NEW JERSEY EXECUTIVE ORDER: LANDLORDS, TENANTS, & SECURITY DEPOSITS
We hope everyone is doing well and staying safe in these troubling and difficult times.
On April 24, 2020, Governor Murphy signed a new executive order that will provide much-needed relief to both landlords and tenants. Many landlords have been seeking solutions to assist their tenants with lagging income streams as a result of the COVID‑19 pandemic. Some landlords have further contemplated the legal consequences of utilizing a tenant’s security deposit in lieu of rent. Executive Order No. 128 creates a fix for this ongoing problem.
Pursuant to this Executive Order, tenants may now request that their security deposit (and accumulated interest thereon) be applied toward their rent. The request must be in writing (which includes electronic communications, like email).
Importantly, if a landlord receives a tenant’s request to apply the security deposit to the rent, the landlord must comply. If a landlord violates this order, it would be considered a disorderly conduct or an aiding and abetting violation.
However, this Executive Order does have its limits. The security deposit can only be applied to rent that:
- has already come due during the current Public Health Emergency,
- will come due during the current Public Health Emergency, or
- will come due up to sixty (60) days after the current Public Health Emergency terminates.
In other words: If a tenant was behind on rent before the COVID‑19 crisis, a landlord is not required to apply the security deposit to the rent owed from before the current Public Health Emergency.
Once the security deposit has been applied to rent, the tenant would not be obligated to make a further security deposit relating to the lease. However, the security deposit can still be replenished.
- If a tenant and landlord do not renew or extend the lease after April 24, 2020: the landlord can require the tenant to repay the portion of the security deposit that would otherwise have reimbursed the landlord upon moveout. In other words, landlords can make tenants pay whatever part of the security deposit would have gone toward covering damages after moveout.
- If a tenant and landlord do renew or extend the lease after April 24, 2020: the tenant must repay the security deposit within six (6) months after the Public Health Emergency ends, or when the lease is renewed (whichever date is later).
Executive Order No. 128 should not be interpreted as a license for every New Jerseyans to utilize security deposits in lieu of rent. As Governor Murphy noted in his announcement on April 24, 2020, “For New Jerseyans fortunate enough to have the income to pay their rent or mortgage, please do so, as that allows us to best help those who cannot.”
If you are concerned with how Executive Order No. 128 may affect you or your business, we at Griffin Alexander, P.C., can assist.
The information in this Client Alert is provided solely for information purposes. It should not be construed as legal advice on any specific matter and is not intended to create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based upon particular circumstances. Each legal matter is unique, and prior results do not guarantee a similar outcome.
ATTORNEY ADVERTISING MATERIAL © 2020 Griffin Alexander, P.C. All rights reserved.
For any questions about this blog, or to schedule a consultation with an attorney, contact Griffin Alexander, P.C. at 973-366-1188 or through our website here!