New Executive Order in NJ: Using Security Deposit to Pay Rent

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New Executive Order in NJ: Using Security Deposit to Pay Rent

Shain Ismailovski
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? 

https://abc7ny.com/rent-security-deposit-phil-murphy-coronavirus-nj/6127590/

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Joe Martella
Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
6y

@Ron Brady

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.  

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  • Stephen Chatto
    Rental Property Investor · Yardley, PA · Member since 2012 · 436 posts · 198 votes
    6y

    Here is a link to the executive order if you are interested:

    https://drive.google.com/file/d/1ISse6cAN8-WfKKPlFhMkt2tpTLvtRDXF/view?usp=sharing


    Here is a link to a press conference he had where he kinda said it was a "Recommendation"

    The wording of the EO makes it seem "Mandatory"?

    1Reply
  • Frank Martielli
    Middlesex, NJ · Member since 2014 · 34 posts · 23 votes
    6y

    Using the security deposit for the rent is mandatory if the renter requests it. 

    I've been thinking, if and when it comes time for the renters who renewed their existing lease to replenish the security deposit what is going to compel them to do so? The EO can't "make them" nor does it really seem a priority of the order, in the grand scheme of things. Surprise, Surprise.

    I sure know what I would be including in my lease renewal if it applied to me. Something like:

    Tenant understands and agrees that on X date they will be required to replenish their security deposit in full due to the fact that they.....blah blah blah. Tenant agrees to do so upon receipt of an invoice from LL. As a courtesy to the tenant, the invoice will be presented 30 days prior to the due date.

    In my crystal ball, I see a lot of court dates.

    2Reply
  • Frank Martielli
    Middlesex, NJ · Member since 2014 · 34 posts · 23 votes
    6y

    I thought about the language to put in the next lease a little more. How do you all like this:

    Since the original security deposit was used as payment for rent, both parties agree the replenishment of the security deposit will be considered due and payable as rent. "Due and payable as rent" is a very powerful clause and I've never had any push back from it.


    For every 5 business days the security deposit is late, a late fee of $50 per week will accrue, due and payable as rent.

    The security deposit must be paid in full for the late fee to stop accruing. 

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  • Joe Martella
    Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
    6y

    I agree that there will be court dates on security deposits and damage to property.  I am honestly more concerned with the inability to evict until 60 days after the state of emergency has ended.  That has more cost to it than using the security deposit for rent.  Either way the security deposit is yours.  It just becomes yours earlier if the tenants decides to apply it towards rent. 

    No matter which way you slice it we still come up empty handed. 

    1Reply
  • Account Closed
    San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
    6y

    I heard on the news today that there is a movement in New York (who knows if it's other places, too - but, probably is) for renters to go "on strike."  They need to be made aware that they can go on strike all they want, but their credit will suffer.  Some of them will care about that.

    I really feel for landlords dealing with this.  I'm glad I'm not right now.  But, for the units I managed, I sincerely doubt that any of them would try to stay and not pay.  If you screen for tenants who are the types of people who care about their credit, they aren't going to get on board with any of this kind of stuff.

    And Section 8 tenants will lose their benefits if they don't pay their rent.

    So, odds are, it's more of a political media stunt than anything else.  And who knows who would be driving that, whether within this country or without.

    2Reply
  • Frank Martielli
    Middlesex, NJ · Member since 2014 · 34 posts · 23 votes
    6y

    I just don't understand, I really don't. If a tenant is really having a problem, generally speaking of course work with them especially if they have been honest and are communicating. 

    I'm not in favor of forgiving rent, but deferring a mutually agreed upon portion and deciding on a mutually agreed upon repayment schedule. Sure.

    If the tenant honors the agreement, waiving any late fees, not taking further action. Yes.

    But why are so many tenants of the mindset that all of a sudden they don't have to pay their rent just because there are no consequences?

    What happened to integrity? Honor? How about you said you would?

    Again, I do believe in working with a tenant under these current circumstances. Working with a tenant doesn't mean a landlord tells the tenant, no breaks, no deals, I want my rent. That's not working with.

    Working with also doesn't mean flat out refusing to pay the rent.

    Working with is clearly in the middle somewhere.

    2Reply
  • Stephen Chatto
    Rental Property Investor · Yardley, PA · Member since 2012 · 436 posts · 198 votes
    6y
    Originally posted by @Vanessa Regalado:

    Hello Everyone;

    I am a property manager in NJ. We recently hosted a  Watch Party in our Facebook page with 3 prominent attorneys in NJ regarding this topic and many others affecting landlords. Let me know if you need the information and I will be happy to share the video of our page.

    Have a nice day

    Is there a replay available to watch?

    1Reply
  • Anthony Liguori
    Rental Property Investor · NJ (new jersey) · Member since 2019 · 113 posts · 16 votes
    6y

    @Vanessa Regalado

    Yes share

    0Reply
  • Frank Martielli
    Middlesex, NJ · Member since 2014 · 34 posts · 23 votes
    6y

    Is Vanessa a troll? Why couldn't she just post it?  She had to ask permission? My antennae are raised.

    0Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    6y
    Originally posted by @Frank Martielli:

    Is Vanessa a troll? Why couldn't she just post it?  She had to ask permission? My antennae are raised.

     Links to facebook groups are considered self promotion and not allowed to be posted in the forums.

    [email protected]Podcast Guest on Show #261
    BiggerPockets
    1Reply
  • Frank Martielli
    Middlesex, NJ · Member since 2014 · 34 posts · 23 votes
    6y

    Oh, ahh, that makes sense. In this case it would have been nice to see, however. But I totally understand generally why that is. So sorry, I didn't mean to encourage anyone to break a posting rule.

    1Reply
  • Brian Liscio
    Little Falls, NJ · Member since 2014 · 88 posts · 49 votes
    4y

    @Frank Martielli

    Little update… Passaic County is still doing cases from last year.

    0Reply
  • Frank Martielli
    Middlesex, NJ · Member since 2014 · 34 posts · 23 votes
    4y

    That's embarrassing. What a mess.

    0Reply
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