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Mauricio v. First Fidelity Bank, N.A.

329 N.J. Super. 342, 747 A.2d 828 (App. Div. 2000)

LANDLORD-TENANT; SECURITY DEPOSITS; FORECLOSURE—A buyer at a foreclosure sale is not liable to a tenant for its security deposit if the deposit is not turned over to the buyer.

A lender acquired title to a residential rental property by judgment of foreclosure. Its mortgagor did not turn over a tenant’s security deposit to the foreclosing mortgagee. The lower court concluded that “a successor landlord, even by way of foreclosure, is responsible for return of a security deposit, even if upon foreclosure no security deposit was received from the former owner.” It then doubled the amount of the security deposit, awarded interest on that amount, and entered judgment in favor of the tenant. The Appellate Division reversed on the ground that, “under the plain language of N.J.S. 46:8-21, a former landlord is relieved of the obligation to repay the security deposit to a tenant only if he turns over the deposit to the purchaser [including at a foreclosure sale] in conformity with N.J.S. 46:8-20, and the purchaser only assumes responsibility for repayment of the deposit after it receives the money from the former landlord.” It pointed out that the lower court erroneously relied on a 1986 Law Division case which had reached the same conclusion as the lower court by relying primarily on a Legislative statement of the Assembly of Commerce, Industry and Professions Committee. The Appellate Division, however, did not read the Committee’s statement in the same fashion as the lower court and it concluded, in any event, that even if there were inconsistency between the legislative statement and the statute itself, the unambiguous language of the statute would prevail. If a purchaser, even in a foreclosure sale, does not receive the security deposit, it is not responsible for its return.


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