Can landlords charge non-refundable security deposits?

Security Deposits in Massachusetts: Non-Refundable Fees Explained

When renting a home or apartment in Massachusetts, understanding the rules surrounding security deposits is crucial for tenants. Security deposits protect landlords against damages, unpaid rent, and lease breaches. However, one common question tenants often have is whether landlords in Massachusetts can charge non-refundable security deposits.

Overview of Security Deposit Laws in Massachusetts

Massachusetts law, under M.G.L. Chapter 186, Section 15B, strictly regulates security deposits. These rules are designed to protect tenants from unfair rental practices and ensure transparency.

Key Points About Security Deposits in Massachusetts

• Amount Limit: Landlords may charge a security deposit up to one month’s rent for the unit.
• Usage of Deposit: The security deposit is meant to cover unpaid rent, damages (beyond normal wear and tear), or other breaches of the rental agreement.
• Return of Deposit: After the tenancy ends, landlords must return the deposit minus any lawful deductions within 30 days.
• Account Requirements: Deposits must be held in a separate, interest-bearing account in a Massachusetts bank or savings institution.
• Written Notice: Landlords are required to notify tenants in writing of where the deposit is held, including the bank name, account number, and interest rate.

Can a Security Deposit be Non-Refundable in Massachusetts?

The Short Answer: No

In Massachusetts, a security deposit cannot be designated as non-refundable. The entire purpose of the security deposit is to secure compliance with the lease terms and cover damages or unpaid rent, which implies it can—and should—be returned if the tenant fulfills all obligations.

Why Non-Refundable Deposits Are Not Permissible

• Legal Definition: By statute, a security deposit is money held in trust to protect the landlord’s interest against potential costs arising after the tenant vacates.
• Return or Deduction Requirement: The law requires any security deposit, or the balance thereof, to be returned to the tenant if the premises are left in good condition and no rent is owed.
• Prohibited Practices: Massachusetts law prohibits landlords from designating all or a portion of the security deposit as “non-refundable” in advance. Doing so could be considered an unfair or deceptive practice.

Permissible Non-Refundable Fees are Different

While security deposits must be refundable, landlords can charge certain non-refundable fees for specific purposes. These include:

• Application fees: To cover the cost of background or credit checks.
• Holding fees: Charged to hold the unit while the tenant completes the application process (must be applied to rent or deposit if the lease is signed).
• Pet fees or pet deposits: These may be non-refundable but must be separate from the security deposit.
• Cleaning fees: Some leases include a separate non-refundable cleaning fee—however, the landlord cannot use the security deposit as a substitute for cleaning.

Crucially, these fees should be clearly disclosed and distinct from the security deposit.

Responsibilities of Tenants Regarding Security Deposits

• Request Written Receipts: Always get a written receipt for the security deposit.
• Document Property Condition: Take photos or videos at move-in to avoid disputes over damages.
• Understand Your Lease: Confirm that any fees labeled “deposit” are refundable and comply with Massachusetts law.
• Follow Up on Deposit Return: If the landlord fails to return the deposit within 30 days after lease termination, tenants have the right to pursue legal action.

What to Do If Your Landlord Charges a Non-Refundable Security Deposit

If you encounter a landlord who attempts to charge a non-refundable security deposit, you can:

• Request clarification: Ask how the fee differs from a traditional security deposit.
• Refer to Massachusetts law: Inform the landlord that security deposits must be refundable.
• Contact tenant advocacy groups or the Massachusetts Consumer Protection Division for guidance.
• Consider legal remedies: Tenants may be able to file a complaint or take the landlord to court for violations related to security deposits.

Summary

• In Massachusetts, security deposits must be refundable and cannot be labeled or charged as non-refundable.
• Landlords may charge non-refundable fees separate from the security deposit, but these must be clearly distinguished and comply with state requirements.
• Tenants have rights to transparency, documentation, and timely return of their security deposit.
• Understanding these rules empowers Massachusetts tenants to protect their financial interests and promotes fair housing practices.

By staying informed, tenants can avoid confusion or disputes around deposits and ensure a smooth renting experience in Massachusetts.