New Jersey security deposit interest
New Jersey requires every security deposit to be invested or deposited for the tenant’s benefit. Landlords with ten or more units must use an insured money market fund or a bank account paying at least the rate on money market accounts; smaller landlords may use any insured interest-bearing account. Whatever the account earns, less nothing, belongs to the tenant and must be paid or credited every year.
Print this page for a dated statement showing the rate applied to each year and the statute.
How New Jersey deposit interest works
Within 30 days of receiving the deposit the landlord must tell the tenant in writing where it is held, the account type and the current rate. Failing that notice lets the tenant demand that the deposit be applied to rent. The deposit is capped at one and a half months’ rent and returned within 30 days with interest.
The rules in brief
- Deposit must be held in a New Jersey insured account or money market fund; the tenant receives all interest earned.
- Written notice of the bank, account type and rate within 30 days of receipt and after each change.
- Deposit capped at 1.5 months’ rent; annual increases of the deposit limited to 10%.
- Return within 30 days with interest and an itemised statement; a landlord who fails to do so owes double the amount wrongfully withheld.
Set by the holding account. Whatever the account earns.
Worked examples: one year held
Assuming an account rate of 0.5%. Enter the real rate from the landlord’s notice in the calculator.
| Deposit | Interest-bearing portion | Interest owed |
|---|---|---|
| $1,000.00 | $1,000.00 | $5.00 |
| $1,500.00 | $1,500.00 | $7.50 |
| $2,500.00 | $2,500.00 | $12.50 |
Other New Jersey deposit rules
- Maximum deposit: 1.5 months' rent (1 1/2 times one month's rent); annual additional security collections capped at 10% of the current deposit.
- Return deadline: 30 days after termination of the lease, by personal delivery or registered/certified mail, with itemized statement of interest and deductions; 5 business days if tenant displaced by fire/flood/condemnation/evacuation; 15 business days for domestic-violence lease terminations; double damages for wrongful withholding.
- Late fees: No statutory cap on late fees; fee must be in the lease and reasonable (courts). A 5-business-day grace period applies ONLY to tenants who are senior citizens receiving Social Security/railroad/government pensions, or recipients of SSDI, SSI, or Work First NJ benefits, when rent is due on the 1st (N.J.S.A. 2A:42-6.1, -6.3). No grace period for other tenants.
Full page: New Jersey landlord and tenant rules.
Frequently asked questions
What interest rate applies to a New Jersey security deposit?
The rate actually earned by the account or money market fund where it is held. There is no fixed statewide rate, so enter the rate from the landlord’s annual notice.
My landlord never told me where the deposit is held. What can I do?
Under § 46:8-19(c) you can give written notice that the deposit plus 7% annual interest be applied to rent, and the landlord may not collect another deposit for that tenancy.
Are owner-occupied two-family homes covered?
Not automatically. Owner-occupied buildings with up to two rental units are exempt unless the tenant asks in writing for the Act to apply, 30 days after the request.