Real Estate Agent · NJ · Member since 2019 · 237 posts · 169 votes
Gov. Murphy announced today that he has signed an Executive Order that will allow tenants to use the security deposit as a rent payment. Curious to know everyone's thoughts on this and how the EO will effect your business?
Rhino is basically a security deposit insurance policy. It leaves a lot to be tracked. What happens if the tenant stops paying the policy in the middle of the lease. You are no longer covered and you have no insurance. If there are damages to the unit then you have to deal with an insurance company to remit payment for repair. That would take forever to get done. I don’t think I like it. The benefit is totally in the tenants’ favor here.
Why didn't they just invite all the tenants to trash their apartments while they were at it?
The courts will be flooded with damage cases. Well, that's fine. If and when my tenants move out I will go over their unit with a magnifying glass and black light.
I wonder if this is even legal. A few weeks ago Comrade Murphy said he couldn't interfere with private contracts when he was asked to put a moratorium on rents. How is this any different?
I hope someone sues to put an injunction on this. I can't imagine this holding up in court.
For our tenants, we have them use a Rhino policy in lieu of a security deposit. This lowers our tenants' security deposit requirements, provides us with a wider potential customer base, saves us from the administrative work of managing security deposits and, in this moment, takes us out of a situation where Governor Murphy's order adversely impacts us.
I'm not sure if this helps anyone who who finds themselves on the short end of Gov. Murphy's Executive Order, but we hope it does.
For our tenants, we have them use a Rhino policy in lieu of a security deposit. This lowers our tenants' security deposit requirements, provides us with a wider potential customer base, saves us from the administrative work of managing security deposits and, in this moment, takes us out of a situation where Governor Murphy's order adversely impacts us.
I'm not sure if this helps anyone who who finds themselves on the short end of Gov. Murphy's Executive Order, but we hope it does.
This site provides some more information. So if the tenant decides to use their security deposit as rent, you cannot replenish that security deposit up to 6 months after the emergency declaration or new lease.
I have been reading on the forums that people think you can’t evict for 60 days. That isn’t the case. You cannot evict or lockout a tenant for 60 days after the state emergency is lifted and no one knows when that will be.
At least they are urging lenders to automatically move the missed mortgage payments to the back of the loan. https://www.nj.com/politics/20...
Rhino is basically a security deposit insurance policy. It leaves a lot to be tracked. What happens if the tenant stops paying the policy in the middle of the lease. You are no longer covered and you have no insurance. If there are damages to the unit then you have to deal with an insurance company to remit payment for repair. That would take forever to get done. I don’t think I like it. The benefit is totally in the tenants’ favor here.
@Shain Ismailovski can’t comment on most of what I haven’t read but allowing the security deposit to be used for rent is a possible benefit to the landlord if they are able to take it.
Keeps cash flow coming for longer and stays away from no pay for that much longer.
Yea that’s kicking the can down the road but sometimes that’s the best you can do. Not saying this is the right govt approach but there is a sliver of a silver lining
Comrade Murphy has all but declared war on NJ landlords.
I don't like the Rhino Policy. I thought about that last week actually. I know that is popular to do in some places but even good credit folks are getting hit by this lockdown. At least 1.5x rent buys some time.
I’d be surprised if this order will actually come to pass. Will depend on the NJ Constitution but if it’s like most, the Executive (Governor) lacks the legal authority to make a new law or modify an existing one. That right is usually held by the legislative branch exclusively.
An executive order can only direct the members/employees of the executive branch - not the citizens.
Nor could the Governor direct the Legislative branch to cease ruling on a specific class of cases.
When the dust settles, if it turns out that this is possible in NJ, it would be wise to get out of NJ completely.
I wouldn’t be surprised if Cuomo did the same to New Yorkers. That’s too bad for New Jersey, how are the tenants suppose to pay when the landlord turns over the apt or if the tenant needs the SD to put down on a new apartment? Did Murphy think this through or did he just want to say it to get more votes? I hate politicians.
Primarily to allow landlord to receive some cash flow from their clients.
Secondly to help tenants survive this pandamic that is affecting everyone landlords and tenants alike.
I do think there was another way to satisfy both landlords and tenants But Murphy is Murphy.
I think this will explode at the small claims court for landlord to reep their losses when a tenant leaves. No matter how wonderful the tenant is the apartment will need some cosmetic work. Therefore landlord will be left footing a bill and lowering profit because of this.
I don't like the idea of Rhino. If a tenant doesn't have the resources to come up with a security deposit I don't want them for a tenant. Someone else can take that risk if they would like. I am not prepared to. For that matter, being at the "mercy" of a third party is one I never put myself in, if at all possible.
If I, as a landlord, should decide I will let my tenant use their security for rent that should be my decision and my decision alone. That is my decision to make. I deeply resent it is being made for me. My lease specifically states this is not allowed, and now I am being told I "have" to. Every day I wonder what's next.
I am burning mad about this and there is going to be a lot of fallout, as there should be.
This is very bad for landlords as they will no be left with no security deposit at the end of lease term with which to cover any repairs to home caused by tenant or any outstanding rent/utilities.
Governer went too far with this. All landlords need to come together and challenge this E.O. in court. If we don't fight this one, next up will be that all rent payments are waived until further notice. Let's put an end to this madness.
@Shain Ismailovski this can be a big help for landlords who cant collect rent from their tenants, as using a security deposit can help an owner make up to one and a half monthly mortgage payments many of the deals that lenders are offering property owners to suspend or defer payments will leave owners in a tight spot when the deferred payments are due, in my opinion this is a fantastic option for some.
@Vaughn Smith That is true Vaughn, perhaps. The issue everyone has is that it is being mandated. A landlord HAS to do this. Prior to this there was nothing stopping a landlord from using the security deposit for rent if they decided to. Wouldn't you agree?
Now it is no longer a choice. I really believe there is a legal problem here, especially if I have it in my lease that the security deposit can not be used for rent, which I do.
Government has just decided they can go ahead and modify an existing private contract between two willing parties. Is that the government you want? I sure don't.
Everything I’m reading and am listening to is on the behalf of the tenant. What about the landlord!?! I have a tenant who’s using the system (pandemic) to her full advantage. She has stopped communicating with me regarding this month’s rent payment as of the 10th. She’s all of a sudden sick and is unable to work - this was her excuse after she told me she’ll pay April’s rent by the 25th. Not to mention, she’s lying- she is still working (6 days a week) as a home health aide. And to add to this she has other people staying in the unit who’s not on the lease. And due to this Executive Order, I can’ t evict her? Ridiculous!
I know if this is actually allowed to go through, that it means you can't ask for more security deposit money for 6 months after the emergency is declared over. But - I think this is another example of why month to month agreements are best. At least if you had a M2M agreement, you could ask for the security deposit money as soon as the 6 months were up.
There is a movement in this country to force private landlords into in effect providing government housing with rent restrictions, etc. I'm really against this trend - and I'm a registered democrat, albeit a moderate one. I'm all for government benefits for low income folk, but, I think this trend to getting around having to actually pay for government housing by forcing private property owners into the role seriously needs to be addressed. It's just absolutely wrong and I'm thinking it's unconstitutional.
If you take this train of thought and apply it to anything else a tenant who is having a hard time with, it just becomes so obvious. The tenants can't afford to go out to eat, so the restaurants have to give them free sit down meals? The power companies have to give them free heat/cooling? Car dealers/lenders must let them drive around their cars without repossessing their vehicles?
I live in government subsidized low-income senior housing now, so please understand where I'm coming from. I'm somebody who loves the law and also believes in government helping out those in need. But, I think it's absolutely un-American to tell private business owners that they must fulfill the role of the government, and at a loss of profit to boot.
It's like eminent domain without the required compensation! The government needs to be compensating landlords if it wants to require them to house people under government order.
Of course, nobody wants these people to be homeless, but as I say, if the government wants to in effect use eminent domain to take over your property so it can be used, even temporarily, as government housing, then the government should have to pay reasonable compensation under that law.
Everything I’m reading and am listening to is on the behalf of the tenant. What about the landlord!?! I have a tenant who’s using the system (pandemic) to her full advantage. She has stopped communicating with me regarding this month’s rent payment as of the 10th. She’s all of a sudden sick and is unable to work - this was her excuse after she told me she’ll pay April’s rent by the 25th. Not to mention, she’s lying- she is still working (6 days a week) as a home health aide. And to add to this she has other people staying in the unit who’s not on the lease. And due to this Executive Order, I can’ t evict her? Ridiculou
I would consult with an attorney at this point. I believe an attorney can still file the paperwork, it just won't be acted upon until the courts open up, but at least you could start the process. I think it's worth the $500 to make sure it is done correctly. You could also reach out to Turbo Evict. While I have never used them personally, I have read positive reviews about them. I would suggest you do some research and see what options are available to you, and start something. Your goal should be to rid yourself of this tenant, ASAP, as quickly and as inexpensively as possible. I would even try cash for keys if you think that would work. Best of luck.
I know if this is actually allowed to go through, that it means you can't ask for more security deposit money for 6 months after the emergency is declared over. But - I think this is another example of why month to month agreements are best. At least if you had a M2M agreement, you could ask for the security deposit money as soon as the 6 months were up.
It is not a matter of if, it has gone through. Our governor signed the order.
I worked very hard to get to the level of success I reached. In the beginning, while I was working 50-60 hour weeks, living way below our means, not buying the latest this or that, driving cars till the wheels fell off, not going on fancy vacations my friends and family were doing all of this and more while almost laughing at me that I wasn't. However, to this day most of them are still renters and still wonder aloud how I "did" it. Who is laughing now?
Well, most attorneys will tell you that the Governor's executive order is unconstitutional on the FEDERAL and NEW JERSEY level, because both the state and national constitutions have expressly written prohibitions against interfering with contracts. Leases are contracts and cannot be voided. BUT try to get a judge to stay the governor's order now, when it is needed. By the time 2-3 years goes by, and such a stay or lawsuit against NJ prevails, the damage to the rental market is done, and then the Governor promises to not do it again? Landlords are the victims in the short run, but the tenants are the victims in the long run, as the costs will be added to rent increases in EVERY rental. This order will make all the tenants pay for the failures of a few.