Murphy issues executive order allowing security deposits to be used for rent payments


Gov. Phil Murphy (D) announced that he would sign an executive order allowing renters to use their security deposits to make rent payments, following proposals from two Hudson County elected officials to use security deposits for immediate rent relief.

By Corey McDonald/Hudson County View

“We recognize the anxiety that so many feel about looming rent payments … especially with May 1st a week away,” Murphy said during his daily Trenton press briefing. “We will continue to be proactive on housing relief.”

When signing a lease for an apartment, renters are obligated to provide landlords with a security deposit to be held held in an escrow account that can not exceed more than a month and a half worth in rent.

That money, legally owned by the tenant, is then untouchable until the end of the lease agreement.

Murphy’s order now allows renters to “direct their landlords to use their security deposits to pay their rents, whether that be to make up for a shortfall or to pay it in full.”

“During this emergency, renters should have the ability to tap this deposit to help them secure their place in their home,” he added.

The order will go into effect immediately and will remain in place for 60 days following the end of the public health emergency, according to governor’s office.

The move by Murphy comes as the COVID-19 virus has left an unprecedented number of workers left unemployed, after the state closed most non-essential businesses, leaving renters struggling to pay their most important expense.

More than 40,000 Hudson County residents have successfully filed for unemployment insurance since the COVID-19 crisis began: approximately 6.5% of the county’s total population, according to recent data provided by the New Jersey Department of Labor.

Meanwhile, more than 850,000 New Jersey workers have filed for unemployment since the COVID-19 crisis began, according to The Record.

The move by Murphy follows a joint statement issued by Bayonne Assemblyman Nick Chiaravalloti (D-31), and Jersey City Ward E Councilman James Solomon, who last night announced they would be advancing proposals – on the state and local levels, respectively – to enable any tenant to pay their rent with their security deposit.

Solomon and Chiaravalloti said there is an estimated $1.1 billion in security deposits statewide.

“Renters need assistance, [and] most landlords who own a two- or three-family home rely on that rent, and having possibly over a billion dollars sitting in escrow accounts doesn’t really make a lot of sense,” Chiaravalloti said.

While Murphy’s order is only effective during the duration of the state of emergency, Solomon and Chiaravalloti said they’d like to take the measure further and change the way landlords and tenants manage security deposits.

“Thank you Governor Murphy. I’m really glad this eminently sensible policy to aid tenants is now a reality in New Jersey,” Solomon added.

“My next step is to reform security deposit legislation locally. Large, lump-sum security deposits are a barrier to stable housing for low-income families in Jersey City. Now is the time to change it.”

Chiaravalloti, meanwhile, said he would like to move his proposal forward soon, but would first”need to figure out how to recapture those security deposits.”

Cincinnati was the first municipality in the country to make the move to adopt such a policy, requiring landlords to offer accessible alternatives to the traditional lump sum security deposits.

Experts say that a nationwide release of security deposit escrows could result in a multi-billion dollar stimulus package of its own.

Ankur Jain, the chief executive officer of Kairos, whose company has spearheaded the initiative, said there’s roughly $45 billion in cash sitting in escrow accounts for security deposits nationwide.

“With most Americans living paycheck to paycheck, how is it that you could have them paying extraordinarily high prices for rent, and then have them lock up thousands of dollars in security deposits, when most Americans don’t even have $400 saved for an emergency,” he told HCV.

“The money is … supposed to be the tenants’ money, but you have it completely locked away. You don’t earn any interest on it; the landlords can’t use it either by the way, and it just goes from one apartment to the next if you’re lucky enough where your landlord doesn’t take it from you: And the current situation with COVID-19 has just exasperated that problem.”


Follow Corey McDonald on Twitter @cwmcdonald_

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  1. Well it’s obvious that Murphy,Solomon and Chiaravalloti have never owned rental property or seen the amount of damage and vandalism that a tenant can inflict on an apartment. Ok as a landlord I guess I’ll take it on the chin yet again. But let me ask you three clowns what’s your plan next month.
    The real truth here is it’s easier to bully the landlord than it is to pressure lenders , utility companies and municipalities to waive any monies due them!

    Where are the unemployment checks ?

    That’s not easy money security deposits are easier!

    Where are the stimulus checks?

    That’s not easy money security deposits are easier!

    You three clowns are idiots.

    Go find a plan that works and helps everyone.

    Since when has it become permissible to tell me how to run my business.

    Your executive order is illegal and unconstitutional.

    You have taken away my rights in a single swipe of your pen!

  2. Yes, many of us landlords have mortgages to pay on those rental properties. If there is damage to the unit and the security deposit has been used up, will Governor Murphy cover those cost? Can I sue the state in this worst case scenario? They are passing on the burden to the landlord.

  3. I agree as a landlord , the damages some renters do , the security deposit plus non payment of rent Does Not cover so the landlord is pay out of pocket to get the property back on the books . Insurance rates go up for unoccupied properties and if you leave it unoccupied then the township gives you extra fees and the squatters squat and the cooper thieves come . Where is our support from the towns in processing unemployment and the government support ??? What about opening up RENTAL ASSISTANCE temporary and using that money . I have pictures of lots of move outs and cost if you need that . This is horrible for landlords and by the way , not all landlords keep tenants security . Tenant get their monies less any damages or monies owed ! Landlords are not the Villains here but are made out to be the crooks once again !

  4. Murphy , Solomon , Chiaravalloti and Brian Stack have a dislike for property owners and clearly seeking votes from tenants. The security is a owners protection for damages and non payment of rent. Murphy has a clear dislike for taxpayers who make money. THIS WILL MAKE COMMERCIAL LENDING MORE DIFFICULT IN THE STATE OF NEW JERSEY BY BANKS along with difficulty in paying a mortgage.
    Trump does not want to give Murphy monies for a bailout because he will squander funds on illegals for education and welfare. Brian stack will do anything for a vote and has a reputation with a lot of political baggage.
    They are destroying the word democracy and belong in a prison located in North Korea . Clearly they are socialists and do not respect the constitution.

    • Exactly. However, it’s statutory in NJ that a security deposit cannot be used as rent while the tenant still occupies the unit so Murphy can make an executive order waiving that statute. That would free up the landlord to work with the tenant if so inclined, but to direct the use of funds that are part of a private contract clearly oversteps his authority and should be legally challenged. On top of that, this isnt “billions” of dollars, it’s a month or month and a half of rent over thousands of private leases so its disingenuous to allude to it as as some multibillion dollar untapped asset.

      Why do all the politicians believe it’s the responsibility of private landlords to subsidize housing? That’s rhetorical, I know the answer. How about lean on Verizon to reduce its pricing or lean on a major food store chain to lower pricing or lean on Home Depot to sell paint cheaper? Absurd? Then why do I have to subsidize some politician’s pandering?

      If these clowns want to make a dent in the cost of housing and are all about executive orders, how about require a means test for rent controlled housing? Most people probably dont know that there is no requirement to prove “need” to be in rent controlled housing, in fact its unconstitutional in NJ to require it so you could make $250k a year have a 2nd home on the shore and be in a rent controlled apartment paying $700 a month. Which is great for that person, but it reduces supply which most intelligent people, even politicians, understand increases demand which increases price.

      All of this will eventually impact the people who cant afford it most. But I guess that’s the point, have government create a problem that government can’t fix to give politicians something to campaign on.

  5. Great post, JC. For years I have searched for a rational argument in favor of rent control. My use of the word “rational” was intentional. The absence of means testing for subsidized/rent control/work force housing is a separate topic. In closing, I am neither a landlord nor a tenant. I’m just a schlub who likes to base opinions on principle, not emotion.