Managing Your Tenant’s Security Deposit in MA.
The security deposit is a critical safeguard for the landlord and provides some level of assurance that the tenant is following your agreed upon rules and appropriately maintaining the property. However, it can quickly become a contentious part of a landlord tenant relationship when it is not done properly. Whether you’re a seasoned landlord with several apartment buildings, or a novice considering a multifamily property, understanding the rights and responsibilities of a landlord is a key factor in getting the most out of your investment.
This blog is part of a series that covers four basic areas where landlords often get confused or tripped up:
Security Deposit Basics for Landlords in Massachusetts
Knowing how to handle your client’s security depots is an important part of being a good landlord. Here are a few frequently asked questions:
1) What Is The Maximum I Can Charge for a Security Deposit?
The maximum you can charge for a security deposit in MA is equal to 1 months’ rent.
2) How Do I Handle the Security Deposit Money?
As a landlord, you must set up a separate, interest-bearing account in a bank that is located in the Commonwealth of MA. It’s important that you note the word “SEPARATE” as you cannot co-mingle it with any other assets. You must provide a receipt to the tenant 30 days after receiving the deposit and it must have the bank name, location, amount deposited and account number.
3) What Do I Do with the Interest?
For yearly leases, the landlord must pay the interest provided from the bank (or 5% per year) paid annually, or within 30 days of the termination of the lease.
4) What if I Need to Use Some or all of the Security Deposit for Repairs?
If you are going to use the tenant’s security deposit to make repairs, you must provide them with:
o An itemized list of damages within 30 days after tenant departure. That list must include precise detail the nature of the damage
o The precise cost of repairs necessary to correct such damage
o And written evidence, such, as estimates, bills, invoices, or receipts, indicating the actual or estimated cost for the work
5) What if I Don’t Comply with the Security Deposit Regulations?
This is a favorite rule every tenant seems to know…If you are found to be non-compliant with any of the security deposit regulations, the tenant shall be awarded 3x the amount of the security deposit, plus interest and potentially court costs and attorney fees. So, it’s not worth it to screw around with the deposit money.
Want to Learn More About Being a Landlord?
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About the Author
Stephen Martin, Founder, and CEO of MultifamillyProperties.com, is a success-driven marketing entrepreneur with a diverse background ranging from real estate sales and mortgage financing to consulting and development to marketing and branding. Steve is the founder and former CEO of the b Positive Project Apparel Co. A socially responsible clothing line whose mission it was to raise funds for hundreds of non-profits throughout New England. Steve is always looking for creative ways to add value to his businesses. He has a genuine passion for helping others and making a positive impact.