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Overview of MA Rental Security Deposit Laws

Posted in: Landlord-Tenant Matters | December 7, 2016

In the state of Massachusetts, rental laws generally favor tenants. If you are a landlord, it is important to pay close attention to MA rental security deposit laws as failure to do so could result in hefty fines and jeopardize your rights when it comes to other matters. Here are a few key aspects of rental security deposit laws in MA.

Amount of Security Deposits

Rental security deposits may not exceed one month’s rent. There are no exceptions to this. For example, landlords may not ask for a higher security deposit because the tenant has pets. The maximum amount allowed by Massachusetts law is the equivalent of one month’s rent.

Bank Account Requirements

Landlords must place tenant security deposits into an interest bearing escrow account. This special type of account allows you to list the tenant’s information in addition to yours. Plus, the account must be separate from personal funds. Security deposits belong to the tenant, but you are simply holding it on their behalf. You may not spend these funds. The law is very clear and strict about this.

Upon receipt of security deposit money, you have 30 days to place it into the proper type of account. Additionally, it must be held at a Massachusetts bank. Be sure to provide the tenant with the account information.

Interest Payments from Security Deposits

On an annual basis, landlords are required to pay out the interest from the security deposit to tenants. This can be done by giving the tenants a check for the interest amount, or deducting that same amount from their rent for the month. Be sure to keep good records of this payout.

Penalties for Security Deposit Mishandling

Under MA Security Deposit Law, landlords may be subject to a fine of up to three times the amount of the deposit for failure to properly manage security deposit funds. This is referred to as “Triple Damages.” Landlords may also be responsible for the tenant’s legal fees. Lastly, your rights as a landlord may also be jeopardized if you fail to comply with security deposit law. There was a recent case (Garth Meikle v. Patricia Nurse) where the landlord’s failure to pay out $3.26 worth of interest from the security deposit halted eviction proceedings when the tenant later defaulted on their rent.

Importance of Complying with MA Rental Security Deposit Laws

As you can see, failure to comply with MA rental security deposit laws can not only subject you to heavy fines, but it can also affect your rights as a landlord to evict and otherwise enforce your rights. Avoid this costly mistake by strictly following the law. Promptly place the funds into the proper account at a local bank and within the specified time. Pay out interest funds each year and on-time. Most importantly, keep detailed records of every financial transaction between you and your tenant, whether it be payment of rent or payout of interest funds. MA laws favor tenants, so as a landlord, you must do everything possible to demonstrate your compliance.

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Phone: 781.333.5244
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