What Fees Can Residential Landlords Charge To Prospective Tenants?
Nothing in this blog constitutes legal advice. If you require legal advice, then please consult with a lawyer instead of this blog.
Legal Question: The issue of what fee or fees a residential landlord can charge tenants was recently contested in a Massachusetts federal district court. In Perry v. Equity Residential Management, Judge Rya Zobel held fees charged by the defendant, Equity Residential Management, L.L.C. (“Equity Residential”), to its tenants violated the Massachusetts Security Deposit Statute.
Perry v. Equity Residential Management1
In a class action case consolidated to include four other lawsuits, plaintiffs, Brian Perry, Kim Perry, and Cheryl Miller, on behalf of themselves and all others similarly situated, brought action against Equity Residential alleging that it had charged them tenant fees in violation of the Massachusetts Security Deposit Statute. Those fees included application, amenity, community, and pet fees prior to moving into their respective apartments. According to the Massachusetts Security Deposit Statute2 (the “Statute”), residential landlords are only permitted to charge the following four types of fees to prospective tenants: (1) first month’s rent, (2) last month’s rent, (3) a security deposit equal to or less than the first month’s rent; and/or (4) a key-and-lock purchase and installation.Massachusetts General Laws chapter 93A section 2(a) 3, referred to as the Consumer Protection Act (“CPA”), states it is an unfair or deceptive practice for a residential landlord to charge a tenant or prospective tenant, at or before the tenancy begins, a fee outside of or greater than the four categories mentioned in the Statute. Violators of the CPA can be forced by courts to pay attorneys’ fees, up to triple damages, and punitive damages.
Equity Residential presented two notable arguments4 to the court. First, it argued the language of the Statute, specifically §15B(1)(b), is ambiguous and should allow a landlord to charge tenants up-front fees outside of the four approved categories. Equity Residential pointed to the Statute’s legislative history to highlight the underlying ambiguity that it believed existed. However, the language in the Statute was found to be unambiguous in two earlier Massachusetts cases:Gardner v. Simpson Fin. Ltd5 and Hermida v. Archstone Properties6. Judge Zobel agreed with the earlier decisions and maintained the position that no ambiguity existed. Next, Equity Residential presented an unpersuasive “aggregate cost theory” to the court. The argument suggested the fees Equity Residential charged to its tenants were reasonable, since they did not exceed the total costs that could be incurred under the four statutorily approved fee categories.
Ultimately, Judge Zobel held only those fees approved under the Statute to be permissible. With exception to monthly pet fees, which were found to be reasonable under the Statute, application fees, amenity or move-in fees, community fees, and up-front pet fees were all found to be unlawful7. Furthermore, Judge Zobel held the unlawful fees charged by Equity Residential constituted a violation of the CPA.
Answer: Following the decision in Perry v. Equity Residential Mgt, residential landlords in Massachusetts ought to be cautious when charging prospective tenants fees. While other fees not mentioned by the court or this blog-post may be permissible, taking a conservative approach to fee-charging will likely offer the best protection against CPA claims.
Lawful Fees: The Statute and Judge Zobel have stated the following five fees are lawful, subject to certain limitations, and can be charged by Massachusetts landlords:
- First month’s rent;
- Last month’s rent;
- Security deposit (equal to or less than the first month’s rent);
- Key-and-lock (purchase and installation); and/or
- Monthly Pet Fees
Unlawful Fees: According to Judge Zobel, the following four charges are unlawful and should not be charged by Massachusetts landlords:
- Application Fees
- Amenity or Move-In Fees
- Community Fees
- Up-Front Pet Fees
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1Perry v. Equity Residential Mgmt., 1:12-cv-10779-RWZ (D. Mass. Aug. 26, 2014).
2Mass. Gen. L., ch. 186, § 15(B).
3Mass. Gen. L., ch. 93A, § 2(a); 940 C.M.R. § 3.17(4)(a).
4Judge Rya W. Zobel, Memorandum of Decision, August 26, 2014, http://www.plainsite.org/dockets/sv4q0jhd/massachusetts-district-court/perry-et-al-v-equity-residential-management-llc/
5 Gardner v. Simpson Fin. Ltd. P’ship, No. 09-11806-FDS, 2012 WL 1109104, at *8 (D. Mass. Mar. 30, 2012) (Saylor, J.).
6 Hermida v. Archstone, 826 F. Supp. 2d 380, 384 (D. Mass. 2011) (Young, J.).
7 Rich Vestein, Esq., Equity Residential’s Upfront Tenant Fees Illegal, Federal Judge Rules, September 3, 2014,http://massrealestatelawblog.com/2014/09/03/equity-residentials-upfront-tenant-fees-illegal-federal-judge-rules/
The information and materials on this blog are provided for general informational purposes only, and were done so by a law student. This information is not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances. No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction. If you require legal advice, please consult with a competent attorney licensed to practice in your jurisdiction.
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