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https://www.nj.gov/dca/codes/publications/pdf_lti/secty_deposit_bulletin.pdf
I’m not in NJ but…If you want to keep it business, normally that would forfeit the security deposit. However if that tenant hasn’t been a problem at all during the time of stay and you’re ok with giving them their deposit money back then go ahead.
ask them to help you find a replacement in exchange for the deposit.