Landlords Beware: Double Damages Awarded to Tenant for Wrongful Withholding of a Security Deposit

A landlord who attempted to retain a tenant’s entire security deposit, plus charge the tenant additional repair costs, was forced to return most of the deposit after a judge ruled that he did not present credible proof that the alleged damages warranted such expensive repairs. The judge also awarded the tenant double damages pursuant to New Jersey law. The New Jersey Appellate Division recently affirmed this case.

The plaintiff moved into a newly constructed apartment complex and paid a $2,565 security deposit. Some three years later, when he notified his landlord that he intended to vacate the premise effective June 30, 2018, the landlord arranged for a walk-through to examine the apartment. The walk-through resulted in a list of damages, including burn marks, excessive holes, damage to the walls, excessive stains on the carpet, excessive burns penetrating the seal on the balcony’s rubber decking, a dent in the stove and a dent in the door. The landlord also noted excessive dirtiness in the apartment. The plaintiff signed the list, which included no cost estimates.

Within a month of leaving the apartment, the plaintiff received a letter from the landlord stating that he was withholding the plaintiff’s security deposit and using it to pay for repairs to the damaged property. Moreover, the landlord charged the plaintiff $1,370.56 for the cost of repairs that exceeded the security deposit. The letter included a detailed list of expenses relating to each repair, including $1,550 for repairs to the walls, $275 for repairs to the dented stove, $1,250 for replacing the carpet due to burn marks, $900 for repairs to the deck, and $250 for ridding the apartment of an overwhelming smell of marijuana.

The plaintiff contested these charges, arguing that the damage to the stove was no more than a dent the size of a quarter and that the alleged burns on the walls and carpets were really just smudges and stains. The trial judge agreed with the plaintiff, finding his testimony more credible than the testimony from the landlord’s witness, who had attended the walkthrough and presented photographs as evidence. The judge found that the alleged damage was no more than the normal wear and tear that occurs from living in a residence for three years. Notably, he found that the alleged excessive holes in the wall were nothing more than those used to hang picture frames and that the alleged burn marks were merely smudges and stains. He eliminated all costs that the landlord charged the plaintiff, except for the cost to repair the stove (which he reduced by almost half) and ordered the remainder of the deposit returned to the plaintiff. Pursuant to New Jersey’s Security Deposit Act (SDA), which was meant to protect tenants from overreaching landlords who target funds in security deposits, the judge also doubled the amount of the deposit that the plaintiff was supposed to receive, plus court costs.

The appellate court affirmed, deferring to the trial judge’s finding of fact and noting that the SDA reinforced that security deposits belong to tenants, but are set aside as a protection for the landlord. As a result, it is up to the landlord to prove that damages exist which require full or partial use of the security deposit to effect repairs. If the landlord cannot meet this burden, the money must be returned to the plaintiff and double damages may be awarded based on the landlord’s attempt to wrongly retain the funds.

If you are a landlord and have concerns about your obligations under the Security Deposit Act, feel free to contact Ward, Shindle & Hall for legal advice.