Massachusetts Security Deposit Laws

Landlords and tenants in Massachusetts have certain legal responsibilities when a property is rented. One such responsibility is complying with Massachusetts law.

M.G.L. c. 186, § 15B is the statute that governs the collection, handling, and return of security deposits.

As a landlord, you should clearly outline expectations around security deposits in a valid written rental agreement. It’s important to be well-versed in how to properly handle a tenant’s security deposit before renting, as failure to comply can result in costly legal disputes and attorney’s fees over a month’s rent. Below is everything landlords need to know about Massachusetts law.

How much can landlords in Massachusetts charge their tenants for security deposits?

Massachusetts landlord-tenant law states that a landlord may only charge up to one month’s rent as a security deposit. If the rent is $1,500 per month, the maximum deposit you can request is $1,500.

In addition, under Massachusetts law, landlords may also request last month’s rent and payment for the purchase and installation of a key and lock.

Are there requirements for how landlords must store tenants' security deposits in Massachusetts?

Yes. A landlord must hold a tenant’s security deposit in a separate, interest-bearing bank account. The deposit belongs to the tenant, not the landlord, so it must not be commingled with other funds.

You are required to pay your tenant an annual interest rate of either 5% or the actual interest earned—whichever is greater. This ensures proper handling of both the rent and deposit funds.

A landlord may pay the interest directly to the tenant or, with written permission, apply it as a credit toward the tenant’s rent. If the lease agreement is terminated early, you must return the accumulated interest within 30 days of the end of tenancy.

Every year, landlords must provide tenants with a written statement that includes:

• The name and address of the financial institution holding the deposit
• The interest rate being earned
• The dollar amount of the deposit
• The account number
• The interest-bearing account number where the deposit is held

Do landlords in Massachusetts have to provide tenants with a written receipt?

Yes. Massachusetts law requires landlords to provide three types of notices:

1. Immediately upon receiving the deposit, landlords must provide a written receipt that includes:

   • The amount received
   • The date it was received
   • A description of the rental unit
   • The landlord’s signature

2. Within 10 days, landlords must provide a "statement of condition" listing all existing damage to the property. The tenant may dispute any items on the list and must sign and return it within 15 days.

3. Within 30 days of receiving the deposit, landlords must provide a notice that includes:

   • The name and address of the bank where the deposit is held
   • The interest rate being earned

Failure to comply with any of these steps entitles the tenant to a full refund of their security deposit.

Do landlords in Massachusetts have to keep records of security deposits?

Yes. Under Massachusetts law, landlords must maintain records of any security deposit collected. These records should include:

• Documentation of any damages
• The date the lease ended
• Repair dates and costs for any deductions
• Copies of notices served to the tenant regarding the deposit

These records must be made available to the tenant upon request during normal business hours. Failure to do so may entitle the tenant to the return of the full deposit plus interest.

Can a landlord in Massachusetts withhold part or all of a tenant’s security deposit?

Yes. A landlord may withhold part or all of the deposit in specific cases, such as:

• Unpaid rent
• Unpaid utility bills
• Unpaid rental taxes
• Damage beyond normal wear and tear

But what is normal wear and tear? Massachusetts defines it as deterioration resulting from normal use—such as minor scratches, faded paint, or worn carpets. Landlords are responsible for these types of repairs.

Excessive damage—like broken windows, holes in walls, or pet destruction—goes beyond wear and tear and may be deducted from the deposit. If the damage exceeds the deposit amount, landlords may take legal action.

When must landlords in Massachusetts return a tenant’s security deposit?

The remaining balance of the deposit (after any lawful deductions) must be returned within 30 days after the tenant moves out. If deductions are made, landlords must include an itemized list of those deductions to avoid legal disputes.

What happens to the deposit if the property is sold?

If a rental property is sold, the landlord must transfer the tenant’s deposit and accrued interest to the new owner. The new landlord then assumes responsibility and must notify the tenant within 45 days. The notice must include the new landlord's name, address, and the amount transferred.

Bottom Line

Howzer Property Management helps landlords experience the benefits of rental ownership—without the headache. We proudly serve the South Shore and South Coast of Massachusetts communities. Contact us to learn more about our proven property management services.

Disclaimer: This blog is not a substitute for legal advice. Security deposit laws may change. For expert guidance, please consult a qualified attorney or contact Howzer Property Management for help.