Massachusetts Security Deposit Law: To Take A Security Deposit Or Not To Take One, That Is The Question.

images-9My last post on this blog and on Boston.com on Massachusetts landlord-tenant law spawned many questions on the Massachusetts security deposit law.  So, I decided to go into more detail about the topic.

Massachusetts Security Deposits–An Overview

Last month’s rent and security deposits are one of the most heavily regulated aspects of Massachusetts landlord-tenant law and are fraught with pitfalls and penalties for the unwary, careless landlord. Any misstep, however innocent, under the complex Massachusetts last month’s rent and security deposit law can subject a landlord to far greater liability than the deposit, including penalties up to triple the amount of the deposit and payment of the tenant’s attorneys’ fees. This is why I advise landlords not to require security deposits. If a deposit is necessary, take a last month’s deposit, the requirements of which are less strict than security deposits. If landlords insist on taking a security deposit, they must follow the law to the letter.

Requirements For Holding A Security Deposit

The following steps must be followed when a landlord holds a security deposit:

  1. When the deposit is tendered, the landlord must give the tenant a written receipt which provides:
    • the amount of the deposit
    • the name of the landlord/agent
    • the date of receipt
    • the property address.
  2. Within 30 days of the money being deposited, the landlord must provide the tenant with a receipt identifying the bank where the deposit is held, the amount and account number.
  3. Within 10 days after the tenancy begins, the landlord must provide the tenant with a written “statement of condition” of the premises detailing its condition and any damage with a required disclosure statement;
  4. The tenant has an opportunity to note any other damage to the premises, and the landlord must agree or disagree with the final statement of condition and provide it to the tenant.
  5. The security deposit must be held in a separate interest bearing account in a Massachusetts  financial institution protected from the landlord’s creditors.
  6. The landlord must pay the tenant interest on the security deposit annually if held for more than one year.
  7. The security deposit may only be used to reimburse the landlord for unpaid rent, reasonable damage to the unit or unpaid tax increases if part of the lease. Security deposits cannot be used for general eviction costs or attorneys’ fees. Within 30 days of the tenant’s leaving, the landlord must return the deposit plus any unpaid interest or provide a sworn, itemized list of deductions for damage with estimates for the work. Only then can the landlord retain the security deposit.

What Do I Do If The Landlord Mishandles My Security Deposit?

First, talk with the landlord about the situation and respectfully remind him or her of the law’s requirements. Many landlords will balk at the potential penalties for a security deposit violation, and most issues can be resolved amicably, usually with the return of the deposit with interest. If that doesn’t work, send the landlord a certified demand letter under the Massachusetts Consumer Protection Act, Chapter 93A. If that fails, take the landlord to Small Claims Court (the limit for these type of claims involving triple damages is $6,000) or contact an attorney.

  • Jim Singer

    Hope you are well. Saw your brother the other night and he got me up to speed on your new practice. Good luck.

    Good article re: security deposit law. One comment. Should have been clear only talking about residential. My understanding that no restrictions in commmercial. Yake care.

    Jim Singer

    • http://www.vetsteinlawgroup.com Richard D. Vetstein, Esq.

      Yes Jim, you are correct. The security deposit law only applies to residential tenancies. In the commercial context, the contract governs and there’s no other legal requirements/restrictions.

      Rich

      • Chrissie,

        Hi Richard,My Lease says 4 people to live in my rental house,at this time there is 7 people living in my rental house.Tenants will not let my repair team in my house,they park on my leach field with 2 mine vans, and cars,they were told not to park on leach field,i took pictures of them parking on my leach field. can I get A leach field inspection done and take it out of there security deposit? also they paid last month rent/securitydeposit.i seved tenants with a 30 day quit.Tenants are moving on on Oct 31,2013. they did not pay rent on oct 1,they are using, last month rent for the rent of Oct1.So they have used there last month rent for Oct 1.Tenants signed a 2 year lease,they have only lived there for 1 year.I do not know about any damages as of yet because they refuse me any access to my house.I came to the door and knocked on the door, they called the police on me the landlord. I served them with a 30 day equit and they should of been all moved out on Oct 17, 2013, they are not out till oct 31,2013 with my rental house inspection on oct 31,2013. In which they are using there last months rent for oct 1 rent. the security to them can I minus 2 wks rent from the security ck?

  • Felix Roman

    Hi!

    My tenant was suppose to be out of the apartment as of 8/31, instead she left 9/2 in which the place needed to be inspect it by section 8 inspector on 9/3 for the next tenant. Well I only had a few hours to put the place back in to shape. Also she didn’t give me the keys of the place until after 9/12. Went I check the apartment, she didn’t clean up the stove oven, it was disgusting and dirty, also all the wall had juice mark of all kind of colors (Red, Blue, Orange). Also the rugs upstairs was stained with what seems to be color juice/soda, I noticed stains all over the place, also a hole in the wall of the small bedroom. I had to repaint the whole apartment. Also the wood floor was damage with acetone in which an estimate was done by someone she called, estimated for floor repair $150.00.

    I am taking out of her security deposit the following:

    1) Damage to hardwood floor $150
    2) Cleaning Stove Oven, Wash Walls, patch hole and paint apartment $100
    3) Cleaning Rug (original cost $218) $100

    Note: I didn’t charge her for the 2 extra days which will had been another $120

    Total charge from security deposit $350.00

    Do the charges sound fair enough?

    Thank You.
    Felix Roman

  • http://simplisafe.com/ Apt

    @Felix, As long as you kept records of everything, that sounds fair to me.

  • Robert Shapiro

    Bank of America seized the funds held in my tenant’s RENT Security Deposit account that was held in my (Landlord) name, with the tenant’s SSN, because of a large credit card debt by the tenant. I believe this to be an escrow account in which I hold a security interest and they have no right to take these funds. Your opinion?

    • Fibroboston

      Hi!  I saw your post while doing a search on a similar situation that just happened to me.  It seems that the bank where I had deposited my tenant’s rent security deposit that was held in my(landlord) name was also seized.  I cannot get a straight answer from the bank, and was told that they can do this?!?!?!  We just now found out that we only have a portion of the security deposit held, am I lialbe to make up for the difference, when it was taken out of the account to pay the tenant’s own bills??!?!?!

  • http://None Jeff Reed

    When I first leased my apartment 27 years ago, I paid a security deposit of $431.00. Last month, the landlord sent me a check for the interest for $0.24. (24 cents). Is that the correct amount for fiscal year 2009? Thank you in advance.

  • Paul

    If a landlord justifiably retains a portion of a security deposit but does not sign and swear to the detailed list of deductions “under the pains and penalties of perjury” the tenant, as I understand it, is entitled to a full refund of the security deposit. In this scenario, can the landlord then take subsequent action to recoup the monies that he or she originally withheld from the deposit refund through billing/collections/litigation?

  • Scott

    Hi Paul,

    Thank you for the great blog and post.

    I am currently dealing with a situation with my old landlord and I am hoping that you can help me out.

    I recently broke the lease on an apartment in Brighton. It was noisy and my landlord was very unresponsive to things that needed to be fixed. In order to move out immediately, I agreed to pay my last months rent to break the lease.

    There was, however, a $300 deposit. I did not receive any notice that this money was received or placed in an interest bearing account. Now that I’ve moved out, I am hoping to obviously get this money back.

    When I left, the apartment was left in good condition and only needed the things that I had already complained about fixed. As my landlord is very un-responsive and almost incoherent when you try to talk to him on the phone, real estate agents who have dealt with him have advised me to send him a letter with a self-addressed stamped envelop in it. So far, this has not worked.

    Do you have any advise for how to get my money back? Under what circumstances could my old landlord keep my money? What will get this guy’s attention?

    Thanks!

  • michael

    do you represent tenants against landlords?
    have a series of issues would like to know if you do, including be force to put over 100,000 in a security deposit for a residential home. They own several properties. They are trying to sell this. They had their lawyer provide us a notice to quit for failure to pay rent stating we owe a large sum. After numerous attempts to attorney and requesting attorney to look at the facts, and the large security deposit, the attorney finally recanted (after months of stress on me and my family with these untrue statements.
    now they are trying to sell the house and want us to sign a letter saying that we will leave prior to the end of our lease, because the potential new buyers us out, and that we are holding up their sale because we will not leave prior to our lease ending.

  • EB

    Im just curious, what would happen if the landlord didnt put the money into an interest bearing account for the security deposit? I am 99% sure that my landlord didnt and I have been here for 13 yrs. I know i never recieved anything from them in regards to where the deposit was made or the account number, etc and they certainly havent paid me the interest annually on it. Is there any way they could get around that that I have not read about yet? I am asking since I am looking to move and I know I will get a hard time about it if I ask about the interest, etc. Also, I know 2 other tenants that lived on this property(it is a 2 family with a smaller place in the back) that got thier security deposits back but did not recieve any interest, can they do anything about it at this point? Thank you

  • Kevlaw2

    Does the law apply to office rentals, too?  Separate statute?

    • http://www.massrealestatelawblog.com Richard Vetstein

      Only applies to residential leases. lease governs commercial tenants.

  • Mornette

    Hi,
    would appreciate any help or advice on this issue.  I am a single mother and a landlord, I had collected a security deposit and last Months rent,  7 years and 7 months ago from my Tenants. I did not know and was unaware of the law about depositing the security deposit into a separate account. The tenants are vacating the property and are part of the Housing Authorities generous funds in Massachusetts which I believe they are abusing. but, . . .

    MY QUESTION IS:
    They asked me about the interest on the security deposit of $1300 and the last months rent of $1300, I said they were going to get 5% on the security deposit and the last months rent for the 7 year 7 month period which I believe to be fair since I did not deposit the funds into a separate account. They then said well our lawyer told us we could get triple damages.   MY question is how much is 5% of  $1300 over 7 years and 7 months, so I can go ahead and write a check to them and are there any legal ramifications to not depositing the security deposit and is 5% enough to compensate for my mistake.
    Thanks to you and your team in advance for your efforts in this matter :-)

    Just trying to keep the peace

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  • Sean Ward

    As it relates to security deposit interest this law has become an undue administrative burden on multifamily affordable housing managers in Massachusetts. Interest rates on the accounts these deposits are kept in is so low and the deposit amounts for households participating in federal affordable housing programs is so low that managers of these properties end up sending hundreds of checks each year for less than the value of the stamp. Many of them are never cashed and cause hours of extra work trying to reconcile bank statements for the accounts. Many other states allow the landlord to accrue the interest and refund it at move out. Other states allow the interest to be credited to the tenants rent that month. MassHousing and other regulatory agencies in Mass have repeatedly denied management companies either of these options. This law was intended to protect the rights of the tenant. Instead it is causing managers of these properties to waste time and financial resources on a petty meaningless process instead of using that time and money to actually maintain clean, safe, affordable housing for their residents.

  • Gemma

    What happens in the case of the landlord declaring bankruptcy?  Does the security deposit (we will assume they did not follow the law and put it in a separate account) become just another unsecured debt?

    • http://www.massrealestatelawblog.com Richard Vetstein

       The security deposit is always supposed to be the property of the tenant, so the bankruptcy trustee must account for it and give it back to the tenant if required.

  • Heather

    Is there a list anywhere of what the acceptable damages are that can be taken from a security deposit? I have a crazy minded ex-tenant who just left my house with an insane amount of damages and she is claiming there are none. I am not clear on what I can actually deduct. She left a ton of items behind that are clearly trash. It appears I cannot deduct painting, even though I only have paint the entire house because they ruined every single wall and all of my natural wood trim throughout the whole house. There is soot on the ceilings from the fireplace and smoking, both not permitted per the lease. There are several pet urine stains on my hard wood floors which requires the floors to be stripped and redone with a darker stain. I have doors hanging on hinges and doorknobs hanging on the doors. I have rotted cabinets in the bathroom and the ceiling paint bubbled because they didn’t use the fan I have installed. There are burn marks from cigarettes everywhere including on the porcelain sink in bathroom. My brand new basement rug is saturated and permanently stained from pet urine requiring replacement. I can go on and on forever. I am not able to comprehend that she sees nothing wrong with my house and know this is going to be a battle. I want to make sure I understand the laws. Thank you.

  • Michael

    HI there. As A LL , i never advertised my rental. A friend of a friend asked if I may have an apt for rent. I said a long time tenant is moving out and they could look at the place. We have not been in that apt for over 6 yrs and are planning updates repair and plumbing maintenance. The couple gave a small deposit and we did not exchange any written agreements. We are now having a larger maintenance issue and will not be ready for rental anytime soon. We want to return the deposit and are not going to be advertising it. We will be returning the deposit and not advertising the apt. Should we be concerned about anything?

  • TSP

    Does this law apply if my security deposit was $1500 and I gave them $1000 and am paying off the balance? Or is the Landlord allowed to not provide me with bank info until the entire deposit is paid..?

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