Where Does Your Security Deposit Really Go? What Massachusetts Renters Should Know
When you pay a security deposit, your landlord cannot simply deposit the money into a personal or operating account. Under Massachusetts law, the security deposit remains the tenant’s property throughout the tenancy.
Where Must the Security Deposit Be Kept?
A Massachusetts landlord must place the security deposit in a:
Separate, interest-bearing account
Bank located within Massachusetts
Protected account that keeps the money beyond the reach of the landlord’s creditors
The deposit cannot be combined with the landlord’s personal or business funds.
What Information Must the Tenant Receive?
Within 30 days of receiving the security deposit, the landlord must give the tenant a written receipt identifying:
The name and location of the bank
The amount deposited
The account number
Failure to properly deposit the funds or provide the required account information may entitle the tenant to the immediate return of the security deposit.
Does the Tenant Receive the Interest?
Yes. If the landlord holds the deposit for one year or longer, the tenant is entitled to interest beginning on the first day of the tenancy.
The landlord must pay either:
Five percent interest per year; or
The lower amount actually earned by the bank account
At the end of each year, the landlord must provide a statement showing the account information and interest owed. The landlord must either pay the interest directly or notify the tenant that it may be deducted from the next rent payment.
What Happens When the Tenancy Ends?
Generally, the landlord must return the security deposit—and any interest owed—within 30 days after the tenancy ends. The landlord may make only legally permitted deductions, such as unpaid rent or the reasonable cost of repairing tenant-caused damage beyond ordinary wear and tear.
Any deduction for damage must be supported by a properly detailed and sworn itemized statement, along with written evidence of the repair costs.
What If the Landlord Does Not Follow the Law?
Massachusetts has strict security-deposit requirements. A landlord who fails to place the deposit in the required account may lose the right to retain any portion of it. Certain violations can also expose the landlord to three times the amount wrongfully withheld, together with interest, court costs, and reasonable attorneys’ fees.
Notes
A security deposit is not additional income for the landlord. It is the tenant’s money held in trust and must be carefully handled, documented, and returned under Massachusetts law.
Whether you are a tenant concerned about your deposit or a landlord trying to comply with the law, obtaining legal advice early can help protect your rights and avoid costly disputes.
This article is provided for general informational purposes only and does not constitute legal advice. Every situation is different, and you should consult an attorney regarding your specific circumstances.
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