Massachusetts security deposit and move-in inspection rules

How much can the deposit be?

At or before the start of a tenancy, the landlord or the landlord's agent may require no more than: the first month's rent, the last month's rent (at the same rate), a security deposit no larger than the first month's rent, and the cost of buying and installing a key and lock. After the tenancy starts, the landlord may not demand rent in advance beyond the current month or a deposit above this limit (§ 15B(1)(d)).

“At or prior to the commencement of any tenancy, no lessor or agent of the lessor may require a tenant or prospective tenant to pay, to the lessor or to an agent of the lessor, any amount in excess of the following: (i) rent for the first full month of occupancy; and, (ii) rent for the last full month of occupancy calculated at the same rate as the first month; and, (iii) a security deposit equal to the first month's rent”

“(iv) the purchase and installation cost for a key and lock.”

Where the deposit must be kept

The deposit stays the tenant's property and may not be mixed with the landlord's assets (§ 15B(1)(e)). It must be held in a separate, interest-bearing account in a bank located in Massachusetts, protected from the landlord's creditors. The landlord must give a signed receipt when the deposit is paid (§ 15B(2)(b)) and, within 30 days, a second receipt naming the bank, its location, the amount and the account number; failing that, the tenant is entitled to the deposit back immediately. The landlord must also keep a record of deposits, damage and repairs for two years and show it to the tenant on request (§ 15B(2)(d)).

“Any security deposit received by such lessor shall be held in a separate, interest-bearing account in a bank, located within the commonwealth under such terms as will place such deposit beyond the claim of creditors of the lessor, including a foreclosing mortgagee or trustee in bankruptcy, and as will provide for its transfer to a subsequent owner of said property.”

“A receipt shall be given to the tenant within thirty days after such deposit is received by the lessor which receipt shall indicate the name and location of the bank in which the security deposit has been deposited and the amount and account number of said deposit. Failure to comply with this paragraph shall entitle the tenant to immediate return of the security deposit.”

“Upon a wrongful failure by the lessor or his agent to make such record available for inspection by a tenant or prospective tenant, said tenant or prospective tenant shall be entitled to the immediate return of any amount paid in the form of a security deposit together with any interest which has accrued thereon.”

Move-in inspection and photos

Required. A landlord who takes a deposit must give the tenant a separate written statement of the unit's condition when the deposit is received or within 10 days after the tenancy begins, whichever is later. It must list all existing damage (including certified or adjudicated sanitary and building code violations), be signed by the landlord or agent, and carry a statutory notice in 12-point bold type. The tenant has 15 days to sign and return it, attaching a signed list of any other damage; the landlord then has 15 days to return a copy marked agreed or with a clear statement of disagreement. A tenant who does not return it may be treated by a court as agreeing the list is complete. Damage listed on these statements cannot later be deducted (§ 15B(4)).

“furnish to such tenant or prospective tenant a separate written statement of the present condition of the premises to be leased or rented.”

“This is a statement of the condition of the premises you have leased or rented. You should read it carefully in order to see if it is correct. If it is correct you must sign it. This will show that you agree that the list is correct and complete. If it is not correct, you must attach a separate signed list of any damage which you believe exists in the premises. This statement must be returned to the lessor or his agent within fifteen days after you receive this list or within fifteen days after you move in, whichever is later.”

Move-out inspection

The landlord may enter to inspect the unit for damage that would be deducted from the deposit during the last 30 days of the tenancy, or after either side has given notice to end it. The statute does not require a joint move-out inspection.

“(iii) to inspect, within the last thirty days of the tenancy or after either party has given notice to the other of intention to terminate the tenancy, the premises for the purpose of determining the amount of damage, if any, to the premises which would be cause for deduction from any security deposit held by the lessor pursuant to this section.”

When the deposit must be returned

The landlord must return the deposit, or the balance after allowed deductions, within 30 days after a tenancy-at-will ends or the written lease term ends. Any deduction for damage needs the sworn itemized list within the same 30 days.

“The lessor shall, within thirty days after the termination of occupancy under a tenancy-at-will or the end of the tenancy as specified in a valid written lease agreement, return to the tenant the security deposit or any balance thereof”

What the itemized statement must include

For any damage deduction, the landlord must give an itemized list of damages, sworn under the pains and penalties of perjury, describing in precise detail the damage and the repairs needed, together with written evidence of the actual or estimated cost, such as estimates, bills, invoices or receipts.

“In the case of such damage, the lessor shall provide to the tenant within such thirty days an itemized list of damages, sworn to by the lessor or his agent under pains and penalties of perjury, itemizing in precise detail the nature of the damage and of the repairs necessary to correct such damage, and written evidence, such as estimates, bills, invoices or receipts, indicating the actual or estimated cost thereof.”

What can and cannot be deducted

Only three deductions are allowed: unpaid rent or water charges not validly withheld; unpaid real-estate-tax increases owed under a tax escalation clause that complies with § 15C; and a reasonable amount to repair damage caused by the tenant or people under the tenant's control, excluding reasonable wear and tear. Damage listed on the move-in condition statement (or the tenant's signed list) cannot be deducted unless the landlord repaired it and proves the new damage is unrelated and caused by the tenant. Nothing else may be deducted.

“(iii) a reasonable amount necessary to repair any damage caused to the dwelling unit by the tenant or any person under the tenant's control or on the premises with the tenant's consent, reasonable wear and tear excluded.”

“No deduction may be made from the security deposit for any purpose other than those set forth in this section.”

Interest on the deposit

Required. A landlord who holds a deposit for a year or more owes interest from the first day of the tenancy at 5% a year, or the lower rate the bank actually paid. Each year the landlord must send a statement with the bank's name and address, the deposit amount, the account number and the interest owed, and either pay the interest or tell the tenant to deduct it from the next rent; if neither arrives within 30 days after the end of the year, the tenant may deduct it. If the tenancy ends before an anniversary, all accrued interest is due within 30 days.

“A lessor of residential real property who holds a security deposit pursuant to this section for a period of one year or longer from the commencement of the term of the tenancy shall, beginning with the first day of the tenancy, pay interest at the rate of five per cent per year, or other such lesser amount of interest as has been received from the bank where the deposit has been held payable to the tenant at the end of each year of the tenancy.”

Penalties for keeping a deposit wrongly

The landlord loses the right to keep any part of the deposit, or to counterclaim for damage in the tenant's suit, if it: did not put the deposit in a proper account; did not give the itemized damage list within 30 days; used and tried to enforce a lease clause that conflicts with § 15B or sought a waiver; did not transfer the deposit on a sale; or did not return what was owed with interest within 30 days (§ 15B(6)(a)-(e)). For failures (a), (d) or (e), the tenant is awarded three times the deposit owed, plus 5% interest from the due date, court costs and reasonable attorney's fees.

“If the lessor or his agent fails to comply with clauses (a), (d), or (e) of subsection 6, the tenant shall be awarded damages in an amount equal to three times the amount of such security deposit or balance thereof to which the tenant is entitled plus interest at the rate of five per cent from the date when such payment became due, together with court costs and reasonable attorney's fees.”

“The lessor shall forfeit his right to retain any portion of the security deposit for any reason, or, in any action by a tenant to recover a security deposit, to counterclaim for any damage to the premises if he:”

Using the deposit as last month's rent

Massachusetts treats last month's rent paid in advance separately from the security deposit. The landlord must give a receipt when it is paid, and pay interest on it from the first day of the tenancy at 5% a year or the lower rate the bank paid, every year (no interest accrues for the last month itself). A landlord who does not pay that interest within 30 days after the tenancy ends owes three times the interest, plus court costs and reasonable attorney's fees.

“Any lessor or his agent who receives said rent in advance for the last month of tenancy shall, beginning with the first day of tenancy, pay interest at the rate of five per cent per year or other such lesser amount of interest as has been received from the bank where the deposit has been held.”

A fee instead of a deposit

The statute lets the state housing office (the Executive Office of Housing and Livable Communities) authorize, by regulation, an optional fee instead of a security deposit. Under the statute, any such fee must be optional for both sides, may not exceed one month's rent in total, and the tenant may switch to paying the full deposit. Whether those regulations have been issued was not checked; without them the statute alone does not authorize the fee.

“provided, however, that the executive office of housing and livable communities may promulgate regulations to authorize a lessor and a tenant or prospective tenant to agree to the payment of a fee in lieu of payment of a security deposit”

If the property is sold

When the landlord's interest is transferred (sale, assignment, death, receivership, bankruptcy or otherwise, but not by granting a mortgage), the landlord must transfer the deposit with accrued interest, and the new owner becomes liable for it. Within 45 days the new owner must notify the tenant in writing, with the owner's and any agent's name, business address and phone number. If the deposit is not transferred, the new owner is still liable, except a city or town taking title under ch. 60 or a foreclosing bank chartered by Massachusetts or the United States (§ 15B(5)).

“the lessor shall transfer such security deposit together with any interest which has accrued thereon for the benefit of the tenant who made such security deposit to his successor in interest, and said successor in interest shall be liable for the retention and return of said security deposit in accordance with the provisions of this section from the date upon which said transfer is made”