Governor Phil Murphy Issues Executive Order 128, Authorizing Application of Security Deposit Funds as Rent Payment
With over 850,000 state unemployment claims filed within the past five weeks, New Jersey is providing financially strapped renters with support to make ends meet: their security deposits.
On April 24, 2020, Governor Phil Murphy signed Executive Order No. 128 into effect, disputing provisions of statutory law under N.J.S.A. 46:8-19 et seq. that prohibit the use of security deposits for residential rental payments. In doing so, the Governor’s Office asserts that tenants may now opt to apply these funds to their upcoming rent obligations and mitigate the potential for eviction, accumulation of interest and late fees upon the conclusion of the State’s moratorium on residential evictions under Executive Order No. 106 (2020). In accordance with the Order, upon a tenant's written request (including text or email) a security deposit that is governed by the provisions of N.J.S.A. 46:8-19 et seq. and the tenant's portion of any interest or earnings that have accumulated thereon may be applied or credited toward rent payments due during or up to 60 days after the public health emergency established by Executive Order No. 103 (2020) has officially ended.
Once applied, tenants are under no obligation to replenish their initial security deposits regardless of the language of the lease. However, if the tenant and landlord subsequently extend or renew their lease, contract or license agreement after the date of Executive Order No. 128 (April 24, 2020), then landlords may obligate the tenant to replenish the security deposit in-full, provided landlord permits repayment within a six month window following the end of the public health emergency, or on the date the current lease is extended or renewed, whichever is later.
While security deposits may be utilized for rent as permitted by the order, it is important to note that tenants’ liabilities under the lease remain unaffected and landlords are still entitled to collect monies that would have otherwise been due to the landlord pursuant to the terms of the lease. For example, tenants would remain responsible for damage when they vacate, regardless of whether landlord is holding a security deposit to be applied against such charges.
If you are a landlord or a tenant and are unclear as to your rights, or have general questions on how the coronavirus pandemic may impact and affect your lease obligations, contact Steven Polhamus or any member of the Wilentz Real Estate team.
The author wants readers to be aware that there is no known precedent for Executive Order No. 128 and a legal challenge could result in a reversal of the order. As such, tenants seeking to utilize their security deposits pursuant to Executive Order No. 128 should proceed with caution.
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