Security Deposits 101

A security deposit is often collected upon signing a lease agreement and protects the landlord financially should a tenant cause damage beyond "reasonable wear and tear." This page details security deposit rules and regulations, including how to ensure your deposit is returned. 

Security Deposits

In Massachusetts, it is common practice for landlords to require incoming tenants to pay a security deposit. Such deposit cannot exceed the amount of one month’s full rent. The security deposit is a form of protection for the landlord should the tenant cause damage to the property or leave owing rent.

A security deposit may only be used for three things: 

  1. Unpaid rent.
  2. The repair of damages caused by the tenant.
  3. Payment of the tenant’s percentage of a property tax increase.

Upon receiving a security deposit, a landlord must give the tenant a receipt, which must state:

  1. The amount of the security deposit.
  2. The name of the person receiving the security deposit.
  3. The name of the landlord.
  4. The date on which the deposit was received.
  5. A description of the premises being rented (the location).

The landlord must place the money in a separate, interest-bearing account in a bank located in Massachusetts. Within thirty (30) days of receiving the security deposit, a landlord must give the tenant a second receipt containing the following information:

  1. The name and location of the bank where the money is being held.
  2. The account number.
  3. The amount of the deposit.

The landlord must pay interest on the security deposit after one year’s tenancy and on each succeeding year’s anniversary date. The interest is the amount paid by the bank holding the money, or 5%, whichever is lower.

The landlord is required to provide the tenant with a written "statement of present condition" of the apartment. This statement must be provided upon the landlord’s receipt of the security deposit or within 10 days after the commencement of the tenancy, whichever is later.

Should the tenant dispute anything in the statement of condition, he has 15 days in which to notify the landlord in writing of such concerns by submitting a separate list of damages. The landlord has 15 days upon receipt in which to respond to the tenant’s list by either signing it in agreement or attaching a statement of disagreement.

Landlords are required to maintain a written record of all security deposits received, for a period of no less than two years after the termination of a tenancy. The record must include:

  1. A description of any damage claims.
  2. A statement of when repairs were made.
  3. Substantiation of repair costs.

If a landlord refuses to show these records to a tenant who has paid a security deposit, the tenant is entitled to an immediate refund of the deposit plus interest.

A landlord has until 30 days after the end of the tenancy to return the entire security deposit and its accrued interest. If any deductions are made, the landlord must return the balance along with a statement that includes an itemized listing of the deductions with supporting documentation and receipts.

Returning the Security Deposit

If the landlord does not return the security deposit within 30 days of the end of the tenancy (or the tenant disputes any deductions that the landlord made), the tenant should send a demand letter asking for the immediate return of the amount in dispute.

The tenant should make three copies of the letter:

  1. One for the tenant’s own records.
  2. Another to be mailed to the landlord by first class mail.
  3. A third to be sent to the landlord by certified mail (return receipt requested).

If no payment is received after the tenant sends the demand letter, the tenant can proceed to court. The tenant may seek three times the disputed amount in damages (plus interest, court costs and reasonable attorney’s fees). The tenant may also seek triple damages if the landlord fails to hold the security deposit in a separate bank account or fails to transfer the security deposit to a successor in interest, such as a new owner of the building.

Tenants in Boston can seek damages in either the Small Claims or the Civil Division of the Boston Housing Court or the District Court in which the property is located. For claims of up to $7,000, relief may be sought through Small Claims although it is possible that the court may award double or triple damages above that amount. All other actions must be pursued as civil actions in the Civil Division.

Mediation

If you and your landlord have a dispute that you cannot resolve between yourselves, you should consider mediation. Mediation is an informal process in which you and your tenant can try to reach a resolution with the help of an impartial mediator. For information about the free mediation service offered by the City of Boston’s Rental Housing Center, call (617) 635-RENT.