Apartment Lease Question - Can Security Deposit Increase?

So I got a letter along with my new apartment lease for this year letting me know that the security deposit has increased by around $50.

At first I thought the landlord was letting me know by how much my original security deposit (4 years ago when I first moved into the apartment) had increased (I know that it’s supposed to be placed in a savings account and accrues interest, which I believe is payed to me when I move out.). I didn’t do the math and thought that sounded fine for a year’s worht on interest on about $1300. I thought it was a bit strange though because he had never told me the amount before, I simply assumed it would go up about $30-$50 a year).

Today however, I get a call letting me know that he is expecting the check for the $50. And I was like ???

I know several people who are landlords and none of them have ever increased the security deposit on the same renters with a new lease. Also suspicious is the amount by which the deposit is increasing, it’s not an even number, which is why I immediately thought it was the interest increase on my original deposit amount. This would also be the first year of the 4 I’ve lived in the apartment where he has asked me for a security deposit increase. Weird. Another note: My rent has increased from $850 when I first moved in to $945 for this year. Which I guess might make some sense too, there’s about a $95 difference, split in 2, it kinda works…

So my questions are:

  1. Is this normally done by landlords (increasing the securty deposit - specially by such a trivial amount after 4 years)?

  2. Is it legal in my state (New Jersey).

  3. Should I also be asking for the accrued interest on my original deposit, and am I correct in thinking I am due it once I move out?


Sure as hell seems wonky to me. What’s to stop him from raising it EVERY month, effectively increasing your rent? Sure, he’d have to give it all back to you when you moved out (unless he found a way to keep it), but in the meantime, he’d have some tax-free money to keep depositing in the bank to earn interest on.

I bet that if it IS legal, he can only do it by a set amount or number of times a year. I’d still be surprised if even that’s legal, though.

IANAL, so I can’t say about the legal aspect.

But from a practical standpoint, is he paying or crediting you with interest on your deposit over time? If not, I’d say it would be only fair that his income from the interest would be adequate compensation and he shouldn’t ask for a larger deposit. Of course, new tenants would pay the higher amount.

I know in some cases (I’m including more than apartment rentals, like appliances, containers and tools), the security deposit is refunded after a period of time, like a year, under the theory that you have proved your integrity by then and the deposit isn’t necessary to ensure it.

Since most security deposits are intended to offset expenses caused by a tenant, I can’t see that the amount is any other than just a wild estimate of what might be needed, so it seems illogical to say that the first amount isn’t enough and he needs eactly $50 more.

From Findlaw

This is not specific to New Jersey & I have never rented in New Jersey, but it was the case in New York, although many landlords did not bother.

Here is a pretty good explanation of Tenant Rights as regards security deposits on rental property in New Jersey. The answers to your specific questions are ‘Yes’, ‘Yes’ and, for #3, both ‘Yes’ and ‘Depends’:

It sounds like the increase he’s imposed is less than the legal limit (in this case, $130).

I would put any and all questions and/or correspondence between you and your landlord regarding this in writing.

I work in rental property management in New Jersey. The landlord can increase the security deposit to keep it at 1 1/2 times your rent. However, the monies are suppose to be kept in a separate, interest bearing account. We credit 3% a year.

Security is not the last month’s rent. It is a deposit for any repairs needed to the place after you move.

By my calculations, at 3% annual interst your security deposit should now be $923.35. I would offer to pay the $21.35 balance to bring it up to your current rent.

Thanks everyone. At least I now feel better about paying the balance on the security deposit.

About the interest, Shayna’s cite says I should be getting the interest paid to me every year? This has never happenned, as I mentioned, he never even tells me how much ineterest the account has accrued.

I’m going to pay the security deposit, but I will also ask for the total amount of interest accrued on my $1300 deposit.

Should I ask, just to know, and so that I can make sure I’m being payed it when I move out, or should I ask for it to be payed to me now?

Thanks again!

I’m a landlord in California where we aren’t obligated by law to pay interest on monies held for security deposits, so I can only answer based on my interpretation of the cite I provided above. Based on my reading of that, as well as the actual text of the relevant Assembly Bill No. 2608 (Warning: .pdf file) (also be sure to note the "EXPLANATION - Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted in the law.), your landlord should have either paid you the accrued interest or deducted an equivalent amount from the monthly rent on the anniversary of your lease renewal every year, or every January 31st, whichever he prefers. However, in order to make the payment on January 31st instead of your anniversary date, he would have had to put that in writing.

Since your landlord has apparently not only not paid you (or allowed you to deduct) the accrued interest annually, but has also not informed you where and how your money has been invested, you must first give him an opportunity to comply. . .

If he doesn’t comply, he owes you, per the preceding paragraph;

How far you want to pursue this depends on what kind of relationship you have, and/or want to establish with your landlord. But it seems to me as if he or she owes you some money, and you have every right to attempt to collect it. Good luck!

I really don’t want bad blood between me and him. We’ve already had some problems where he wasn’t being very helpful at all with a heating sutuation a few years back.

I’m going to inform him of this and ask in a nice way for the money. Unfortunately if he ignores me, as he has done in the past, I probably won’t press the matter too much. Hopefully it won’t come to that though! Thanks Shayna!

You’re welcome. To give you a general idea of approximately how much you might be talking about, using Annie-XMas’s 3% from her post above, compounded annually, this savings calculator says he would owe you $39 per year. If he had paid it out to you each year, you would only be calculating the interest due on the principal balance of $1,300 each year, so that would mean you’d’ve collected a total of $156 over the past 4 years. But all those variables could differ, based on what’s in your lease and how your landlord responds.

Have a great weekend!