Broker Angela manages a residential rental portfolio in Princeton. She collects security deposits from tenants and holds them in her broker trust account. Under New Jersey law, which of the following correctly describes the interest obligation on security deposits held by a broker managing residential rentals?
Correct Answer
B) Interest earned on security deposits belongs to the tenant and must be credited to the tenant annually or at lease termination
Under the New Jersey Security Deposit Law (N.J.S.A. 46:8-19 et seq.), interest earned on security deposits belongs to the tenant. Landlords and their agents (including brokers) must invest security deposits in an interest-bearing account and credit the interest to the tenant either annually or at the termination of the tenancy. The tenant is entitled to receive the interest as part of the security deposit return process.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
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