SPOA Housing Policy Series, Episode 13: The Security Deposit Trap
By Small Property Owners Association Members
The Small Property Owners Association (SPOA) has released Episode 13 of SPOA Housing Policy Series called "The Security Deposit Trap."
When property owners accept security deposits from tenants in many cases, they are unaware of the strict requirements for maintaining these deposits. Although security deposits were once intended to protect the owner's property from damage caused by tenants, the focus shifted to protecting the tenant's deposit, which eventually took an extreme turn for the worse in Massachusetts. The conversation centers on Ms. Taneka Davis, who was forced to launch an eviction when her tenant refused to vacate the property after Taneka provided reasonable notice of termination with the intent to sell. Due to the complicated system, Taneka hired Attorney Jordana Greenman two months later to reissue the notice using the proper language. In this particular case, Taneka had to regain possession of the property in order to sell at a reasonable price. But Taneka's honest misunderstanding of security deposit requirements allowed the tenant to delay the eviction process significantly, as Taneka was forbidden to remedy the situation after the eviction began. Attorney Greenman, whom Taneka retained thereafter, outlines the complexities of security deposit regulations in Massachusetts to help property owners avoid the security deposit trap, which is weaponized against housing providers. SPOA Vice President, Amir Shahsavari, moderates the discussion.
What are the rules for collecting and holding security deposits in Massachusetts?
Mass. law permits landlords to collect a security deposit up to one month's rent, plus a pet deposit of up to one month's rent. The pet deposit is only deductible for damage caused by a pet. Security deposits must be held in a regulated interest-bearing account. Landlords are required to provide tenants with a statement of the account's location and interest rate. Pet deposits are not subject to interest. Landlords must return unoccupied rental units within 30 days of the end of the tenancy. Landlords must also provide a list of any existing damages within 15 days of the tenant's departure. Landlords who violate these rules could face penalties from the court. Aggrieved tenants may be able to recover triple damages. Landlords are advised to consult with an attorney before establishing security deposit policies.
How much can a landlord charge for a security deposit and a pet deposit?
In Massachusetts, a landlord can collect a security deposit equivalent to one month's rent. An additional pet deposit, also up to one month's rent, may be collected, but it's specifically for pet-related damages. This pet deposit does not accrue interest and has distinct rules regarding its use.
What are the deadlines for returning security deposits and accounting for damages after a tenant leaves?
Once a tenant leaves, landlords have specific timeframes to return security deposits and account for any deductions. Unoccupied rental units must be returned within 30 days. A list of damages must be provided to the tenant within 15 days of their departure. Failure to follow these strict timelines can lead to penalties for the landlord.
Where do landlords need to keep security deposit funds, and what documentation is required for tenants?
Massachusetts law requires landlords to hold security deposits in a regulated, interest-bearing account. They must also provide the tenant with a written statement detailing the account's location and the current interest rate. This ensures transparency and protects the tenant's funds. Remember, pet deposits are not subject to these interest-bearing account rules.