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Dira Management v. Banks

2005 WL 2860499 (N.J. Super. App. Div. 2005) (Unpublished)

LANDLORD-TENANT; SECURITY DEPOSITS — A tenant may not exercise its statutory right to apply its security deposit to current rent under the New Jersey Rent Security Deposit Act if the landlord has substantially complied with the notice requirements of the Act including its provisions that give a landlord the ability to cure certain deficiencies.

A woman rented an apartment. The lease agreement acknowledged that the company had received the security deposit and stated the amount of the deposit and the bank where it was being held. During the term of the lease, the landlord transferred the tenant’s security deposits to a different bank. It notified the tenant in writing that her deposit had been transferred. One year later, the woman sent a letter to the landlord claiming that it had violated the New Jersey Rent Security Deposit Act (Act) by failing to provide her specific information about her deposit, such as the type of account in which the deposit was being held and amount of the deposit. She told her landlord that she was applying the deposit to the following month’s rent. Two weeks later, the landlord sent a letter containing all of the information regarding the security deposit that the tenant had requested. It also enclosed a check for the interest that had accrued on her deposit. Despite this letter, the tenant still continued to withhold the following month’s rent. As a result, the landlord filed to evict for nonpayment of rent. The tenancy court ruled that the initial letter sent by the landlord provided sufficient notice of the location of the deposit. It entered a judgment of possession and ordered the tenant to post the following month’s rent. She posted the rent as instructed and filed a motion for reconsideration, which the landlord-tenant court denied. She then appealed.

The Appellate Division affirmed the lower court’s ruling. In reaching its decision, it discussed the requirements of the Act. Under the Act, a landlord must provide its tenant notice of certain information regarding his or her security deposit within thirty days of receiving the deposit. In addition, the Act requires a landlord to provide the tenant with information regarding his or her security deposit on an annual basis at the time it pays interest to the tenant. A landlord must also provide a tenant with notice that the security deposit has been transferred to another bank within thirty days of the transfer. Under the Act, if a landlord fails to provide a tenant with any of the required notices, a tenant has the right to apply his or her security deposit against the current rent due. However, before a tenant may exercise his or her statutory remedy, the Act provides the landlord with an opportunity to cure the deficiency. In this case, the Court found that the woman could not invoke her statutory remedy because her landlord had substantially complied with the notice requirements under the Act. The landlord complied with the Act when it notified its tenant where her deposit was being held in the lease agreement at the commencement of the lease term. It also noted that the landlord again complied with the Act when it advised its tenant that her deposit was being transferred to another bank. In addition, its immediately responded to its tenant’s written request for more information regarding her deposit. For these reasons, the Court concluded that the landlord had substantially complied with the Act.


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