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RESIDENTIAL TENANT SECURITY DEPOSITS

In 2003 new legislation was enacted affecting landlords of residential properties in New Jersey. The legislation modified the residential tenant security deposits. The amendments affect the landlordís use of and ability to increase the tenant security deposit and further impose penalties for insufficient notice or failure to pay interest to the tenant. The landlord is also responsible for more detailed notification of the type of account in which their deposit is placed. Landlords are no longer entitled to retain 1% of the security deposit per year or 12 1/2% of the aggregate interest yield to defray administrative expenses. In addition to notifying the tenant of the location of the account and the amount deposited, the tenant now must be notified as to the type of account in which the funds are invested and the current rate of interest.

The landlord must notify the tenant within 30 days after 1) receipt of the deposit, 2) transfer from one account to another, or 3) transfer or sale of the real estate.

Under the prior law, a tenant was entitled to receive the annual interest either as a credit toward rent due or as cash on the renewal or anniversary of the lease. Now the interest must be applied as a credit to rent either on the anniversary date of the lease or on January 31, if a tenant has been given written notice prior to the next anniversary of the lease that subsequent interest payments will be made on January 31 of each year.

 

 

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