If you are a landlord or renter in Massachusetts, it is important to know the law when it comes to security deposits. Massachusetts law requires deposits to be handled in a specific manner. Here is an overview of the MA law on rental security deposits.
What Are Rental Security Deposits
Security deposits are usually required by landlords in Massachusetts. Deposits are held for the purpose of covering any damage that may occur to the apartment during your occupancy and for which you may be held responsible. Most landlords forbid the security deposit to be used as last month’s rent.
When taking a security deposit, the landlord must provide you with a statement of condition that details any damages to the apartment. Be sure to review this and make any necessary corrections. This ensures that you will not later be charged for any pre-existing damage. The landlord must also provide you with a receipt and some follow-up information (described below).
Limitations on the Amount for Security Deposits
By law, security deposits in Massachusetts may not exceed one month’s rent. So, if the rent is $1,500 per month, the security deposit may be no more than that. Landlords are permitted to ask for first and last month’s rent, but they may not ask for anything else such as pet deposits.
Holding of Security Deposits
Security deposits must be placed in an interest bearing escrow account at a Massachusetts bank. The account must be separate from the landlord’s personal funds. In many cases, the landlord may ask the tenant to fill out a legal form with their tax ID number so that they may submit this to the bank (for reporting interest on the account). Within 30 days of taking a deposit, the landlord must provide the tenant with the bank name and account number.
Yearly Interest
Each year, landlords must pay out the the interest from security deposits. This can be done as a check from the landlord to the tenant or as a deduction in rent due. This interest may be taxable.
Return of Rental Security Deposits
Upon termination of a tenancy, the security deposit shall be returned, less any deductions for damages. Both landlord and tenant should perform a final walk-through together to discuss any potential issues. This avoids any misunderstandings later on. Landlords must return deposits and/or provide a detailed account of any deductions within 30 days.
Security Deposit Disputes
It is extremely important for landlords to fully understand and follow the MA law on rental security deposits. Failure to do so can be costly. Tenants may file suit and could potentially be awarded triple damages! For additional and the most up-to-date information on MA landlord-tenant laws, visit the Mass.gov website. The above is merely an overview of the MA law on rental security deposits and is subject to change without notice.