New Jersey security deposit law

You may not require more than one and one-half times one month's rent as security for a home used as a dwelling. If you later collect additional security, the yearly increase may not be more than 10 percent of the current deposit.

N.J.S.A. 46:8-21.2

• Money held as security stays the tenant's property: you hold it in trust, and it may not be mixed with your own money. N.J.S.A. 46:8-19
• The Security Deposit Act covers every rental used as a dwelling except an owner-occupied building with no more than two rental units, and even there the tenant can bring it into play by giving you 30 days' written notice. N.J.S.A. 46:8-26
• A lease term in which the tenant waives any part of the Act is void. N.J.S.A. 46:8-24

Within 30 days after the lease ends, return the deposit with the tenant's share of the interest, less charges allowed by the lease, by personal delivery or by registered or certified mail. Itemize the interest and every deduction, and send that notice the same way.

N.J.S.A. 46:8-21.1

• You may not take deductions from the deposit of a tenant who is still in possession. N.J.S.A. 46:8-21.1
• If a fire, flood, condemnation or evacuation displaces the tenant and a public official posts a notice barring occupancy or a building inspector certifies the displacement will last more than seven days, make the deposit available on demand within five business days, and give the tenant written notice within three business days of learning of the displacement. N.J.S.A. 46:8-21.1
• After a lease ends under the Safe Housing Act, make the deposit available on demand within 15 business days. Give the separate written availability notice within three business days after termination, identifying pickup location and hours. Follow the duplicate-notice and applicable posting requirements. The net refund must remain available on demand for 30 days; uncollected amounts must be redeposited as specified. N.J.S.A. 46:8-21.1 See Ending a lease early on the New Jersey page
• If a court finds for the tenant in a suit to recover the deposit, it awards double the amount owed, full costs and, at its discretion, reasonable attorney's fees. N.J.S.A. 46:8-21.1
• When the lease ends because the tenant died, the deposit goes to the executor, administrator or surviving spouse. N.J.S.A. 46:8-21.1
• DCA's security-deposit bulletin describes deductions for damage beyond ordinary wear and money due under the lease. Compare dated move-in and move-out records, photographs, the lease and actual repair evidence before withholding. Aging paint or a routine refresh does not by itself establish a damage charge. Keep the refund calculation, interest, itemization and delivery records when reviewing a dispute. N.J.S.A. 46:8-21.1 NJ DCA Security Deposit Bulletin, revised July 2025

If you hold deposits for fewer than 10 units, put them in an interest-bearing account at a federally insured bank, savings bank or savings and loan in New Jersey. With 10 or more units, use an insured money market fund of a New Jersey-based investment company or a New Jersey bank account paying a variable money market rate. The interest belongs to the tenant.

N.J.S.A. 46:8-19(a), (b)

• Give the statutory bank/fund, address, account-type, rate and amount notice within 30 days of receiving the deposit and after property transfer, and with each annual interest payment. Section 46:8-19(c)(2) separately addresses institution mergers and account/institution changes more than 60 days before the annual payment; apply those timing conditions to a move of the funds. N.J.S.A. 46:8-19(c)
• Pay the interest each year in cash or as a credit toward rent on the lease anniversary or renewal, or on January 31 if you told the tenant in writing that you would. N.J.S.A. 46:8-19(c)
• If you do not deposit the money, give the notice or pay the interest as required, the tenant may tell you in writing to apply the deposit plus 7 percent yearly interest to rent, and you then lose the right to demand a deposit. For a missed annual payment or notice, the tenant must first give you 30 days to fix it. N.J.S.A. 46:8-19(c)
• Deposits for a seasonal rental are exempt from the account rules. A seasonal rental is a term of no more than 125 consecutive days to a tenant with a permanent home elsewhere, and you must prove the rental is seasonal. N.J.S.A. 46:8-19(d)
• When you sell or assign the property, within five days turn the deposit and the tenant's interest over to the new owner and tell the tenant by registered or certified mail who now holds it; the new owner must collect it from you. N.J.S.A. 46:8-20

The Security Deposit Act, read in full, does not require a move-in inspection or condition checklist. A written record still helps you support any deduction you itemize at move-out.

N.J.S.A. 46:8-19 to 46:8-26

• Every deduction you take must be itemized and sent with the deposit refund. N.J.S.A. 46:8-21.1 See Returning the deposit on the New Jersey page