Quick Answer
Under N.J.S.A. 46:8-19, landlords with 10 or more units hold deposits in a statutorily specified investment, an insured money market fund, or a comparable account. Landlords with fewer than 10 units may use an interest-bearing account at an FDIC-insured New Jersey institution. Within 30 days of receiving the deposit you tell the tenant the bank name and address, the account type, the interest rate and the amount, and you repeat the disclosure each time interest is paid. Earned interest is paid to the tenant annually or credited to rent. Statute text last checked October 22, 2026.
Key Takeaways
- Approved accounts. The type depends on whether you have 10 or more units.
- Thirty-day disclosure. Bank, address, account type, rate and amount.
- Annual interest. Pay it or credit it against rent.
- Repeat the disclosure each time interest is paid.
- Keep statements. The bank record is your proof.
1. Choosing the Account
Smaller landlords can use an interest-bearing account at an FDIC-insured New Jersey institution. Larger landlords use the statutorily specified investment, an insured money market fund or a comparable account. Open the account before you collect the first deposit.
2. The Disclosure Letter
Within 30 days of receipt, send the tenant a letter with the bank name and address, the account type, the interest rate and the deposit amount. Keep a copy and a record of delivery. The same details accompany every interest payment.
3. Paying the Interest
Interest earned belongs to the tenant. Pay it each year or credit it to rent, and write a short statement that shows the amount, the rate and the period. Pick one method and apply it consistently.
4. Keeping the Money Separate
Keep deposits clearly identified in your accounting. Mixing deposits with operating funds makes the annual statement and the move-out accounting harder.
5. At Move-Out
Include accrued interest in the final accounting, then follow the 30-day return deadline in the companion guide.
6. A Checklist
- Open a qualifying account before collecting deposits.
- Send the 30-day disclosure letter.
- Record the rate and the dates.
- Pay or credit interest each year with a statement.
- Reconcile balances at move-out.
Annual Routine
Pick a date each year, such as the lease anniversary, for the interest statement. Pull the bank statement, calculate the tenant’s share, and send the notice with the bank details repeated. A fixed routine keeps you from forgetting a year and makes the move-out accounting a simple addition.
When You Sell or Change Banks
If you move the deposit to a different institution, send the tenant an updated disclosure with the new details. If you sell the building, check with an attorney about how the deposit and its records transfer.
7. What This Guide Does Not Cover
This guide covers the holding and interest duties at the summary level. It does not cover the investment options in detail, transfers on sale, or the court process. Confirm current text on the New Jersey Legislature site. It states the statute and does not predict how a court will rule.
8. Questions Owners Ask
Do I need a separate account per tenant? Keep deposits identified and traceable in your records.
Can I credit interest to rent? The statute provides for paying or crediting it.
What if I own nine units? The smaller-landlord account option described applies to fewer than 10 units.