New Jersey Truth In Renting

Posted at 7:51 PM, Apr. 23, 2009

New Jersey Rent Deposit

While working with a renter I came across a fact that Property Owners, Renters and REALTORS® should be aware of.

My customer was interested in a particular property to rent. I called the listing agent for availability and showing instructions. During the conversation the listing Agent stated that the owner required 1-1/2 Month's Security, the First Month's Rent and the Last Month's Rent for a total of 3-1/2 Month's Rent. I challenged the Listing Agent on requesting the Last Month's Rent. The Listing Agent assured me that this was perfectly legal for the Agent had just completed another rental with an attorney as the property owner.

Here is the law (In New Jersey) as stated in the New Jersey Department of Community Affairs book "Truth in Lending" regarding Security Deposits, page 9, second paragraph:

"The security deposit cannot be more than one and one-half times one month's rent. It can be less. Any additional yearly security deposit increase may not exceed 10% of the current security deposit. A landlord may not charge a pet secuity deposit if it exceeds one and one-half times one month's rentwhen combined with the regular security deposit. In the case of Brownstone Arms v. Asher, the courts determained that advanced rents in excess of one and one-halftimes the monthly rental payment violates the secuity deposit law. Therfore, any prepaid funds held to secure future rents are considered to be part of the security deposit. This includes the last month's rent. It does not matter what the the prepaid funds are labeled. The landlord may only require one and one-half times the tenant's rent as security and the first month's rent at the inception of the lease....."

Lessons learned: 1. When you are using an attorney in a Real Estate Transaction, make sure you obtain a full time Real Estate Attorney, not a "part-timer." 2. As a landlord, prospective tenant or REALTOR® obtain a copy of the NJ "Truth in Renting."

NJ Department of Community Affairs
Division of Codes and Standards
Landlord/Tenant Information Service
PO Box 805
Trenton, New Jersey 08625-0805

The HouseJeanie Team.