October 31, 2018 | Share
Security Deposits and the Law: How Boston Landlords Can Avoid Costly Mistakes
One of the most heavily regulated areas of landlord-tenant law revolves around security deposits. The Massachusetts laws regarding tenant security deposits can be confusing and hard to follow, so it is no surprise that this is a common area where landlords make mistakes.
Legal Consequences for Violating Massachusetts Security Deposit Procedures
If you are collecting security deposits from your tenants, there are strict processes and procedures you must follow when it comes to collecting, holding and returning those deposits. And there are pretty costly legal consequences that could result from the failure to follow the law.
If you and your tenant disagree about how the security deposit was handled, your tenant can file a legal suit against you. If a court finds that you have violated the Massachusetts security deposit laws, you may be required to return the tenant’s deposit immediately; you may even be required to pay the tenant three times the amount of the original security deposit; and you may be required to pay interest and the other party’s attorney’s fees.
General Overview of Requirements for Collecting, Holding, and Returning Security Deposits
When a tenant hands over a security deposit, the landlord must provide them with a written receipt that sets forth the amount of the deposit, the landlord’s name, the date of the receipt, and the address of the property.
This money then must be deposited into a separate interest bearing account in a Massachusetts financial institution protected from the landlord’s creditors. Within 30 days after the funds are deposited into the account, the landlord must provide the tenant with a receipt that sets forth all the relevant information about the account: the name of the bank, the amount and the account number.
In Massachusetts, the security deposit remains the property of the tenant. The landlord is merely holding it for them in escrow or trust. Not only must the landlord keep track of this deposit, but he or she is required to pay the tenant the amount of interest that accumulates on the security deposit annually if it is held longer than a year.
The rules regarding how to handle the return or use of the security deposit are also strict. Within 30 days of the tenant’s leaving, the landlord must return the deposit plus any unpaid interest or provide an itemized list of deductions for damage with estimates for the work. Security deposits cannot be used for other purposes, such as general eviction costs.
A Boston Landlord Tenant Lawyer Can Help Avoid Security Deposit Mistakes
If you are new to being a landlord, or even if you are an experienced landlord who has not reviewed your security deposit and other procedures in a while, it is advisable to consult a Boston landlord tenant lawyer. An experienced attorney can fully explain how to properly collect, hold and return security deposits and help you set up policies and procedures to meet all of your landlord-related legal obligations.
Please contact the Law Offices of Attorney Shaun A. Hannafin at (617) 848-4572 or request an appointment online today.
Posted in Landlord-Tenant Information