In an effort to protect against the costs of future damages to an apartment or unpaid rent, a landlord commonly collects a security deposit at the commencement of a new tenancy. However, this same practice, designed to protect the landlord, often causes greater harm. This harm results from a lack of understanding of the Massachusetts security deposit law known as M.G.L. c. 186 § 15B.
The Massachusetts security deposit law is complicated and if not followed carefully, can subject a landlord to severe penalties. It is therefore essential that every landlord intending to collect a security deposit have a general understanding of the law.
When collecting a security deposit from a tenant, a landlord must be sure to comply with the following terms and conditions:
- The security deposit may not exceed the amount of the tenant’s first month of rent.
- The security deposit must be deposited in a separate, interest-bearing account in a bank located in Massachusetts within 30 days of receipt.
- The security deposit must be deposited in a bank account that is protected from the landlord’s creditors, including a foreclosing mortgagee or a trustee in a bankruptcy matter.
- Upon receipt of the security deposit or within 10 days of the commencement of the tenancy, whichever is later, the landlord must provide the tenant with a written “statement of condition,” which describes the condition of the apartment and any damage that exists at that time. The tenant has 15 days to add to or revise the “statement of condition.”
- Within 30 days of receiving the security deposit, the landlord must provide the tenant with the name and location of the bank holding the deposit, the actual account number and the total amount deposited.
- At the end of each year of the tenancy, the landlord must pay the tenant interest at the rate of 5% or such lesser amount of interest as has been received by the bank. In the alternative, the tenant may deduct the amount of interest accrued from a rental payment.
- The landlord must keep records of disputes with prior tenants regarding damage to the property for a minimum of two years. Said records must be made available for inspection by the tenant upon request.
- Upon the conclusion of the tenancy, the landlord must return the security deposit, plus any accrued interest, to the tenant within 30 days. The landlord may, however, retain any unpaid rent or the amount of money necessary to repair any damage to the apartment. The damage must be beyond normal wear and tear.
- In the event that the landlord retains any portion of the security deposit for damages, the landlord must provide the tenant with a written itemized list of damages, supporting documentation and an estimate of the repair costs within 30 days of the termination of the tenancy. The itemized list of damages must be sworn under the penalties of perjury.
- If at any time during the tenancy the landlord sells the property to a new owner, the landlord must transfer the tenant’s security deposit, along with any accrued interest, to the new owner/new landlord. The same requirements of the security deposit law apply to the new owner/new landlord.
A tenant is entitled to the immediate return of their entire security deposit if the landlord engages in any of the following conduct:
- The landlord fails to provide the tenant, within 30 days of receipt of the security deposit, with the name and location of the bank where the deposit is held, the account number of the bank and the total amount deposited.
- The landlord fails to make security deposit records available to the tenant during business hours.
- The landlord deducts damages from the security deposit without providing the tenant with proper documentation.
- The landlord attempts to enforce a provision in the lease in conflict with the security deposit law or attempts to have the tenant waive their rights under the security deposit law.
A tenant is entitled to the immediate return of their entire security deposit plus treble damages, court costs and attorney’s fees if the landlord engages in any of the following conduct:
- The landlord fails to place the security deposit in a separate, interest bearing account located in Massachusetts.
- The landlord fails to return the security deposit, less any proper deductions for unpaid rent or damages, within 30 days of the end of the tenancy.
- The landlord fails to transfer the security deposit to the new owner/new landlord.
The actual law is rather lengthy and the cause of much confusion. Unfortunately for landlords, however, the complexity and confusion surrounding the law is not a valid defense to an alleged violation. Before choosing to collect a security deposit, be sure to understand the requirements and responsibilities imposed when doing so.
Our attorneys are well versed in this area of law and can provide you with the knowledge and guidance necessary to maintain a safe and pleasant rental experience. If you need assistance with a landlord/tenant matter, please do not hesitate to contact our office at 508-624-4700 or by e-mail.