When renting a home, it’s common to be asked for and pay a security deposit. However, many people do not know how much they can ask for and how it is calculated. In addition, unreasonable cleaning or repair costs are often deducted from the security deposit, causing conflicts between landlords and tenants. With the moving season upon us, many people are facing problems with security deposits. We’ve been getting a lot of questions about security deposits lately, so we thought we’d take a look at the law on the subject.
In New Jersey, we have a law that governs security deposits called the Security Deposit Law. Security deposits can only be up to 1.5 times the monthly rent. If you want to increase the security deposit, you can charge no more than 10% of the previous security deposit per year. If your tenant has a dog, you might ask for an additional security deposit because of the dog. It’s okay to ask, but the Security Deposit, including the cost, shouldn’t be more than 1.5 times one month’s rent. A security deposit legally includes anything you pay in advance to secure the lease, not just the paper “security deposit” you pay when you move in, so if a landlord asks you to pay two or three months’ rent up front, it’s likely to be illegal.
Many disputes between landlords and tenants revolve around who owns the security deposit. The security deposit belongs to the person who paid it – the tenant – and the landlord can’t use it for anything other than what the law says. In many cases, landlords keep the Security Deposit in their personal account, but we recommend that you keep it in a separate account to avoid legal issues down the road.
If the security deposit is deducted from the security deposit due to damage to the property, it’s up to the landlord to decide what to do with it, and the landlord should provide you with details of the amount that was deducted from the security deposit, such as cleaning fees. If the cost of the repairs is more than the security deposit and the landlord suffers damages, the landlord can sue for the cost of the damages. The landlord is also obligated to return the security deposit to you personally or by registered/certified mail to ensure that you receive it.
If the landlord doesn’t return the security deposit within 30 days, or if the landlord disagrees with the former tenant about the amount of money the landlord is limiting for repairs, you may be able to sue in small claims court. If you sue and win, the court will usually allow you to recover your damages, including attorney fees and court costs. If the tenant vacates the property without a legally valid reason before the end of the lease, then the 30 days start when the original lease expires or when the property is re-rented, whichever comes first, not when the tenant vacates the property.
We’ve had a lot of people ask us what to do if the evacuation order is lifted due to a natural disaster like the last hurricane or fire, and the tenant is forced to move out before the end of the contract period. If the evacuation order is for more than 7 days, the landlord has 3 days to notify the tenant that they can take the Security Deposit and 5 days to return the Security Deposit to the tenant. If the tenant doesn’t claim the security deposit within 30 days, the landlord can first deposit it back into the bank account. If the tenant does retrieve the security deposit and later changes their mind and moves back in, they’ll have to pay the security deposit again. However, they don’t have to pay the full amount right away, and can pay one-third of the security deposit immediately, one-third within 30 days, and the remaining one-third within 60 days.
When it comes to security deposits, many states have legislated down to the last detail, so it’s important to know your legal rights and responsibilities before reacting emotionally if something goes wrong. If you have any further questions about Security Deposit, or if there are any laws that you think our readers would like to know about, please don’t hesitate to contact us at mail@songlawfirm.com. I’ll incorporate it into my next column.