New Jersey § 46:8-19

§ 46:8-19.

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

property or become an asset of the person receiving the same. The person receiving money so deposited or advanced shall: a. (1) Invest that money in shares of an insured money market fund established by

an investment company based in this State and registered under the “Investment Company

Act of 1940,” 54 Stat. 789 ( 15 U.S.C.s.80a-1 et seq. ) whose shares are registered under the “Securities Act of 1933,” 48 Stat. 74 ( 15 U.S.C.s.77a . et seq.) and the only investments of which fund are instruments maturing in one

year or less, or (2) deposit that money in a State or federally chartered bank, savings

bank or savings and loan association in this State insured by an agency of the federal

government in an account bearing a variable rate of interest, which shall be established

at least quarterly, which is similar to the average rate of interest on active interest-bearing

money market transaction accounts paid by the bank or association , or equal to similar accounts of an investment company described in paragraph (1)

of this subsection . This subsection shall not apply to persons receiving money for less than 10 rental

units except where required by the Commissioner of Banking and Insurance by rule or

regulation. The commissioner shall apply the provisions of this subsection to some or all persons

receiving money for less than 10 rental units where the commissioner finds that it

is practicable to deposit or invest the money received with an investment company

or State or federally chartered bank, savings bank or savings and loan association

in accordance with this subsection. Except as expressly provided herein, nothing in this subsection shall affect or

modify the rights or obligations of persons receiving money for rental premises or

units, tenants, licensees or contractees under any other law. b. Persons not required to invest or deposit money in accordance with subsection a.

of this section shall deposit such money in a State or federally chartered bank, savings

bank or savings and loan association in this State insured by an agency of the federal

government in an account bearing interest at the rate currently paid by such institutions

and associations on time or savings deposits. c. 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; (2) within 30 days of moving the deposit from one depository institution or fund to

another, except in the case of a merger of institutions or funds, then within 30 days

of the date the person investing the security deposit receives notice of that merger,

or from one account to another account, if the change in the account or institution

occurs more than 60 days prior to the annual interest payment; (3) within 30 days after the effective date of P.L.2003, c. 188 (C.46: 8-21.4 et al.); (4) at the time of each annual interest payment; and (5) within 30 days after the transfer or conveyance of ownership or control of the

property pursuant to section 2 of P.L.1967, c. 265 ( C.46:8-20 ) . All of the money so deposited or advanced may be deposited or invested by the person

receiving the same in one interest-bearing or dividend yielding account as long as

he complies with all the other requirements of this act. The interest or earnings paid thereon by the investment company, State or federally chartered

bank, savings bank or savings and loan association, shall belong to the person making the deposit or advance and shall be paid to the tenant in cash , or be credited toward the payment of rent due on the renewal or anniversary of said tenant's lease or on January 31, if the tenant has been given written notice after the effective

date of P.L.2003, c. 188 and before the next anniversary of the tenant's lease, that subsequent interest payments

will be made on January 31 of each year . If the person receiving a security deposit fails to invest or deposit the security money

in the manner required under this section or to provide the notice or pay the interest to the tenant as required under this subsection, 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. However, 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. d. The provisions of this section requiring that the security advanced be deposited

or invested in a money market fund, or in an interest bearing account in a State or

federally chartered bank, savings bank or savings and loan association shall not apply

to any security advanced on a contract, lease or license agreement for the seasonal

use or rental of real property. For purposes of this paragraph “ seasonal use or rental ” means use or rental for a term of not more than 125 consecutive days for residential

purposes by a person having a permanent place of residence elsewhere. “ Seasonal use or rental ” does not mean use or rental of living quarters for seasonal, temporary or migrant

farm workers in connection with any work or place where work is being performed. The landlord shall have the burden of proving that the use or rental of the residential

property is seasonal.