I recently received this question resulting from my article “NJ Landlords: Remember the Security Deposit Interest Deadline” :

“I deposited a security to my own account instead of an escrow account. I know under such conditions the tenant could ask that their security be used as rent. However, they have to let me know in writing AND give me 30 days to either give them their interest or notify them of where their security deposit is or both. Could I, within these 30 days, immediately open an escrow account, therefore invalidating their request to use the security deposit towards their rent.”

To answer this question with legal competence, I asked attorney Rob Gleaner, Esq. to help us with an answer. Here is Rob’s response:

“You are correct that New Jersey law requires a separate escrow account. I would suggest that you immediately open one. You will need your tenant to sign a W-9 form (available on the IRS web site) and also provide you with a copy of his drivers license. Both of these are required by banks. If you only have one tenant, a passbook or similar account would be fine. If you have several, some banks offer a “lump sum” account that divides up all of the money, tenant by tenant. You would want to talk with your banking representative to determine which is best for you. However, you should get this done immediately.

Keep in mind that this information is given based on the facts that you have provided. And no one can rely on advice from an attorney who has not been retained. In order to be able to rely upon any advice, you need to meet with and retain an attorney who is experienced in Landlord/Tenant law, who will be able to give you advice after a full and comprehensive interview. Before you do anything, you should contact an attorney for a full consultation. Good Luck! Rob Gleaner”
(Editor’s note: Robert Gleaner, Esq. can be reached at http://www.ragpc.com/ )

Regards,
Steven A. Boorstein
Landlord/Author
www.LandlordBusinessInsider.com
www.ManageRentalProperty.com
www.HowToBuyRentalProperty.com