Tag Archives: Massachusetts Security Deposit Law

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.

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.

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.

 

Small Claims – How It Works

17 Oct

It happens often. You’re buying a home but you don’t like the results of the
inspection and you cancel the offer – or at least you try. The seller refuses
to release your deposit.

 You’re a tenant. You paid a security deposit and now you want it back. You’ve asked for it but your requests have been ignored.

Recent changes to small claims procedures make small claims very attractive. The amount that can be sued for in small claims has increased from $2,000 to
$7,000.

You don’t need to hire a lawyer in small claims unless you are a corporation or a
limited liability company. You can do it yourself.

Once the small claims case is filed, notice is sent to the defendant by regular
mail. A date is chosen by the court and the parties must appear or risk being
defaulted.

Hearings are no longer held in front of a judge. Rather, certain court personnel,
designated as Clerk/Magistrates, conduct the hearings.

It’s important to bring with you all the documents that you want considered by the hearing officer. Telling the hearing officer that “it’s at home” will often
lose the case. Be fully prepared to have any witnesses with you, copies of
checks and all your documents. Good luck! 

© 2011 George Warshaw. All rights reserved.

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George Warshaw is a real estate attorney and legal 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 at george.warshaw@warshawlaw.com.

Legal Advice: Laws, and court decisions interpreting them, change frequently and this article is not updated as laws change. The content and information contained in this article is neither intended as legal advice nor shall establish an attorney-client relationship. Before making any legal decision, consult an attorney to see how the foregoing may apply to your circumstances.

How Much May a Landlord Charge at Rental?

4 May

Metro® Boston, Publication Date: May 4, 2011

By Attorney George Warshaw

The law is clear: a landlord in Massachusetts cannot require a residential tenant pay more than a first month’s rent, a last month’s rent, a security deposit (of no more than one month’s rent), and a key and lock deposit when renting an apartment.

That’s the maximum. There are no exceptions.

A pet deposit, a cleaning deposit, or any other kind of “deposit” is nothing more than a security deposit. There’s nothing inherently wrong with a landlord limiting the potential use of a security deposit to repair a specific type of damage to an apartment, such as one caused by a pet. The problem usually arises when the deposit doesn’t relate to the “condition of the apartment” or the total of these security deposits exceeds a single month’s rent.

A landlord who requires a full month’s security deposit and a half month’s pet deposit, for example, asks for too much. A tenant has the right to demand that the landlord immediately return the excess.

Demanding more than what the law permits is considered an unfair or deceptive act or practice under the Massachusetts Consumer Protection Act and subjects a landlord to possible significant damages under multiple landlord-tenant and consumer protection laws.

The foregoing is not intended as legal advice. Consult an attorney to see how or if the foregoing applies to you.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties, prepares wills and trusts for inheriting real estate, and trusts that protect your children and pets. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.

What You Need to Know before Renting an Apartment

1 May

Rental Basics – a two-part series
Metro® Boston, Publication Date: April 20, 2011
Metro® Boston, Publication Date: April 27, 2011

By Attorney  George Warshaw

I’m often asked by landlords, “what should I do before renting an apartment?” My initial advice is “fix up the apartment before you rent it, eliminate every possible code violation and document it.”

Massachusetts gives a tenant the right to withhold rent if there are sanitary or building code violations in the apartment that endanger the health or safety of its occupants. If these conditions exist and certain requirements are met, the tenant is entitled to a reduction in the rent and a defense in any legal action to evict the tenant.

Under current law, a landlord is responsible for defective conditions that exist at the inception of the tenancy, even if the landlord doesn’t know about the problems. If, for example, an apartment has drafty and loose windows or rodents at the time of the rental, the landlord is liable under the law even if the tenant doesn’t complain about it.

So, be a smart landlord; inspect your apartments and eliminate any problems before your tenants move in.

On Security Deposits and Last Month’s Rent

A security deposit is treated differently under Massachusetts law than a last month’s rent. Rent is the landlord’s money and can be spent by the landlord at any time. A security deposit is the tenant’s money and must be protected and preserved. A security deposit must be held in a special security deposit bank account in Massachusetts. The tenant is entitled to interest on both the last month’s rent and security, even though the landlord may freely spend the last month’s rent.

Landlords routinely make 2 major mistakes in handling security deposits.

If a landlord fails to give a tenant an “Apartment Condition Statement” requesting the tenant list any defects in the apartment, the landlord cannot later deduct for damage to the apartment from the security.

If a landlord fails to provide the tenant with the required bank and account information within 30 days of taking the deposit, the landlord forfeits the right to hold the deposit and has to return the deposit on the tenant’s request. © 2011 George Warshaw.

The foregoing is not intended as legal advice. Consult an attorney to see how or if the foregoing applies to you.

Attorney George Warshaw represents buyers and sellers of homes, condos and investment properties, prepares wills and trusts for inheriting real estate, and trusts that protect your children and pets. George welcomes new clients and questions at  george.warshaw@warshawlaw.com.