessed once the tenant has moved out of the rental unit. Whether you can keep the deposit or any part of it is dependent on a number of factors that should be thoroughly examined by one of our attorneys.
The easiest way to understand the reasons to keep a tenant’s security deposit in New Jersey is to have the damage and rent due added up, and then deduct the costs of normal wear and tear. What you have left is what you can keep from the security deposit. Even then, it is a good idea to have us review the details and numbers involved so that you can be certain you can keep any part of the tenant’s security deposit.
Help from New Jersey Real Estate Lawyers
There are some situations where it’s perfectly legal for you to keep some or all of your tenant’s security deposit, but it’s important that you follow the proper procedures first. Let the experienced real estate attorneys at Jean Baptiste & Associates, LLC review your case’s detail so that you don’t make costly mistakes with your tenants.
To arrange a meeting, simply call our office at 1-800-531-6442 or complete our online form at the bottom of this page. A consultation is free and carries no commitment, so you have nothing to lose and everything to gain by discovering what we can do for you.