NJ Allows Renters to Use Security Deposit for Rent During Pandemic

April 27, 2020Alerts

With many residential tenants unable to make rent due to the widespread impacts of coronavirus, New Jersey Gov. Phil Murphy has issued an executive order to mitigate the economic burden that outlines a process for paying rent with existing security deposits.

Issued on April 24, 2020, Executive Order No. 128 is effective immediately and will be in place until 60 days after the current public health emergency is terminated. The order waives provisions of statutory law that prohibit the use of security deposits for rental payments, allowing for renters to direct their landlords to use security deposits to pay current rent to either make up for deficits in rent, or pay their rent in full.

Duty to Replenish

Tenants who later extend or renew their lease would be obligated to replenish the security deposit in full either six months following the end of the current public health emergency or on the date on which the current lease is extended or renewed, whichever is later.

Residential tenants are encouraged to work with their landlords to discuss the implications of this new executive order, as well as the implications of Executive Order No. 106, which prohibits any lessee, tenant, homeowner or any other person from being removed from a residential property as the result of an eviction or foreclosure proceeding during this State of Emergency.

Guidance for Landlords

Landlords are encouraged to consult their attorneys to discuss the implications of this executive order on New Jersey laws regarding security deposits.

For general guidance on issues landlords are facing during the coronavirus crisis, see Fox Rothschild’s prior alerts, Rent and Mortgage Payments in the Time of COVID-19 and How to Reply to Tenant Requests for Rent Relief.

Fox Rothschild is monitoring potential federal, state and local relief efforts that might help simplify these discussions and facilitate resolutions. We stand ready to assist our clients in having these difficult discussions, balancing the various statutory and emergency requirements and guiding clients to achieve a workable outcome.