Security Deposit Reminders for Landlords in Massachusetts

Landlords Need to Know the Security Deposit Statute

Did you know?  The Security Deposit Statute in Massachusetts isn't just complicated - it has major teeth for the unwary landlord. 

It is SO complicated, that I must highlight the following:

This is -- NOT LEGAL ADVICE -- and I am not an attorney.  This is an overview only, of the types of things most landlords should be aware of when collecting a security deposit.  All landlords are encouraged to seek *Actual* advice from a Massachusetts Attorney if they have questions, or wish to develop their own policies for the handling of these funds that are in full compliance of the law.  

Why Landlords Need to Know the Statute

The primary reason for Landlords to know the statute is because if a tenant sues them for a violation - and there is a violation - the tenant can win 3x damages and attorney fees.  What makes this so troubling is that there are precedents that establish the judge has no discretion in the award, and the tenant doesn't have to prove harm, just a violation. And like many laws, ignorance is not an excuse.  Despite it's complication, landlords are on the hook for understanding the whole law. For this reason alone, keep good relations with your tenants, and stay out of court.

Key Provisions of the Security Law for Landlords and Tenants

Let's get the easy ones out of the way.

• You don't have to collect security.  It's not required, but it's a good idea in my opinion, despite the hassles and risks.  If you don't collect it, you don't have to comply with the rest of the provisions.
• Security can't be more than 1 months rent.  That's it, and not a penny more.  No exceptions for pets, smokers or other things you can think of.
• Must be held in an interest bearing account in a Massachusetts Bank.  Yes, it must be a local bank!  Putting the funds in your internet bank may be a violation right there.

Those are the easy ones.  Now the harder ones....

• You must have a condition statement and it should be signed by the tenant.  This must be done 15 days after occupancy, but can be done before occupancy (and ideally is).  There are a lot of restrictions on the condition statement itself, so read up on it!
• You must pay the tenant interest on the security deposit
• You must, within 30 days of the tenancy ending, refund the security, and you can only keep security funds for unpaid water and sewer, taxes (if they are liable), unpaid rent, and damage - reasonable damage.

It's is best if you have receipts for the damage repair.  

Ugh, there are other things that you also need to do for security deposits.  These include little things, like making sure the tenant has a receipt that he paid it, and keeping track of when it was collected.  They include bigger things as well, like making sure all the deductions to the security deposit are itemized and sent to the tenant.  

Bottom line: Know the law, and follow it!  It's a complicated thing, but it offers good protection against damage, early termination, and non-payment, and for those reasons, it's worth the risk (It also helps identify tenants who are short on cash, at application time).