Pros and cons on security deposits for 2 family
Realtor · Lynn, MA · Member since 2016 · 35 posts · 4 votes
Pros and cons on security deposits for 2 family
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Medford, MA · Member since 2016 · 85 posts · 44 votes
9yMassachusetts Security Deposit Law: One of the most neglected rental laws in Massachusetts and one of the most disputed between landlords and tenants. The Security Deposit Law (for lease agreements of a year or more) caps how much the security deposit is (one month's rent) and within thirty days the deposit must be placed in an interest bearing account where the landlord provides the tenant a receipt indicating the name and location of the bank where it is being held. The same applies to last month’s rents. If the landlord uses a lease that contains any provision that conflicts with the Security Deposit Law and attempts to enforce that provision or attempts to obtain from you or a prospective tenant a waiver of any provision of the Security Deposit Law, the landlord cannot keep your security deposit for any reason including making deductions for damages. Upon receiving the last month’s rent and/or a security deposit, the landlord must give you a receipt for security deposit and/or last months rent. If the deposit isn't deposited in the bank or the tenant doesn't receive the receipt of their deposit within thirty days, the tenant is entitled to the immediate return of the deposit. If the landlord doesn't comply, the tenant can go to court and may be entitled to three times the amount of the security deposit or the remaining balance to which the tenant is entitled after lawful deductions with interest, plus court costs and reasonable attorney’s fees. If the landlord collects a security deposit they must give you a signed, separate statement of the present condition of your apartment including a comprehensive list of any existing damage. The landlord must provide you with this statement upon receipt of the deposit or within 10 days after the tenancy begins, whichever is later. If you do not agree with the contents of the statement, you must return a corrected copy to the landlord within 15 days after you receive the list or 15 days after you move in, whichever is later. If you fail to return the list and later sue to recover your security deposit, a court may view your failure to do so as your agreement that the list is complete and correct. If you submit a separate list of damages, the landlord must return it within 15 days of receipt with a clear written response of agreement or disagreement.
5 Replies
- 9yBrandon SturgillBusiness MemberReal Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
Money market. Interest to tenant...a basic savings works as well...maybe a trust account, but no need to get overly complicated unless you own 500 units...
- Rental Property Investor · Haverhill, MA · Member since 2014 · 79 posts · 39 votes9y
@John Barry - I use an escrow account with Santander Bank. I use Santander for my personal banking, and when I approached one of their account manager's and explained that I was a landlord, they let me know that they have a landlord specific escrow account.
The account sends monthly statements to you and the tenants, and they keep track of each units interest. They also automatically cut a check at the end of the year to the tenants for any accrued interest. I have found their account to work perfectly for the incredibly specific MA security deposit rules that we have to abide by.
With this account, since it's held in escrow, none of the interest counts for your taxes, even though it's a small amount of interest, it is something. Also, this is incredibly scale-able because the entire process is automated, other than the initial set up. I have everything through Santander, and they don't charge any fees for these accounts.
Note: I am not an affiliate of Santander, and I am not being paid to make any of these statements either...I just like the account!
Let me know if you have more questions about it too:)
- 9yRich N.Pro MemberInvestor · Haverhill, MA · Member since 2015 · 761 posts · 328 votes
good - you can protect your property somewhat with funds from damages. but really only works if you take the last month's rent upfront too.
bad - sooo many law requirements to follow. About 5 or so steps need to be followed "perfectly"
ugly - do it wrong and the tenant can sue for treble damages (up to 3 times what you held)
- 9yJimmy MurrayBusiness MemberInvestor · Warwick, RI · Member since 2013 · 220 posts · 119 votesI'm going to second Dan Smith and Rich Ng It's imperative you follow the laws to the T in Massachusetts or else you could find yourself in some pretty hot water. Make sure it is in a separate interest bearing account with the tenants name on it. Also, one often over looked law in Massachusetts is that it must be deposited in an account within 15 days or receipt.
Lyon Property Group4.5630 Reviews - Medford, MA · Member since 2016 · 85 posts · 44 votes9y
Massachusetts Security Deposit Law: One of the most neglected rental laws in Massachusetts and one of the most disputed between landlords and tenants. The Security Deposit Law (for lease agreements of a year or more) caps how much the security deposit is (one month's rent) and within thirty days the deposit must be placed in an interest bearing account where the landlord provides the tenant a receipt indicating the name and location of the bank where it is being held. The same applies to last month’s rents. If the landlord uses a lease that contains any provision that conflicts with the Security Deposit Law and attempts to enforce that provision or attempts to obtain from you or a prospective tenant a waiver of any provision of the Security Deposit Law, the landlord cannot keep your security deposit for any reason including making deductions for damages. Upon receiving the last month’s rent and/or a security deposit, the landlord must give you a receipt for security deposit and/or last months rent. If the deposit isn't deposited in the bank or the tenant doesn't receive the receipt of their deposit within thirty days, the tenant is entitled to the immediate return of the deposit. If the landlord doesn't comply, the tenant can go to court and may be entitled to three times the amount of the security deposit or the remaining balance to which the tenant is entitled after lawful deductions with interest, plus court costs and reasonable attorney’s fees. If the landlord collects a security deposit they must give you a signed, separate statement of the present condition of your apartment including a comprehensive list of any existing damage. The landlord must provide you with this statement upon receipt of the deposit or within 10 days after the tenancy begins, whichever is later. If you do not agree with the contents of the statement, you must return a corrected copy to the landlord within 15 days after you receive the list or 15 days after you move in, whichever is later. If you fail to return the list and later sue to recover your security deposit, a court may view your failure to do so as your agreement that the list is complete and correct. If you submit a separate list of damages, the landlord must return it within 15 days of receipt with a clear written response of agreement or disagreement.
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