New Jersey security deposit rules for landlords
How much you can collect, where it must be held, what you must tell the tenant, and how and when to return it.
6 min readBy Green American Property Management
New Jersey's Rent Security Deposit Act is strict, and the penalties for getting it wrong can exceed the deposit itself. Here is how it works for most residential rentals.
How much you can collect
The deposit can't be more than one and a half times the monthly rent. Any additional security collected each year can't be more than 10% of the current deposit.
Where the money goes
The deposit must be placed in an interest-bearing account at a bank or savings institution in New Jersey. It belongs to the tenant, so it must not be mixed with your own money.
The notice you must send
Within 30 days of receiving the deposit, tell the tenant in writing the name and address of the bank, the type of account, the current interest rate and the amount deposited. You must also notify the tenant if you move the deposit to another bank. If you don't give the required notice, the tenant may tell you to apply the deposit, plus interest, to rent.
Interest belongs to the tenant
Interest earned on the deposit is the tenant's. It is paid to the tenant each year or credited toward rent.
Returning the deposit
- Return the deposit, plus interest, within 30 days after the tenancy ends.
- Send an itemized list of any deductions for unpaid rent or damage beyond normal wear and tear.
- Deliver it in person or by registered or certified mail.
- If the tenant is displaced by fire, flood, condemnation or evacuation, the deadline is five business days after a request.
Selling a rental property
When ownership changes, the deposit and interest must be transferred to the new owner, and the tenant must be notified. Otherwise the seller can remain liable.
Exemptions
Owner-occupied buildings with two or fewer rental units are generally exempt, unless the tenant gives 30 days' written notice that they want the law to apply. Even then, keeping good records is wise.
Protect yourself with good records
Dated move-in photos, a signed condition report and repair records are what make deductions stand up. They're part of our tenant placement process. For the other move-in rules, see the New Jersey landlord compliance guide.
Not legal advice. This guide summarizes New Jersey rules in plain language as of November 7, 2026. Laws and municipal requirements change; for a specific situation, check the official source or consult a New Jersey landlord-tenant attorney.
