How Much Money Can a Landlord Ask for Up Front?
At the beginning of a residential Massachusetts landlord-tenant relationship, the landlord can make the following four demands upon the prospective tenant:
- First Month’s Rent
- Security Deposit
- Last Month’s Rent
- Lock & Key Fees
First Month’s Rent
The Massachusetts landlord is well within their rights to require that the prospective tenant provide the full amount of the first month’s rent. The income received by the landlord from this transaction can go straight into the operating account of the management company or landlord’s bank account and is not subject to any statutory limitations.
Security Deposit in Massachusetts Lease or Tenancy-at-Will
Purpose of the Security Deposit
In Massachusetts, a landlord takes a security deposit as a means to cover damage that may occur to the apartment that the tenant is living in that exceeds normal wear and tear. For example, the cost to repair a large hole made in the wall from an aggressive tenant would be likely deductible from the security deposit.
Amount of the Security Deposit
Massachusetts law limits the dollar amount that a landlord may collect as a security deposit to no more than the amount of one month’s rent. If the landlord will charge a tenant $800 per month for the unit, he or she cannot collect over $800 for the security deposit in Massachusetts.
What Happens to the Security Deposit?
Once collected the landlord will need to deposit the funds from the security deposit into a Massachusetts bank that pays interest. The security deposit must be placed within the Massachusetts bank within the tenant’s first month of tenancy. Also, the landlord must give the tenant the name of the bank, account number and bank address. At the end of each year, and the end of the tenancy itself, the landlord pays out interest made on the security deposit to the tenant. Alternatively, a landlord may reduce the amount of rent owed for a particular month by the amount of interest earned on the security deposit.
End of the Tenancy and the Security Deposit
Once the tenancy ends and if the security deposit is to be returned, the landlord must return the security deposit along with any interest within 30 days of the end of the tenancy, minus the dollar amount of rent that is unpaid and/or the cost of repairs from damage that is beyond wear and tear damage to the apartment.
Qualify Damage with the Statement of Condition
A landlord has 10 days from the date of the start of tenancy or from the date the landlord receives the security deposit (the latter of the two) to produce a statement of condition. In Massachusetts, a statement of condition simply describes the condition of the apartment at the time the tenant takes possession of the apartment. Once completed, the tenant has a 15 day period to make changes or additions to the statement of condition.
When the tenancy ends, a final statement of condition should be made which demonstrates in writing any changes from the original statement of condition. This, as with the original statement of condition should be dated and signed by both parties and any additional pages initialed and dated. This final statement of condition can be used by the landlord to substantiate damages to the unit, and the need to repair that damage for the purposes of applying the cost of repair to the security deposit.
Last Month’s Rent
The landlord must treat any last month’s rent collected at the onset of the tenancy in a similar manner in which the security deposit was treated. Provide a receipt to the tenant with the name of the parties to the lease or tenancy, the description of this payment as being applied to last month’s rent, and who took receipt of the payment. Interest is also earned on last month’s rent and must be distributed annually and at the end of the tenancy.
Lock & Key Fees
The tenant in a residential lease may be charged a fee based upon the cost of a new lock and key required for the tenant’s premises.
Summing it all Up
Massachusetts landlords are held to strict rules regarding the handling of money involved in the landlord-tenant relationship. If you are a landlord, please take the time to learn these rules and change your practices accordingly to avoid appearing to a judge in a Massachusetts Housing Court as though you have no idea what you are doing, or worse, that you do not what you are doing and are avoiding the law on this most important subject.
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