DIRT Development for Monday, August 10, 2009
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

SECURITY DEPOSITS; STATUTORY LIMITS; PET DEPOSITS: Landlords cannot collect additional “pet deposits” beyond the statutorily permitted maximum of 1.5 times the rent.  Any deposit so collected is deemed wrongfully withheld and must be repaid to the tenant promptly at peril of the “doubled recovery” of the Security Deposit Act even if the landlord can show damages that exceed the amount of the lawfully permitted deposit.

Reilly v. Weiss, 966 A.2d 500 (N.J. Super. Ct. App. Div. 2009).

The landlord and tenant signed a lease at a monthly rent of $1425, and the tenant provided a security deposit of $3562.50. The security deposit was divided between a month and a half of rent plus a pet deposit of an extra month. Under the Security Deposit Act, security deposits cannot exceed one and one-half times the monthly rent. Problems arose between the landlord and tenant, and the tenant moved out of the premises prior to the end of the lease term. After moving out, the tenant never received any of her security deposit back from the landlord.

The tenant sued to collect the security deposit. The trial judge essentially subtracted the amount that landlord could retain for damage to the apartment from the amount of the security deposit in order to determine the amount that was "wrongfully withheld." The tenant was awarded a small amount of damages and appealed.

The Appellate Division held that any portion of the security deposit that exceeds the statutory limit and is not returned to tenant is "wrongfully withheld." In other words, "prior to considering any credits due defendant for damage to the leasehold caused by plaintiffs, the judge was required to give them the benefit of the statutory remedy." Id. at 506. If this were not the case, a landlord who violates the statutory limit and then deducts damages would be able to violate the statute and suffer no consequence. Because the amount "wrongfully withheld" is the amount that exceeds the statutory limit, this amount-irrespective of any deductions by landlord-is the number that is subject to doubling.

In order to determine the amount wrongfully withheld (i.e. the amount that exceeds the statutory limit), the court had to resolve whether a landlord could allocate a tenant's funds into pet deposits and general security deposits. The court held that allocating security deposits in such a way is impermissible if the combined amount of all deposits exceeds the statutory limit. Otherwise, landlords could avoid the mandate of the statute by allocating between general security deposits and pet deposits.

Comment: Virtually all states have some form of multiple recovery residential deposit statute, and many provide for attorney’s fees.  Landlords ignore the nuances of these statutes at their peril.  If their fixed policy in some way violates the statute, class actions are possible.

Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters.  The same is true of all
commentary provided by contributors to the DIRT
list.  Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor or the contributors
and are in no sense the publication of the ABA.

Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality


DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 to 15 messages per work day.

Daily Developments are posted every work day.  To
subscribe, send the message

subscribe Dirt [your name]



To cancel your subscription, send the message
signoff DIRT to the address:


for information on other commands, send the message
Help to the listserv address.

DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters.  Because real estate brokers generally find
this service more valuable, it is named “BrokerDIRT.”  But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list.  If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.

To subscribe to BrokerDIRT, send the message

subscribe BrokerDIRT [your name]



To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:


DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law.  Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, any substitute reporters, DIRT, and its sponsors.

All DIRT Developments, and scores of other cases, arranged topically, are reported in hardcopy form in the ABA Quarterly Report.  This is a limited subscription service, available to ABA Section Members, AMCA members and members of the NAR.   Qualified subscribers may Subscribe to this Report ($30 for Two Years) by Sending a Check to Ms. Bunny Lee, Aba Section on Real Property, Trust & Estate Law, 321 N. Clark Street, Chicago, Il 60610. Contact Bunny Lee  at (312) 988-5651, Leeb@staff.abanet.org   Aba Members Also Can Access Prior and Current Editions of this Report on the Aba Rpte Section Website.

DIRT has a WebPage at: