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Padazopulos v. Qureshi

A-1020-09T3 (N.J. Super. App. Div. 2011) (Unpublished)

LANDLORD-TENANT; SECURITY DEPOSIT — A residential tenant who may not have paid his or her rent and a security deposit directly to a landlord, but had paid by a public agency, can still make a claim against the landlord for return of rent as well as the security deposit if the tenant has a legal or contractual obligation to reimburse the public agency.

A recipient of welfare benefits leased an apartment on a month-to-month basis. The welfare board paid the security deposit directly to the landlord on behalf of the tenant and also paid the tenant’s rent each month. In February 2007, the landlord notified the tenant that the lease would terminate at the end of May. The tenant vacated the apartment in July. The landlord did not send the tenant an accounting or return the security deposit. The welfare board wrote to the landlord, requesting that the security deposit be returned. In response, the landlord claimed that damage to the apartment exceeded the deposit. The board did not pursue the matter.

The tenant then sued his former landlord and the board for return of the deposit, one month’s rent, and statutory penalties for violation of the provisions of the Security Deposit Act (SDA). The tenant alleged that he had vacated the apartment at the beginning of July, but the landlord had failed to refund the July rent or refund the security deposit to him or to the board. The tenant claimed a financial loss because the Social Security Administration reimbursed the board for the security deposit and the rent out of funds he otherwise would have received.

During a bench trial, the lower court took testimony solely on the issue of payment of the security deposit and rent. The tenant testified that he had received a lump sum disability payment from the Social Security Administration with an amount deducted to repay the board for the funds used for him. The board presented a social worker familiar with the tenant’s case. The worker testified that the board expected to be reimbursed for any money paid to or for the tenant. At trial, the social worker was not aware of any reimbursement to the board on the tenant’s behalf. The lower court dismissed the tenant’s claim, finding that the tenant would be receiving a windfall because he had not contributed to the security deposit or to the rent out of his own pocket.

On appeal, the Appellate Division disagreed with the lower court’s findings. The tenant, upon receipt of any lump sum benefit, was obligated by state statute to repay any prior assistance received. Thus, although the board paid the security deposit and the rent directly to the landlord, the tenant was obligated to repay that money to the board. The Court found no reason that such an arrangement should be a bar to an action by the tenant against the landlord. Further, the Court found that the tenant had made a prima facie showing of a SDA violation because the required elements were established; a landlord-tenant relationship existed and was terminated; a security deposit had been paid on the tenant’s behalf; and the landlord did not return the deposit. Thus, the Court remanded the matter to the lower court for a full hearing on the SDA and rent claims. However, the Court found that the SDA did not create a cause of action against the board; and the tenant did not advance any basis for the board being liable to him.

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