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Rusmar Properties v. Edgar andrade and Maribel Rodriguez


December 14, 2012


On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Bergen County, Docket No. LT-7901-11.

Per curiam.


Submitted November 28, 2012

Before Judges Simonelli and Koblitz.

In this landlord-tenant matter, defendants Edgar Andrade and Maribel Rodriguez appeal from the September 30, 2011 judgment of possession entered in favor of plaintiff Rusmar Properties. Defendants contend that because plaintiff violated N.J.S.A. 46:8-19c, they were entitled to apply their security deposit to the rent due. We disagree and affirm.

The facts are straightforward. In May 2006, defendants executed a one-year lease to rent an apartment in plaintiff's building in North Arlington. The lease noted the amount of the security deposit defendants gave to plaintiff. Defendants did not dispute that they executed leases yearly thereafter until 2010, and that the new leases contained rent increases and the amount of the increased security deposit.

On June 1, 2011, plaintiff sent defendants a notice of rent increase, which included an amount for additional security. Plaintiff also sent defendants a new lease, which noted the amount of the security deposit. Defendants did not sign the lease, and indicated they intended to vacate the apartment.

On August 8, 2011, defendants notified plaintiff that they were applying their security deposit to the rent due for August and September 2011 based on plaintiff's failure to provide the written notices required by N.J.S.A. 46:8-19c(1) and (4), and plaintiff's failure to pay defendants the annual interest on the security deposit. Plaintiff responded in an August 11, 2011 letter, stating that defendants had been advised about the banking arrangements for their security deposit at the outset of the tenancy when they were asked to sign a W-9 Form. Plaintiff also stated that defendants acknowledged the amount of the security deposit in their October 24, 2008 letter to plaintiff when they refused to sign a new lease unless plaintiff inserted the amount of the security deposit defendants had calculated into the lease. Plaintiff included a bank statement from Wachovia Bank, which showed the amount of the security deposit, the account information, and the accrued interest. Plaintiff also advised defendants that the accrued interest would be applied to the rent due before the next anniversary date of the lease, and in subsequent years would be paid to defendants on January 31 of each succeeding year.

On September 12, 2011, plaintiff filed a complaint for possession based on non-payment of rent for August and September 2011. Defendants sought to apply the security deposit to the rent due based on plaintiff's alleged statutory violations. Following the trial on September 30, 2011, the trial judge concluded that defendants could not invoke the statutory remedy because plaintiff had complied with N.J.S.A. 46:8-19c by providing the required information within thirty days of defendants' August 8, 2011 notice. The judge also found that defendants owed $2716 for August and September 2011 back rent, plus late fees. The judge entered a judgment of possession, and agreed to dismiss the matter if defendants made full payment by 4:30 p.m. the day of the trial. Defendants made the payment, and the matter was dismissed. This appeal followed.

N.J.S.A. 46:8-19c provides, in relevant part, as follows:

The person investing the security deposit pursuant to subsection a. or b. of this section shall notify in writing each of the persons making such security deposit or advance, giving the name and address of the investment company, State or federally chartered bank, savings bank or savings and loan association in which the deposit or investment of security money is made, the type of account in which the security deposit is deposited or invested, the current rate of interest for that account, and the amount of such deposit or investment, in accordance with the following:

(1) within 30 days of the receipt of the security deposit from the tenant;

(4) at the time of each annual interest payment[.] [N.J.S.A. 46:8-19c(1), (4).]

If the landlord after receiving the security deposit fails to provide the required notice, the tenant may give written notice to that person that such security money plus an amount representing interest at the rate of seven percent per annum be applied on account of rent payment or payments due or to become due from the tenant, and thereafter the tenant shall be without obligation to make any further security deposit and the person receiving the money so deposited shall not be entitled to make further demand for a security deposit. [N.J.S.A. 46:8-19c.]

However, where, such as here, the landlord has not paid the annual interest or provided the annual notice, the landlord is given the opportunity to cure the deficiency before the tenant's security deposit may be applied against the rent due: in the case of a failure by the person receiving the security deposit to pay the annual interest or to provide the annual notice at the time of the annual interest payment, if the annual notice is not also serving as a notice of change of account or institution, before the tenant may apply the security deposit plus interest on account of the rent payment or payments due or to become due on the part of the tenant, the tenant shall first give that person a written notice of his failure and shall allow that person 30 days from the mailing date or hand delivery of this notice to comply with the annual interest payment or annual notice, or both. [Ibid.] N.J.S.A. 46:8-19 is a remedial statute designed specifically "to protect tenants from overreaching landlords who seek to defraud [them] by diverting rent security deposits to their own use." Jaremback v. Butter Ridge Apartments, 166 N.J. Super. 84, 87 (App. Div. 1979). The statute's intent is to alleviate certain practices employed by unscrupulous landlords, it is not to punish those landlords who act in good faith.

Burstein v. Liberty Bell Village, Inc., 120 N.J. Super. 54, 59 (Cty. Ct. 1972). Thus, even when a landlord's notice is deficient, application of the deposit to rent may be withheld by the court "after examining the relevant circumstances." Princeton Hill Assoc. v. Lynch, 241 N.J. Super. 363, 365 (App. Div. 1990).

Here, defendants knew the amount of their security deposit, and they did not dispute that plaintiff deposited it into a bank account where it accrued annual interest. In other words, plaintiff did not defraud defendants or divert their security deposit to its own use. Thus, defendants suffered no prejudice by the lack of the thirty-day written notice required by N.J.S.A. 46:8-19c(1).

In addition, plaintiff immediately responded when informed of the notice and payment deficiencies, confirming the amount of the security deposit, the identity of the bank where the deposit was located, the type of account, and the interest that had accrued. Because this response and accompanying bank statement constituted the annual notice and interest payment required by N.J.S.A. 46:8-19c(4), plaintiff's August 11, 2011 response served to cure any defect, vitiating any right defendants had to apply their security deposit to the rent due.



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