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NJ Allows Expanded Use of Security Deposits for Rent Payments During Pandemic

Client Alert

Authors: Thomas M. Letizia and Cynthia Anne DeLisi

4/28/2020
NJ Allows Expanded Use of Security Deposits for Rent Payments During Pandemic

The COVID-19 pandemic has imposed widespread financial hardships on all sectors of the New Jersey economy. One area particularly impacted is residential rental arrangements and the ability of tenants to continue with their rent payment obligations to landlords.

On April 24, New Jersey Gov. Phil Murphy issued Executive Order No. 128, permitting landlords and tenants to apply tenant security deposits to cover the payment of rent prior to the expiration of the lease term. The order specifically modifies the Rent Security Deposit Act, N.J.S.A. 46:8-19, which ordinarily prohibits the application of residential tenant security deposits until the expiration of the term of the lease or earlier termination. Under the terms of the executive order, to apply the security deposit, a landlord must first receive a written request from the tenant, which may be via electronic mail. Once the landlord has received the written request, the landlord may first apply the security deposit to any amounts the landlord has already expended that would be reimbursable by the security deposit and then apply the remaining security deposit toward rent payments due or to become due from the tenant while the COVID-19 pandemic continues for a period of up to 60 days after the public health emergency terminates (see Executive Orders 103 and 119).

If the security deposit is applied during this time of emergency, the landlord cannot require the tenant to replenish the deposit for the remainder of the current term. However, the landlord can require replenishment of the security deposit on the later of the date that is six months following the end of the declared COVID-19 public health emergency orders, as such orders may be extended, or the date of any lease renewal or extension.

Executive Order No. 128 should free up otherwise frozen assets for immediate use to assist both landlords and tenants during this financially challenging time. To read the executive order, visit https://nj.gov/infobank/eo/056murphy/pdf/EO-128.pdf.

Questions pertaining to this topic may be directed to authors.

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

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