This is a landlord-tenant action for nonpayment of rent. The tenant contends that the landlord is holding a security deposit and advance for the last month of the term, in violation of N.J.S.A. 46:8-19 and N.J.S.A. 46:8-21.2, and seeks to have that money applied as rent to the two months for which she is in default.
The defense raised by the tenant is cognizable by the court in summary dispossess proceedings. Marini v. Ireland , 56 N.J. 130 (1970); Academy Spires, Inc. v. Jones , 108 N.J. Super. 395 (Law Div. 1970).
It is clear from the language of N.J.S.A. 46:8-19 that the security deposit given and the advance rent given by the tenant must be held in an interest-bearing account, cannot be mingled with any funds of the landlord, and the
landlord must notify the tenant in writing of the name of the banking institution in which these funds are being held. This has not been done.
N.J.S.A. 46:8-19 terms security deposits and advances on leases as deposits to secure performance of leases. N.J.S.A. 46:8-21.2 limits the amount of such deposits to 1 I/2 months' rent. Here the deposit amounted to two months' rent and is clearly violative of the law.
The purpose of a security deposit is to afford protection to the landlord in the event that the tenant defaults in the payment of rent, causes damage to the premises, or breaches any covenants in the lease. Where the lease provides, as it does here, that the landlord shall retain the deposit until the end of the term of the lease, he may not be compelled to apply it to any earlier default. United Cigar Stores Co. of America v. Heithaus , 132 A. 655 (N.J. Sup. Ct. 1922); Vailsburg Amusement Co., Inc. v. Criterion Inv. Co. , 9 N.J. Misc. 951, 156 A. 114 (1931); Burnstine v. Margulies , 18 N.J. Super. 259 (App. Div. 1952). If this were not the case the landlord would be without protection for the remainder of the term.
N.J.S.A. 46:8-19 provides protection for the tenant. It gives him the right to earn interest on his money, to know where his money is, and to be safe from having his money misapplied by the landlord. The protection afforded the landlord by the courts and the protection afforded the tenant by the Legislature are not inconsistent.
Plaintiff has the equivalent of two months' rent, which has been illegally commingled with its other funds and which exceeds by $95 the amount of money which may be held by a landlord during the term.
Plaintiff contends that an amount equal to one month's rent is permitted to be held as security and that N.J.S.A. 46:8-21.2 does not prohibit the holding of rent advanced for the last month of the term. That is an erroneous reading of the entire statute and ignores the clear intent of
the Legislature expressed in N.J.S.A. 46:8-19, which ...