An Argument for Relaxation of the Security Deposit Act's Strict Notice Requirement

The New Jersey Rent Security Deposit Act (NJSA 46:8-19 to 26) imposes strict notification requirements on landlords. A common belief is that a landlord's failure to provide the initial notice is an incurable violation, automatically allowing a tenant to apply their security deposit to rent. However, a closer look at case law suggests an argument can be made for a more relaxed application of this rule.

Understanding the Initial vs. Annual Notice

The Act states a landlord must notify a tenant in writing within 30 days of receiving a security deposit with the following details: 1) the name and address of the bank, 2) the account type, 3) the current interest rate, and 4) the deposit amount.

If the landlord fails to provide this initial notice, the tenant can give written notice to the landlord that the security deposit, plus 7% annual interest, be applied to their rent payments. The landlord cannot then demand a new security deposit.

Interestingly, the Act treats the subsequent *annual* notice differently. If a landlord fails to provide the annual notice (which must include accrued interest), the Act expressly gives the landlord a 30-day period to "cure" the defect after receiving notice from the tenant. This "cure" provision is not explicitly mentioned for the *initial* notice violation.

The Argument for an "Acceptable Excuse"

Because the ability to "cure" is absent from the initial notice section, many believe any failure is absolute. However, an argument can be made for a relaxation of this strict application, based on the case of Princeton Hill Assoc. v. Lynch, 241 N.J. Super. 363 (App. Div. 1990).

In this case, the Court held that a landlord should be allowed to present evidence of an acceptable excuse for their failure to provide notice within the 30-day period. The landlord in Princeton Hill did not open the bank account until two months after receiving the deposit, making it impossible to provide the bank details within 30 days. The Court noted that the Act’s intent is to punish unscrupulous landlords, not landlords who act in good faith.

Therefore, we believe a landlord has an arguable defense for failing to provide the initial notice whenever there is an acceptable excuse and the landlord has acted in good faith. When a tenant attempts to use this as a defense in an eviction for non-payment of rent, the landlord's attorney should argue for the opportunity to present evidence of an acceptable excuse. The focus should be on the landlord's good faith rather than an automatic application of the tenant's statutory remedy.