NJ court: Tenants can use security deposit as rent

The ruling backs Gov. Phil Murphy´s order signed at the height of the pandemic

Tenants - El Sol Latino

Murphy has used the emergency order to issue dozens of executive orders. Photo: Katemangostar /freepik

A New Jersey court backed Gov. Phil Murphy’s executive order that allowed tenants to use their security deposit to make rent payments. A state appeals court sided with the Democratic governor´s administration and ruled Murphy was within his authority to sign the order under the Disaster Control Act.

The order signed at the height of the coronavirus pandemic allows renters in the state to direct their landlords to tap into the previously paid security deposits either to pay rent in full or to make up a shortfall.

Murphy’s administration has taken the decision as a victory for tenants. According to a Matt Arco report for nj.com, Acting Attorney General Andrew Buck called the ruling as a big win for New Jersey residents struggling to pay rent.

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“In the worst of COVID-19, @GovMurphy protected individuals from public health and economic harms. One Exec Order supported renters and helped keep them in their homes. Today NJ won big in court: the Gov’s Order protecting renters is valid ,” he said in a tweet.

Expanded powers

The Disaster Control Act originally gave governors authority to respond to war emergencies. However the coronavirus crisis added another dimension. “The Legislature eventually expanded the governor’s powers to address any unusual incident which endangers the public health, safety or welfare,” the court wrote in its decision. “The governor is also not required to wait for a catastrophe to occur before taking action.”

Gov. Murphy has used the emergency order to issue dozens of executive orders, including mask mandates and an ongoing eviction moratorium, which prevents landlords from locking out tenants.

Meanwhile, landlords and homeowners have argued they have been suffering to pay their bills. They claim that they have received the same amount of protection as tenants.

Jared McClain, the lawyer representing the landlords, stated that “no law or contract in New Jersey is safe now whenever the state faces an economic downturn.”

Landlords affected

“Living in New Jersey during the economic collapse in 2006, it would have come as an absolute shock to almost everyone that the governor could just waive the applicability of any statutes and private contracts whenever he claimed that doing so would ‘meet the needs’ of the economic crisis,” McClain said in a statement. “But today’s decision gives the governor exactly that power.”

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Small landlords falling into debt and facing trouble with their tenants reached out to McClain, he said in May. Most have fallen behind on their mortgage or property tax payments.

“It’s unfortunate for most people involved because the pandemic has been devastating to everyone, but by the time this is over, it could be 18 months of rent people are missing,” McClain said at the time.

Assistance from the state

The state has offered several forms of rental relief to tenants and landlords, including the COVID-19 Emergency Rental Assistance Program, which is expected to distribute $353 million to more than 30,000 households.

Another program, the Small Landlord Emergency Grant, was only available to landlords with more than three or less than 30 properties, excluding some small property owners.



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