Security deposit interest in New Jersey
Yes — New Jersey landlords must pay interest on security deposits in buildings of 10 or more units.
Work out what you are owed in New Jersey
Enter your deposit and dates to see what New Jersey law entitles you to.
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Not legal advice. This is an estimate for informational purposes only and is not legal advice. Security deposit laws change and vary by jurisdiction. Verify with the cited statute or consult a licensed attorney in your state before taking action.
How is the New Jersey interest rate set?
No fixed statutory rate. Landlords holding deposits for 10 or more rental units must invest in an insured NJ money market fund or a variable-rate bank account; those with fewer than 10 units may use an ordinary interest-bearing savings account. The tenant receives whatever interest the account actually earns, so the rate varies by landlord and account. Landlords may no longer deduct administrative expenses from deposit interest (P.L. 2003 c.188); all earnings belong to the tenant. A 7% per year rate applies only as a tenant remedy where the landlord fails to comply.
What does New Jersey law actually say?
New Jersey requires all residential security deposits to be held in trust in an interest-bearing account, with the interest belonging to the tenant. Landlords holding deposits for 10 or more rental units must use an insured NJ money market fund or a variable-rate bank account; those with fewer units may use an ordinary interest-bearing account. There is no fixed statutory rate — the tenant receives the interest the account actually earns.
Interest is paid in cash or credited toward rent on the lease anniversary, or on January 31 if the landlord has given written notice. The landlord must give the tenant a written notice of the institution, account type, current rate and amount within 30 days of receiving the deposit and again at each annual interest payment. 5 months' rent, with annual increases limited to 10% of the current deposit.
Seasonal rentals of 125 days or less are exempt from the investment requirement, as are owner-occupied buildings with two or fewer rental units unless the tenant gives 30 days' written notice.
When must a New Jersey landlord return the deposit?
30 days after the tenancy ends.
How much can a New Jersey landlord charge?
Capped at 1.5 months rent; annual increases limited to 10 percent of the current deposit
What if your landlord does not comply?
If the landlord fails to invest the deposit properly, give the required notice, or pay the interest, the tenant may demand in writing that the deposit plus 7% per year be applied to rent due; the landlord then cannot collect another deposit while the tenant occupies the unit. For annual interest or notice failures the tenant must first allow 30 days to cure. Failure to return the deposit plus interest within 30 days of termination: the court awards double the amount owed, plus full costs and, at its discretion, reasonable attorney fees. Unlawful diversion of deposit funds is a disorderly persons offence, fine from $200 and/or up to 30 days imprisonment. Willful withholding of deposits made by a State agency on a tenant's behalf: civil penalty of $500 to $2,000 per offence.