New Jersey Security Deposit

[Andy R.]

I have a rental propert located in Nj. and I am in the eviction process with a tenant. I do not have their security deposit in a separate account and they just sent me a letter a few days before the court hearing telling me to use the security deposit funds towards back rent / lawyer fees. I have a couple of questions  -

1. Its a 3 unit property and its owner - occupied which I thought by state law I did not have to separate the security deposit from my savings account? I read that the tenant can send me a 30 day notice asking me to receive the Act's protection. I am understanding that wrong? 

2. If they send me that letter dont I have 30 days to correct that situation before they can use their security deposit funds towards rent / lawyer fees? 

3. Am I out of options? 

[Judy Parker]

@Andy R. 1) Residential tenant security deposits must be deposited into an interest-bearing account.  By way of a separate letter, the Tenant must be informed of the location of that account after lease signing (I assume you have a lease?).

2) Security deposits are NOT to be used to pay the last month's rent.  Security deposits are just that...."security" for any damage to the property.  If you allow them to use the security to pay the final month's rent, and after they vacate you realize they have damaged the apartment, you have no funds to make repairs.

If you are going to be a Landlord, I recommend reading up on New Jersey Landlord/Tenant law.