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Legal Alert: Executive Order No. 128 Allows Residential Tenants to Apply Their Security Deposit to Rent

On April 24, 2020, Governor Murphy signed Executive Order No. 128 ("EO No. 128") as a response to individuals struggling to pay rent due to financial hardship as a result of the pandemic.Pursuant to EO No. 128, a security deposit and any accumulated interest and earnings on the investment of the security deposit may be applied to pay portions of a Tenant's rent due or to become due.EO No. 128 is effective immediately and will remain in place until sixty (60) days after the public health emergency terminates.

In the event a tenant wishes to take advantage of EO No. 128, they must send a written request to their landlord, which can be in electronic form.While the tenant is not obligated to make any further security deposit relating to the current lease, the landlord may still recoup from the tenant any expenses the landlord incurs that would have been reimbursable by the security deposit and interest or earnings thereon.Additionally, if the tenant renews or extends their lease, then the tenant shall be obligated to replenish the security deposit in full, on the later of (1) the date six (6) months following the end of the public health emergency and (2) the date the lease is extended or renewed.

The New Jersey Apartment Association has released guidance with regard to considerations landlords and tenants should keep in mind which can be found on their website (https://njaa.com/wp-content/uploads/2020/04/Executive-Order-128-Overview.pdf).Most importantly, proper records should be maintained in the tenant file with regard to the application of the security deposit.In addition, the landlord and tenant may agree to an amendment to the lease which would reflect the terms of EO No. 128.

EO No. 128 does not specifically address summer rentals or short-term rentals and it is something to be discussed with your attorney in the event it is applicable to your situation.

The full content of EO No. 128 can be found by clicking on the following link: https://nj.gov/infobank/eo/056murphy/pdf/EO-128.pdf.

See our website for other COVID-19 alerts and continue to check back for future updates.For more information, contact Nehmad Perillo Davis & Goldstein by calling (609) 927-1177.

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