Security Deposit Laws in Massachusetts

State laws in Massachusetts are fairly strict when it comes to collecting, storing, and returning security deposits. Not only are they capped at one months’ rent, but landlords must provide a series of receipts and information about where the money is being stored. If a landlord fails to abide by these laws, they are liable to the tenant for three times the amount of the deposit.

Security deposits are capped at one month's rent

In Massachusetts, a landlord cannot require a security deposit greater than one months’ rent under a lease. In addition, the landlord may request first and last months’ rent—plus an amount of money sufficient to pay for the purchase and installation of a new lock on the rental unit.¹

Landlords must provide receipts and additional information

The landlord must immediately inform a tenant, in writing, that they have received the deposit. Within 10 days of receipt, they must provide the tenant with a detailed statement of the condition of the unit the tenant is moving into. Within 30 days of receipt, the landlord must tell the tenant where the security deposit is being held, and the rate at which the deposit will accrue interest.¹

Landlords must store deposits in a separate account

A Massachusetts landlord must hold security deposits in a separate account and not combine it with his or her own assets. The fund must bear interest, at either five percent or the bank’s customary rate. Every year, the landlord must report the amount of interest earned on the security deposit and provide the tenant with the option to apply said amount to his next month’s rental payment, assuming the lease shall continue. If the lease is ending, the tenant is entitled to a return of the interest earned on the deposit.¹

The “successor in interest” is still on the hook

A landlord must turn over the security deposit to any “successor in interest” on the residence, whether it be a buyer of the property or someone taking over the landlord’s lease obligations. If the landlord fails to do so, the successor party is fully liable to the tenant for the security deposit and the interest earned on it, and must pay it to either the tenant at the lease’s conclusion or allow the tenant to continue to reside in the unit, rent-free, using the balance of the security deposit and interest as payment.¹

Landlords who store a deposit incorrectly must return it immediately

If a landlord fails to comply with any of the above provisions concerning storage of the deposit, they immediately forfeit the right to retain the security deposit, which must be returned to the tenant immediately—even if the lease is ongoing.¹

Acceptable reasons for deduction

A landlord can only retain some or all of a security deposit to compensate for the following:¹

• Unpaid rent or water bills
• Unpaid taxes that a tenant is obligated to pay (a highly specific and uncommon situation)
• A “reasonable amount” needed to repair damage caused by the tenant, with “reasonable wear and tear” specifically excluded

Thirty-day window to return the security deposit

Within 30 days after the end of a lease, the landlord must provide the tenant with:

• Any unused portion of the security deposit
• A record of the interest earned on the deposit
• A detailed statement showing what was withheld from the deposit and the reasons for such withholding

If the landlord fails to do any of the above—or attempts to enforce any lease provisions that are contrary to the above—he or she is liable to the tenant for three times the amount of the security deposit, plus interest, court costs, and attorney fees.¹ This is a strict rule. Even if the landlord returns the deposit before the tenant sues, in the eventual lawsuit the landlord is still responsible for damages equivalent to three times the amount of the deposit.²

Claims of less than $7,000 may be handled in small claims court

If a tenant alleges that he is owed less than $7,000 by a landlord for failure to return a security deposit or comply with the above laws, he may file a lawsuit in Small Claims court. However, if he is claiming damages greater than $7,000, he must file in the state’s general civil court. ³

Next steps

Now that the security deposit is settled, it's probably time to sign a lease. Make sure you understand your responsibilities as a landlord or tenant so things go smoothly from day one.

[1] Massachusetts General Law Chapter 186 § 15b

[2] Taylor v. Beaudry (2012)

[3] Massachusetts General Law Chapter 218 § 21