By Rebecca J. Rosen, Esq.

On April 24, 2020, Governor Murphy signed Executive Order No. 128 (EO 128), which allows tenants to direct their landlords to use their security deposits to offset rent or back rent.

Security Deposits to Offset Rent

Effectively immediately, EO 128 waives provisions of statutory law that prohibit the use of security deposits for rental payments so that tenants can instruct landlords to use them to offset rent or back rent. Upon written request from a tenant, including electronic communication, a security deposit as well as the tenant’s portion of the interest and/or earnings accumulated, shall be applied or credited towards rent payments due or to become due from the tenant.

Tenants will not be required to make any further security deposits relating to their current lease agreement.

Tenant Responsibility for Property Damage

Notwithstanding, tenants would still be responsible for any monies landlords expend, such as to repair damage to the property, that would have been reimbursable via the security deposit as outlined in the original contract. In addition, should the tenant and landlord elect to extend or renew their lease, then the tenant would be obligated to replenish the security deposit in full either six (6) months following the end of the Public Health Emergency established by Executive Order No 103, or on the date on which the current lease agreement is extended or renewed, whichever is the later date.

Schenck Price will continue to monitor legislative developments at the state, federal and local level, and will provide further updates on future legislative enactments.  If you have any questions about the laws referenced in this Alert, please contact the author at rjr@spsk.com.

DISCLAIMER:  This Alert is designed to keep you aware of recent developments in the law.  It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.