Massachusetts Residential Real Estate Deposits Rules
Over the past few weeks I have been approached by several agents inquiring about residential rental deposits in Massachusetts. The rules are clear. Unfortunately, podcasts, videos and posts often contain information that is not consistent with the Massachusetts State Laws.
Violating rules can be costly and may result in triple or treble damages for in defendant.
I have heard say many excuses and the courts will follow the law. One can explain to the Judge why they did something different but the court will rule according to rule of law.
Maximum Deposits: First Month, Last Months, Up to one month toward a Security Deposit.
Security Deposit Rules:
Must be Placed in an interest bearing account located in Massachusetts.
Property Owner Must provide receipt to the tenant within 30 days of receiving the security deposit.
The Receipt must list: Name of the Bank, Bank Account Number, Amount of the Deposit and a statement indicating the tenant is entitled to all of the interest if they live in the apartment for 1 year.
Note: Interest rates will be bank rates or 5% whichever is less. Failure to deposit the funds in an interest bearing account will result in the interest becoming 5%. Interest is due back to the tenant annually.
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Last Month's Rent
The tenant is entitled to interest for the last month's rent whether they stay there a year or less. The interest will be bank rates if placed in the bank or 5% if not placed in the bank. The property owner is not required to place the money in the bank but they are required to pay interest.
Interest Payments
The Interest Payment Due to the Tenant must be made timely.
The interest is due to the tenant on the anniversary date of their tenancy. The property owner is required to inform the tenant of the interest due to them and either return it or deduct from the amount of the upcoming rent payment. If not returned within 30 dats the tenant may deduct from the next rental payment.
Once the tenancy is terminated the tenant must receive any interest due to them with 30 days.
Note: Failure to deposit the last month's rent in an interest bearing account will result in an interest rate of 5% vs bank rates.
Courtesy of Charles P Burke, President of the Massachusetts Academy of Real Estate