Plaintiff commenced this action against defendant to recover a security deposit and the statutory penalty pursuant to N.J.S.A. 46:8-21.1 for failure to return a security deposit within 30 days of the termination of their lease. The issue presented for determination is whether plaintiff is entitled to the statutory penalty of double damages albeit that plaintiff never moved into the premises. This issue has not been reported in New Jersey.
In October, 1991 plaintiff and defendant entered into an oral lease agreement whereby plaintiff rented a first floor apartment,
commencing November 1, 1991. As part of the Lease, the tenant agreed to pay for gas heat and hot water to his apartment.
In addition, plaintiff asserts that the lease agreement between him and the landlord included a promise to reimburse the former for the cost of materials to paint the apartment.
On October 24th and 25th, 1991, plaintiff made deposits with the landlord totalling $675.00 as security for the apartment. Upon acceptance of the deposit, the landlord gave the tenant keys to the apartment in order for the tenant to have access for painting in accordance with their agreement.
On October 26, 1991, before he was scheduled to move in, plaintiff went to the apartment to paint. While in the process of painting plaintiff became aware of the fact that the heating system was constructed in such a way that the heat for the entire house was billed to the first floor tenant. To verify this discovery, plaintiff contacted Public Service Electric & Gas Company which confirmed the fact that the heating system was installed in such a manner that the first floor apartment meter supplied and accounted for all the gas that was used for heat and hot water for the entire building. Upon learning of this "misrepresentation" as to the responsibility for the heating bills, plaintiff considered the arrangement to be a breach of the agreement. He immediately attempted to contact the defendant to notify him that he was terminating his lease and that he was demanding the return of his deposit. In addition, he enlisted the aid of Essex-Newark Legal Services in order to obtain the return of his security deposit. All efforts to recover the security deposit were unsuccessful.
In pertinent part, N.J.S.A. 46:8-19 provides;
Whenever money or other form of security shall be deposited or advanced on a contract, lease or license agreement for the use or rental of real property as security for performance of the contract, lease or agreement or to be applied to payments upon such contract, lease or agreement when due, such money or other form of security, until repaid or so applied including the tenant's portion of the interest or earnings accumulated thereon as hereinafter
provided, shall continue to be the property of the person making such deposit or advance and shall be held in trust by the person with whom such deposit or advance shall be made for the use in accordance with the terms of the contract, lease or agreement and shall not be mingled with the personal ...