---
title: "New Jersey Security Deposit Law (2026): Return Deadline, Cap & Interest"
description: "New Jersey security deposits: 1.5-month cap; return within 30 days; miss it and the penalty is 2× the amount withheld. Statute and move-out calculator."
url: "/property/security-deposits/new-jersey/"
updated: "2026-10-13"
---

Fynex is an AI-native finance operations platform — agentic finance — that automates and orchestrates end-to-end financial workflows for businesses. This page states New Jersey security deposit law for landlords and property managers: the cap, the holding account, interest and the return deadline. Fynex works alongside AppFolio, Buildium and Yardi rather than replacing them. This page is relevant when tenant deposits must be held per unit, with interest and every move-out refund tracked against the statutory deadline.

# New Jersey security deposit law: return deadline, cap and interest

_Law as of October 13, 2026. This page explains the law; it is not legal advice._

New Jersey caps a security deposit at one and a half months' rent, lets the landlord raise it by no more than 10 percent a year, and treats it as the tenant's money held in trust. It has to sit in an interest-bearing account at an insured New Jersey bank (or an in-state money market fund for owners with 10 or more units), the tenant is told in writing where, and interest is paid or credited every year. Within 30 days after the lease ends the landlord returns the deposit plus interest, itemizing any deductions, by personal delivery or registered or certified mail. If the tenant has to sue, the court awards double the money due plus costs. The source is N.J.S.A. 46:8-19 to 46:8-26.

## Deposit cap

| Rule | New Jersey law |
|---|---|
| Maximum deposit | 1.5 months' rent ([N.J.S.A. 46:8-21.2](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Rule as written | An owner may not require more than 1 1/2 times one month's rent as security; annual additions to the security may not exceed 10 percent of the current security deposit ([N.J.S.A. 46:8-21.2](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Exception | Total stays under the 1.5-month cap even with the 10% annual increase ([N.J.S.A. 46:8-21.2](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |

## Where the deposit must be held

| Rule | New Jersey law |
|---|---|
| Separate account | Required ([N.J.S.A. 46:8-19](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| In-state bank | Required ([N.J.S.A. 46:8-19](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Interest-bearing account | Yes, in buildings of 10 or more units ([N.J.S.A. 46:8-19](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Commingling with the landlord's money | Banned ([N.J.S.A. 46:8-19](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Surety bond instead of an account | Not provided for ([N.J.S.A. 46:8-19](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Tell the tenant where it's held | Within 30 days: Written notice within 30 days of receipt giving the name and address of the bank or fund, the type of account, the current interest rate and the amount; repeated within 30 days of any move of the money and with each annual interest payment ([N.J.S.A. 46:8-19](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |

## Interest owed to the tenant

| Rule | New Jersey law |
|---|---|
| Interest required | Yes: the interest or earnings belong to the tenant ([N.J.S.A. 46:8-19(a)-(c), 46:8-19.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Rate | Landlords with 10 or more rental units: an insured in-state money market fund, or an in-state insured bank account with a variable rate set at least quarterly, similar to the bank's average rate on active interest-bearing money market accounts. Landlords with fewer than 10 units: an in-state insured bank account paying the rate currently paid on time or savings deposits. The tenant gets the earnings, no state-published rate. ([N.J.S.A. 46:8-19(a)-(c), 46:8-19.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Paid | Annually, in cash or as a credit against rent due on the lease anniversary, or on January 31 if the tenant has been given written notice of that date; on termination with the deposit ([N.J.S.A. 46:8-19(a)-(c), 46:8-19.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |

No agency publishes a yearly rate. The Commissioner of Banking may set a method of computing interest (46:8-19.1); no rule was read. The landlord's 'tenant's portion' of earnings is the amount the account actually pays.

## Returning the deposit after move-out

| Rule | New Jersey law |
|---|---|
| Refund in full (no deductions) | 30 days after termination of the tenant's lease or licensee's agreement ([N.J.S.A. 46:8-21.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Itemized claim when keeping part | 30 days after termination of the tenant's lease or licensee's agreement ([N.J.S.A. 46:8-21.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Itemized statement of deductions | Required ([N.J.S.A. 46:8-21.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Delivery | Personal delivery, or registered or certified mail; interest and deductions itemized and the tenant notified the same way ([N.J.S.A. 46:8-21.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |

## Penalty for a late or wrongful withholding

| Rule | New Jersey law |
|---|---|
| Rule | In a tenant action for money due under 46:8-21.1, the court awards double the amount due, full costs and, at its discretion, reasonable attorney's fees. Failing to invest, notify or pay interest lets the tenant apply the deposit plus 7% per annum interest to rent and owe no further deposit. Willful withholding from a tenant on State or federal assistance carries a civil penalty of $500 to $2,000 per offense. Knowing diversion of trust funds is a disorderly-persons offence with a fine of at least $200 or up to 30 days in jail. ([N.J.S.A. 46:8-21.1, 46:8-19(c), 46:8-25](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Damages | 2× the amount withheld ([N.J.S.A. 46:8-21.1, 46:8-19(c), 46:8-25](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Attorney's fees | Recoverable ([N.J.S.A. 46:8-21.1, 46:8-19(c), 46:8-25](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |

## Where a New Jersey deposit must sit

The deposit continues to be the tenant's property and cannot be mingled with the landlord's own money (46:8-19). Owners with 10 or more rental units must use an insured in-state money market fund or an insured in-state bank account with a variable rate reset at least quarterly. Smaller landlords still need an insured in-state bank account that pays the going savings or time-deposit rate. All deposits may sit in one account. The tenant gets written notice of the institution, the account type, the current rate and the amount within 30 days of receipt, within 30 days of any change of institution or account, and with every annual interest payment. On a sale, assignment or foreclosure, the deposit and the tenant's portion of the interest go to the buyer within five days of the deed, and the tenant is told by registered or certified mail (46:8-20). The statute does not apply to an owner-occupied building of two rental units or fewer unless the tenant gave written notice invoking it (46:8-26).

## Move-out in New Jersey: dates, itemized statement, refund

1. The lease ends; the 30-day period starts. 2. Total the deposit plus the tenant's portion of interest or earnings. 3. Subtract only charges expended in accordance with the lease. Nothing may be deducted from the deposit of a tenant who is still in possession. 4. Within 30 days, personally deliver or send by registered or certified mail the net amount, with an itemized statement of the interest and each deduction. 5. Special clocks apply: after a fire, flood, condemnation or evacuation the net sum must be available within five business days of the trigger, and after a domestic-violence lease termination within 15 business days, held for demand for 30 days in the same municipality (46:8-21.1). 6. Small-claims court hears deposit disputes up to $5,000, penalties included (46:8-21.4).

## Interest on New Jersey security deposits

The earnings the account pays belong to the tenant in full; the statute gives the landlord no admin fee. Pay them in cash or credit them to rent on the lease anniversary, or on January 31 each year if the tenant was told in writing that this is the date. With the final return at move-out, include accrued but unpaid earnings. Miss the investment rule, the notice or the interest payment and the tenant can serve written notice to apply the deposit plus 7 percent a year to rent, after which no further deposit can be demanded. For a missed annual payment or annual notice, the tenant first gives 30 days to cure.

## New Jersey quirks to know

The 10-unit line decides which account types are allowed. The 10 percent annual increase limit is unusual and is also capped by the 1.5-month ceiling. Seasonal rentals of 125 consecutive days or less (by someone with a permanent home elsewhere) are exempt from the account rule, and the landlord has the burden of proving the rental is seasonal (46:8-19(d)). Trust diversion is a disorderly-persons offence (46:8-25). In a bankruptcy the tenant's claim is a statutory trust (46:8-23). Waivers in the lease are void (46:8-24).

## Worked example: a $2,000 deposit returned in New Jersey

| | |
|---|---|
| Monthly rent | $2,000 |
| Deposit held | $2,000 |
| Move-out | September 30, 2026 |
| Itemized deductions | $350 |
| Refund in full by (no deductions) | October 30, 2026 ([N.J.S.A. 46:8-21.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Itemized claim notice by | October 30, 2026 ([N.J.S.A. 46:8-21.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |
| Refund due to the tenant | $1,650.00 |
| If the deadline is missed | Up to $700 ([N.J.S.A. 46:8-21.1, 46:8-19(c), 46:8-25](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf)) |

A $2,000 deposit is under the $3,000 cap (1.5 x $2,000). The lease ends 2026-09-30, so the net sum and the itemized statement are due by 2026-10-30 (30 days), by personal delivery or registered or certified mail. The net is $2,000 + accrued interest - $350 = $1,650 plus interest (the rate is whatever the account paid, not set by the state). If the landlord misses the date and the tenant sues, the court awards double the amount due: 2 x $1,650 = $3,300 plus interest doubled, plus costs and possibly attorney's fees.

## New Jersey security deposit return deadline calculator

Interactive on the page: https://fynex.ai/property/security-deposits/new-jersey/#deadline-calculator. The statutory figures it starts from:

- **Refund:** 30 days after termination of the tenant's lease or licensee's agreement.
- **Itemized claim when keeping part of the deposit:** 30 days after termination of the tenant's lease or licensee's agreement.
- Itemized statement of deductions required. Delivery: Personal delivery, or registered or certified mail; interest and deductions itemized and the tenant notified the same way.

Calendar days from the move-out date.

## New Jersey security deposit interest calculator

Interactive on the page: https://fynex.ai/property/security-deposits/new-jersey/#interest-calculator. The statutory figures it starts from:

- **Rate:** no single statutory figure (Landlords with 10 or more rental units: an insured in-state money market fund, or an in-state insured bank account with a variable rate set at least quarterly, similar to the bank's average rate on active interest-bearing money market accounts. Landlords with fewer than 10 units: an in-state insured bank account paying the rate currently paid on time or savings deposits. The tenant gets the earnings, no state-published rate.).
- **Paid:** Annually, in cash or as a credit against rent due on the lease anniversary, or on January 31 if the tenant has been given written notice of that date; on termination with the deposit.

Simple interest (annual rate ÷ 365 per day held), never compounded.

## New Jersey security deposit law: questions

### How long does a New Jersey landlord have to return a security deposit?

30 days after the lease ends, with interest, by personal delivery or registered or certified mail, and with an itemization of interest and deductions. N.J.S.A. 46:8-21.1.

### What is the maximum security deposit in New Jersey?

1.5 times one month's rent. The landlord can add up to 10 percent of the current deposit each year, within that ceiling. N.J.S.A. 46:8-21.2.

### Does a New Jersey landlord have to pay interest on a security deposit?

Yes. The interest or earnings belong to the tenant and are paid in cash or credited to rent each year. N.J.S.A. 46:8-19.

### What happens if a New Jersey landlord wrongfully keeps a deposit?

The court awards double the amount due, full costs and, at its discretion, reasonable attorney's fees. N.J.S.A. 46:8-21.1.

### Do small New Jersey landlords have to put deposits in a money market fund?

No. Owners with fewer than 10 rental units need an insured in-state bank account paying the going savings or time-deposit rate, unless the Commissioner of Banking and Insurance requires more. 46:8-19(a)-(b).

## Sources

- [N.J.S.A. 46:8-21.2](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf) (mirror; the official site did not load)
- [N.J.S.A. 46:8-19](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf) (mirror; the official site did not load)
- [N.J.S.A. 46:8-19(a)-(c), 46:8-19.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf) (mirror; the official site did not load)
- [N.J.S.A. 46:8-21.1](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf) (mirror; the official site did not load)
- [N.J.S.A. 46:8-21.1, 46:8-19(c), 46:8-25](https://www.nj.gov/dca/codes/publications/pdf_lti/sdepsit_law.pdf) (mirror; the official site did not load)

Sources marked "mirror" were read from the linked copy on October 13, 2026 because the state's official code site did not load for us. Check the official code before relying on those figures.

Statutes as read on October 13, 2026. This page explains the law; it is not legal advice.

## Related

- [New Jersey trust accounting rules](https://fynex.ai/property/trust-accounting/new-jersey/)
- [Security deposit laws in every state](https://fynex.ai/property/security-deposits/)
- [Property management payments on Fynex](https://fynex.ai/property/)
- [Contractor & field-service payouts](https://fynex.ai/property/field-service-payments/)

## Security deposit law in every state

- [Alabama](https://fynex.ai/property/security-deposits/alabama/)
- [Alaska](https://fynex.ai/property/security-deposits/alaska/)
- [Arizona](https://fynex.ai/property/security-deposits/arizona/)
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- [California](https://fynex.ai/property/security-deposits/california/)
- [Colorado](https://fynex.ai/property/security-deposits/colorado/)
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- [Delaware](https://fynex.ai/property/security-deposits/delaware/)
- [Florida](https://fynex.ai/property/security-deposits/florida/)
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