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There are laws about this sort of thing. In Illinois I believe there is a 45 day turn around for the money used as security. I am not sure what New Jersey is. The way the courts work if a landlord does not follow the rules and can be found at fault (which is easy - they don't expect the tenants to know the law, only the landlords) the tenants attorney and fees would be the responsibility of the landlord.
It is very easy to win as a tenant in Illinois and I would believe this is the case in other states. This is probably the main reason they moved after you said attorney.
Anyway, glad it worked out.