An Overview of Massachusetts Security Deposit Laws
Giving (or receiving) a security deposit has become a standard part of the rental experience. It’s just something that always comes up. It also is something that comes with a number of questions. How much can you charge for security deposits, what can landlords do with them, and so on and so forth. And how does living in Massachusetts effect these things? What are the Massachusetts security deposit laws that dictate the various things related to them? Lots of questions.
It pays to know what you are talking about. The last thing you want to do is mishandle or bend the local laws regarding these types of fees. As one of the premier Boston Massachusetts property management companies out there, we need to know all the various facets of security deposits in our rental units. So we know a lot about them. Here we break down a lot of the basics of Massachusetts security deposit laws so that you know a lot of the answers in one concise article. Let’s get to it.
Table of Contents
What are the Massachusetts Security Deposit Laws
Navigating the ins and outs of security deposits in Massachusetts can be a bit tricky. We know. It’s important for both landlords and renters to understand the rules to keep things running smoothly. First of all, landlords can ask for a security deposit, yes, but in Massachusetts it can’t be more than one month’s rent. Along with this, landlords can request the first and last month’s rent upfront… plus a reasonable fee for changing the locks and keys. But landlords aren’t allowed to tack on extra charges like pet fees or cleaning fees. So make note of that.
Once the landlord has the security deposit, they’re required to place it in a separate account in a Massachusetts bank. This account needs to be solely for holding security deposits and can’t be mixed with the landlord’s personal funds. Within 30 days of receiving the deposit, the landlord needs to provide the tenant with a receipt that includes the bank’s name and address, the account number, and the amount deposited. So as always, good record keeping and communication are key to being a good landlord.
Landlords also need to pay interest on the security deposit annually. That is something they sometimes don’t take into account. Landlords can either pay the renter directly or offer a rent credit equal to the interest earned. If the landlord doesn’t do this, in Massachusetts the tenant has the right to deduct that amount from their next rent payment. So it pays to have landlords keep this in mind, and it pays for tenants to know about and monitor this.
When it’s time to move out, the landlord has 30 days to return the security deposit – along with any accrued interest and minus any deductions. Deductions can only be made for unpaid rent, unpaid increases in real estate taxes (if specified in the lease), or to repair damages (beyond normal wear and tear). If deductions are made, the landlord must provide a detailed, itemized list of damages and associated repair costs within the same 30-day period. Failing to comply with these requirements can result in the landlord being liable for up to three times the amount of the security deposit, plus court costs and attorney fees.
FAQ
Now it would probably help to get a breakdown of a lot of answers to things that people still may be wondering about. There are probably a number of remaining questions, so here we go.
Do You Need to Have Security Deposits in a Certain Type of Bank Account?
Yes, in Massachusetts, landlords are required to place security deposits in a separate, interest-bearing account located in a Massachusetts bank. This account should be distinct from the landlord’s personal or business funds and is strictly for holding the renter’s security deposits. Not keeping the security deposit in this type of account could result in penalties.
Can You Charge Interest on a Security Deposit in Massachusetts?
Landlords in Massachusetts need to pay tenants interest on their security deposit each year. The interest rate is either 5% annually if held in a standard account or the actual interest earned if deposited in an interest-bearing account.
Can You Charge a Pet Security Deposit in Massachusetts?
No, Massachusetts does not allow landlords to charge a separate pet security deposit. The law limits what landlords can collect upfront to first and last month’s rent – a security deposit equal to one month’s rent and a lock-and-key fee. While landlords can set pet-related rules in their lease, they cannot legally require an additional deposit specifically for pets.
How a Property Management Company Could Help
Security deposits are important. We can probably all agree on that. And certainly knowing any Massachusetts security deposit laws is important for keeping things legal in the state. That said, there are many ways to protect your interests as a landlord, and one is through professional rental property management. Property managers understand the local, state, and federal laws that govern all aspects of the rental process. Through qualified representation, owners and landlords can maximize their investment while balancing the needs of tenants.
At Bay Property Management Group, our team handles all day-to-day operations, getting rid of many of the daily stresses for property owners. So, if you would like to learn more about how full-service management can help your business, give us a call today. We provide property services in Boston, Philadelphia, Baltimore, Virginia, Georgia, Texas, and numerous other areas.
