Landlord’s Failure To Pay $3.26 Security Deposit Interest Stops Eviction, SJC Rules

by Rich Vetstein on April 28, 2016 · 6 comments

in Housing Court, Landlord Tenant Law, Massachusetts Real Estate Law, Rental Housing

Landlords Cry Foul Over Ruling

In a ruling which reaffirms Massachusetts’ place as one of the most landlord-unfriendly jurisdictions in the country, the Supreme Judicial Court ruled yesterday that a landlord’s minor security deposit law violation over failing to pay $3.26 in interest can be a complete defense to an eviction case even where the tenant owed thousands in rent. After this ruling, tenants will have another powerful tool to avoid eviction in both no-fault and non-payment cases. A change in this ruling would only come about through legislative action — which is usually a non-starter on Beacon Hill.

Rich’s Legal Advice: I have long advocated to my landlord clients that they NOT take security deposits. This ruling should be the nail in the coffin on that issue.

Garth Meikle v. Patricia Nurse

The Massachusetts Security Deposit Law provides a three month penalty, including payment of the tenant’s legal fees, against landlords who don’t follow its strict requirements. One of the requirements of the Security Deposit Law is that annually the landlord must pay the tenant any accrued interest on the deposit. That’s what got landlord Garth Meikle in trouble with his tenant who was three months behind in rent. Meikle brought a no-fault eviction case in the Housing Court, but the tenant raised the counterclaim and defense that she did not receive interest on the security deposit. Ruling that the landlord’s minor violation of the security deposit was not a complete defense to the eviction, the Housing Court Judge Marylou Muirhead allowed the eviction to proceed, ordering the tenant to pay the past due rent, but deducting the security deposit plus the $3.26 in unpaid interest. However, the tenant, represented by Harvard Legal Aid Bureau, appealed her case all the way up to the Supreme Judicial Court.

Statutory Interpretation

The issue on appeal was the distinction between a counterclaim and a defense for a security deposit violation. Everyone agrees that the tenant can raise a security deposit violation as a counterclaim (entitling the tenant to up to triple damages), but the question was whether such a violation could be a complete defense to an eviction, preventing the landlord from regaining possession of the rental unit. Landlords and yours truly argued that a security deposit is a separate financial matter between the landlord and tenant which has nothing to do about whether the tenant owes rent or the condition of the property.

Justice Geraldine Hines, writing for SJC, disagreed and found that a security deposit violation was within the list of defenses to an eviction. Despite quite unclear and murky statutory language, the justice was persuaded that the Legislature’s historical tightening of penalties and sanctions against landlords was indicative of the legislative intent to include a deposit violation among the list of available defenses to eviction.

So we’ll have to thank the SJC and the Legislature for sticking it to Massachusetts landlords once again. With tenant activist groups pushing “Just Cause Eviction” i.e, rent control and the Legislature’s continual failure to enact any sensible landlord-tenant reform, no wonder Massachusetts has a well-deserved reputation as one of the most tenant-friendly states in the union.

I’ve embedded the opinion below.

Garth Meikle v. Patricia Nurse by Richard Vetstein

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  • mia culpa

    The rel. of landlords tenants today is just an arrangement vs. a legal CONTRACT due to total of laws and
    policies in place in most states. By the state favoring, siding and even aiding and abetting tenants at the expense of landlords that imbalance coupled with underemployed or out-of-a-job tenants by design just burdens the landlord vs the state in todays economy. Most arent held accountable to costs for their damage or none payment of rent since legal status of inability to pay.
    Not all landlords have same status though there is a distinct difference in rental property structures there is less distinctions for classes of “Landlord,” since a person getting a boarder and sharing his home and bathroom has lost his right to equal degree of quiet enjoyment that his tenant enjoys based on him collecting money where he lives so being defined as a landlord if being unaware of having code violations since no inspection is 1st required. Due to how laws classify and burden with no distinction of a clear and obvious difference between taking in boarder and a person renting out some apt, where he doesnt reside it is a trap for home owners who are cash strapped leaving them no options. There are more tenants and higher degree of BAD tenants, and tenants that destroy property with NO ACTUAL legal accountability. Many buy drugs instead of paying rent since the law protects their addiction as a “Recovering addict” when they quailfy for a free supply of drug injections at methedone clinics where there is NO legal or actual expectation of getting free from that habit. The state declared tenants a victim status and now added a protected status if being a drug addict. More tenants are irresponsible and put out little to no effort or investment in the property that they are free to live in and destroy courtesy the gov. who demand that property tax anyway.

  • mia culpa

    Its a proven fact that you cant get tenants to actually pay whats owed in court so why bother. Landlords need to have a class action against the state for losses due to the catch 22 that most are in by law in a sys designed to cause pain to landlords especially in this economy.

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