How to Setup a Security Deposit Account

20 Nov

By Attorney George Warshaw
MetroBoston Publication Date: November 20, 2013

 

There’s more to it than you may think.

First, the account has to be set up within 30 days of when the security deposit is paid, and the tenant given notice of the account within that 30 days period.

Second, it must be placed in a bank located in Massachusetts. You can’t use Fidelity to hold the money and you can’t deposit it in another state.

So you can’t set it up at Bank of America in New Hampshire or Citizens in Rhode Island. The account branch has to be located in Massachusetts.

Most banks have what they call security deposit accounts; basically a savings or escrow account that pays interest. Usually the name of the account identifies it by the words “Tenant’s Security Deposit Account” or some variation.

I use TD Bank. TD has a special Security Deposit Account Agreement that complies with the law. Five other banks I surveyed don’t use any special agreement. Therefore, I can’t tell if the account just sounds nice or actually complies with the legal requirements.

Last, landlords have to give tenants notice about the account every year. Make it easy on yourself. Have the printed monthly bank statement sent directly to the tenant. They get the info required and you can always access it online.

 

© 2013 George Warshaw.  George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, litigates real estate matters, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

Advertisements

Lessons Landlords Haven’t Learned

7 Nov

MetroBoston Publication Date November 6, 2013
By Attorney George Warshaw

I’ve written many articles on security deposits intending to educate landlords and tenants alike. I’ve met with many tenants on their security deposit problems and received a great many more emails from tenants.

Oddly, I’ve never received one email from a landlord. Perhaps they don’t read the Metro.

These are the most common violations of the security deposit laws.

#1. Not returning the deposit within 30 days after the tenancy ends.

#2. Deducting for repairs that are not “repairs” such as apartment cleaning, repainting where the alleged abuse is only ordinary wear and tear, and repairs that are not actually made.

#3. Not stating in the landlord’s deduction letter above the signature (or elsewhere): “signed under the penalties of perjury.” A landlord cannot deduct for repairs unless these magic words appear.

#4. Not depositing the security deposit into a proper tenant’s security deposit account.

#5. Not paying the tenant interest every year.

#6. Not delivering the tenant a notice within 30 days of occupancy stating the bank and account numbers where the money is being held.

#7. Not providing the tenant an Apartment Condition Statement within 10 days of occupancy.

Numbers 1, 2, 3, and 4 are triple damage penalties under the law.
Numbers 6 and 7 result in the loss of the right to take or hold the security deposit.

© 2013 George Warshaw. George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, litigates real estate matters, and prepares wills, trusts, and estate plans. George welcomes new clients and questions.  Contact him at metro@warshawlaw.com.

The Buffoons in Washington

16 Oct

MetroBoston Publication date October 16, 2013
By Attorney George Warshaw

Sorry, I just couldn’t let the fiasco pass without comment. I will say at the outset I am a neutral; neither a Democrat nor Republican, thus I am free to pillory them all.

The Republicans proclaimed this crusade about Obamacare, moronically trying to eviscerate it through fiscal blackmail, proclaiming the Affordable Care Act unconstitutional and a failure. Though it may need first aid in the end, it was declared constitutional, like it or not.

When this futile Obamacare strategy ultimately failed, the Republicans then declared the shutdown was really about deficit reduction, not Obamacare.

When that fooled no one, the Republicans reportedly caved on all significant issues thereby succeeding in angering opponents and supporters alike.

Now this made the Democrats in Congress beat their chests, kick dirt on the Republican grave and overreach, demanding more in concessions than they initially desired.

Aside from this “Three Stooges Congressional Comedy Show,” the real problem, in my opinion, is that each side is more possessed with embarrassing each other than doing the well-paid job they were hired to do.

Let us not forget that while others are not getting paid, the political faithful in Congress are cashing their checks and eating quite well; and they kept their exceptional health care plan rather than accepting Obamacare for themselves.

© 2013 George Warshaw.  George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, litigates real estate matters, and prepares wills, trusts, and estate plans. George welcomes new clients and questions.  Contact him at metro@warshawlaw.com.

Is Interest Due on Last Month’s Rent?

9 Oct

MetroBoston Publication date October 9, 2013
By Attorney George Warshaw 

Many landlords choose to require a last month’s rent rather than a security deposit under the belief that there is less risk and no liability with a last month’s rent.

That’s very true with one exception: a landlord still has to pay the tenant interest on the amount of the last month’s rent.

Yes, that’s right. It’s a common misconception that interest is only payable on a security deposit and not on the last month’s rent.

The tenancy statute is very clear. A tenant is entitled to interest at the annual rate of 5% on the amount paid as last month’s rent with one exception.

A landlord may avoid paying the 5% rate if the landlord escrows the money in an interest-bearing account bank account. In that case the tenant only receives the interest earned in the account.

In calculating the number of months that interest is due, the landlord doesn’t have to pay interest for the very last month of the tenancy, since that is the month for which the last month’s was taken and presumably used.

If a landlord takes a last month’s rent and a security deposit, the tenant is entitled to interest on both, payable at the end of each year of the tenancy.

© 2013 George Warshaw.  George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, litigates real estate matters, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.

 

Is an Inheritance a Gift or an Entitlement?

26 Sep

MetroBoston publication date September 25, 2013
By Attorney George Warshaw

The answer depends not only on your personal philosophy but whether you are the one inheriting or giving.

More people these days are considering whether it is better to leave all or a sizeable portion of one’s money and property to a charity rather than one’s children.

A frequently asked question is whether an inheritance will help one’s children in some important way or provide an incentive to do little or nothing with their lives, personal growth, or career development.

Frankly, too many children of wealthy or financially well-off families seem to do far less with their lives while waiting for an inheritance and become hostile later on when they don’t believe they received enough.

In my view, the number one purpose of earning money and acquiring assets over a lifetime is to take care of oneself first and foremost. What you leave to your children afterwards is something you earned. That point should be emphasized to one’s children.

Many believe today that the best estate plans remove the cost burden of education and medical expenses for one’s children or grandchildren, provide support where needed and incentives to do more with their lives.

More next week.

© 2013 George Warshaw.  George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, litigates real estate matters, and prepares wills, trusts, and estate plans. George welcomes new clients and questions.

Is Boston’s New Rental Law Enforceable?

20 Sep

MetroBoston publication date September 18, 2013
By Attorney George Warshaw

You’ve probably heard about Boston’s new registration and inspection law.

If you own and rent an apartment or condo in Boston or don’t live in it, you have to register your property with the Inspectional Services Department.

Here are some key details.

  • Registration was due by August 31st. If you haven’t registered you will have to pay a penalty.
  • Every year you will have to renew your registration and pay a small fee.
  • If you, the property owner, don’t live in Massachusetts you have to designate a resident agent.
  • If your children occupy the apartment but you don’t, you still have to register your property.

As part of the registration, the property owner is required to certify that he or she is familiar with a plethora of complex laws and regulations including the State Sanitary Code, Building Code, Student Zoning Code, Lead Paint Standards, Fair Housing Regulations, etc. – and the owner has to certify an intention to comply with them.

Is that possibly legal?

I could not honestly certify familiarity with thousands of pages of regulations and I’ve written a textbook on Massachusetts Landlord-Tenant Law used by lawyers and law schools throughout the state and litigated cases in the Housing Court for 20 years.

Can you be forced to certify what isn’t true? © 2013 George Warshaw.

Thoughts on Charitable Giving

20 Mar

MetroBoston Publication Date March 20, 2013
By Attorney George Warshaw

I was speaking with Mark at the U.C. about this column. He asked me to write about how charitable giving may be used with an estate plan.

Interesting question.

Money you leave by will, trust or otherwise to an IRS tax qualified charity is not included in your estate at death. If your estate is worth $1,250,000 and you leave $250,000 to a qualified charity, your estate is then valued at $1,000,000.

More interesting is what you can do with your charitable estate.

If you want to leave all or a chunk to charity, and possibly avoid even the Massachusetts estate tax problem, you could establish a private tax qualified foundation in which your friends and family participate in making donations to causes that are important to you.

Once or twice a year friends and family get together, remember you in their thoughts and hearts, and do something good with your money and memory. They could use it where it’s needed most – and certainly more efficiently than our spendthrift government.

It’s also a good way of keeping your family together and doing something positive “as a family” with a great result.

There are also Charitable Funds, like Fidelity runs, where they decide how your money is used, or you can direct it yourself in your will or trust.

Say you want to help children or pets. I’ll use the MSPCA and Tenacity, my personal favorites, as examples.

MSPCA, www.mspca.org. You can leave a specific amount of money in your will or trust (a “bequest” in legal talk) or you can target a specific program.

For example, “I give and devise to MSPCA $________ [or _____% of my net estate] for its “Pet Care Assistance Program for the medical care of sick or injured animals.”

Tenacity, www.tenacity.org. Tenacity changes the lives of inner Boston city kids. They learn to play tennis but only after the student and family make a multi-year learning commitment. The kids receive structure, discipline and educational assistance from elementary school through high school. Tennis is the motivator to enroll.

Aside from a bequest, you can give all or a portion of the residue of your estate (i.e. after payment of all debts and bequests.)

For example, “I leave the rest and residue of my estate (or a percentage) to Tenacity to sponsor as many children as possible in its “Middle School Academy.”

Plan it in advance with the charity or just surprise them in your will!

And don’t forget Tenacity and the MSPCA in your planning – helping children and pets is a good thing to do. © 2013 George Warshaw.

George Warshaw is a well-known attorney and author. He represents buyers and sellers of homes and condos in Massachusetts, and prepares wills, trusts, and estate plans. George welcomes new clients and questions. Contact him at metro@warshawlaw.com.