A new state law signed by Gov. James E. McGreevey bolsters tenants’ rights in New Jersey by making changes to security deposit regulations.
Signed into law last week, A-2608 makes several changes to existing tenant law, specifically those dealing with security deposits and tenant notification requirements.
"This legislation gives landlords the protections they need, but does it in a way that does not unfairly penalize the tenant," said McGreevey at the signing.
Among the changes in the new law is the elimination of the landlords’ right to charge an administration fee. The previous law allowed an annual 1-percent charge on the security deposit for management of the account.
The bill also requires landlords to provide better notification about the location and status of the security deposit, including the name of the bank, type of account and interest rate. Landlords who fail to notify tenants or pay the interest earned on the account will be subject to a penalty of 7-percent interest on the deposit.
Other protections include the requirement that — when a building is sold — the new landlord must obtain tenants’ security deposits from the previous owner. A loophole in the previous law allowed a new landlord to ask tenants for a new deposit without requiring the former landlord to refund existing deposits.
The bill also: clarifies the law to prevent landlords from taking unwarranted deductions from the security deposit when a tenant moves out; upgrades the small claims court limit to $5000 when involving a tenant security deposit; gives tenants the option of applying accrued interest each year to their current rental on the renewal or anniversary of the lease, or on Jan. 31 of each year; and prohibits landlords from increasing the amount of the security deposit by more than 10 percent a year.
By and large, most tenants are good, responsible citizens," McGreevey said. "They do nothing wrong, yet are penalized in so many ways. We gave this law teeth so that tenants aren’t left at the mercy of their landlord."