interest, as required, the tenant must give the landlord written notice and allow the landlord 30
days to comply with the annual interest payment and notice requirements. If the landlord does not
reply within the allotted time, the tenant can use his security deposit toward his rent. If the tenant’s
security deposit gets applied to his rent, the landlord may not make further demand for an
additional security deposit (N.J.S.A. 46:8-19.1 (c)).
Within 30 days after the termination of a tenancy, a landlord must return the security
deposit, plus interest earned less deductions, to the tenant (N.J.S.A. 46:8-21.1). Deductions may
include the cost of any damages over and above normal wear and tear, and any other money due
the landlord under the terms of the lease. The landlord must return the money either by personal
delivery, registered, or certified mail. If there are any deductions made from the security deposit
by the landlord, an itemized list of these deductions must also be sent to the tenant by registered
or certified mail within 30 days from the termination of the tenancy. If the amount of money owed
to the landlord for damages or unpaid rent is greater than the amount of the security deposit, the
landlord may sue for the difference. No deductions shall be made from a security deposit of a
tenant who remains in possession of the rental premises.
If a landlord fails to return the security deposit within 30 days, or the tenant disagrees with
the amount deducted, the tenant may sue for double the amount of the security deposit that the
tenant contends was wrongfully withheld. If the tenant is successful, the court may award the
tenant double the amount wrongly withheld, together with court costs and reasonable attorney’s
fees (N.J.S.A. 46:8-21.1). However, if the tenant breaks the lease and moves out of the dwelling
unit prior to the expiration of the lease, without legal cause, the lease is not considered to be
terminated. The lease is considered to be terminated once the unit is re-rented or the lease expires,
whichever occurs first, provided that the tenant notified the landlord as required by the lease
agreement. The date the rental unit is re-rented determines the date of the termination of the
breached lease, J.C. Mitchell v. First Real Estate, 287 N.J. Super 546 (1996). Therefore, in the
case of a broken lease agreement by the tenant, the 30 days that the landlord shall return the tenant’s
security deposit does not start until the landlord re-rents the rental unit, or until the lease expires,
whichever occurs first.
Within five (5) business days after a tenant is displaced by fire, flood, condemnation, or
evacuation, the landlord must return the security deposit. The law requires the return when either
an authorized public official has posted a notice prohibiting occupancy or has certified that the
displacement is expected to continue longer than seven (7) days. Within three (3) business days of
having received notice of the displacement, the landlord must let the tenant know where the
security deposit can be collected. The landlord may arrange to have the municipal clerk hold the
security deposit so that the tenant may collect it at the clerk’s office. If the tenant has not collected
the deposit within 30 days, the landlord can redeposit it with the banking institution or investment
company with which it was deposited before the displacement. If the tenant is later able to move
back into the dwelling unit but has already collected the deposit, the tenant must again pay the
landlord a security deposit (one-third will be due immediately, another one-third in 30 days, and
the last one-third in 60 days) (N.J.S.A. 46:8-21.1).