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Rura v. Bennett

A-1466-99T2 (N.J. Super. App. Div. 2001) (Unpublished)

LANDLORD-TENANT; SECURITY DEPOSITS—The statutory limit for residential security deposits is one and one half month’s rent and a landlord cannot insist on an enhancement for special reasons such as the presence of a dog.

A tenant leased a townhouse. Because the tenant had a dog, the landlord and tenant agreed to an enhanced security deposit equal to two months’ rent “in order to compensate for the potential damage resultant by the allowance of a pet.” The tenant’s dog was a constant problem and there were many complaints from the townhouse association and neighbors concerning the annoyance and damage that the dog caused. The landlord demanded the tenants leave the premises, and they did. The video tape of the premises taken by the landlord showed extensive physical damage and numerous personal belongings left by the tenants. The landlord obtained estimates for the cost of repairs, sent a letter to the tenant’s last known address describing the damages and requesting payment above and beyond the amount of the security deposit. The landlord received no response and sent another letter. At trial, the lower court ruled that the security deposit violated the statutory limit of one and a half times the monthly rent. The lower court also calculated interest because the landlord failed to account for interest on the deposit. Further, the lower court found a violation of the New Jersey law requiring a landlord to notify its tenants by “personal delivery, registered or certified mail” of the disposition of the security deposit. The trial judge disallowed the landlord’s request for damages for a number of items and then, after subtracting the allowable damages, doubled the remaining amount. The trial judge also awarded substantial attorney’s fees. On appeal, the landlord argued the security deposit was not in violation of law because its “specific purpose” was to refurbish the townhouse after the tenants’ occupancy with their dog. The landlord pointed to a prior case where there was a separate agreement providing for payment of the sum to be used to repair the apartment at the conclusion of a lease. In that situation, however, the money was nonreturnable and it unconditionally belonged to the landlord at the inception of the lease. Here, the additional money paid by the tenant was part of the security deposit. Consequently, it was subject to the Security Deposit Act. Even though the extra security deposit was based on possible damage being caused by a dog, if no damage resulted, the money was to be returned to the tenant. Under these circumstances, the Appellate Division found that the lower court correctly held that the amount of security deposit violated New Jersey law. The landlord also argued that the tenant should not have been awarded double the amount of the security deposit because only the notification requirement of the Security Deposit Act was breached. The Court rejected the argument “because we have subsequently held that, in every case, the landlord is obliged to return the security deposit within 30 days or notify the tenant in writing, by registered or certified mail, why he or she is not doing so and that, failing such action, the tenant is entitled to recover twice the deposit under the statute.” Lastly, the landlord argued that the lower court erred in granting its tenant’s application for attorney’s fees because he acted in good faith, the tenant’s application for fees was accepted and the lower court’s decision was based on a case which, itself, denied attorney fees. The Court pointed out that counsel fees may be awarded in the “court’s discretion.” The landlord’s failure to comply with the notification requirements, the landlord’s accepting of an illegal security deposit, and the landlord failing to account for interest, “are sufficient to show that with respect to the handling of the tenant’s security deposit, [the landlord] did not act in good faith.”

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