Massachusetts Security Deposit Laws for Landlords

A Massachusetts landlord can collect only four things before a tenancy starts: the first month's rent, the last month's rent, a security deposit of no more than one month's rent, and the cost of a new lock and key. If you take a deposit, you must issue the required receipts and a statement of condition, keep the money in a separate Massachusetts bank account, pay the tenant interest each year, and return it within 30 days after the tenancy ends. Under General Laws chapter 186, section 15B, missing the account or return rules can cost you three times the deposit plus the tenant's attorney's fees.

What you can charge at move-in

At or before the start of the tenancy, section 15B limits you to:

• the first full month's rent;
• the last full month's rent, at the same rate as the first;
• a security deposit up to one month's rent; and
• the purchase and installation cost of a new lock and key.

Nothing else is allowed. The Massachusetts Law Reform Institute's tenant manual lists charges this rules out, including application and holding deposits, amenity fees, upfront pet fees, cleaning fees, and credit check fees. Renting to pet owners covers pet rules you can set, which do not include an upfront pet fee in Massachusetts.

Since August 1, 2025, the same limit applies to anyone acting as your agent. If you hire a broker to find a tenant, you pay that broker; you cannot make the broker's fee a condition of the lease. A tenant pays a broker fee only when the tenant hired the broker before that broker began working with you.

Example: on $2,300 monthly rent, the most you can collect at signing is $6,900 (first month, last month, and a $2,300 deposit), plus the lock and key cost.

After move-in, you cannot demand more than the current month's rent in advance or a deposit above the cap. Section 15B also bars interest or a penalty on late rent until the rent is 30 days late; Massachusetts eviction process for landlords covers what to do when rent stays unpaid. Any lease clause that conflicts with section 15B, or any waiver of it you ask a tenant to sign, is void. Massachusetts lease required disclosures covers what else a Massachusetts lease must disclose. Vacation or recreational rentals of 100 days or less are outside these rules.

The paperwork you must deliver

The tenant has 15 days after receiving the statement of condition, or 15 days after moving in if later, to return it with a signed list of any damage it leaves out. If the tenant sends a list, return a copy to the tenant within 15 days, either signed in agreement or with a clear statement of what you disagree with. You cannot later deduct for damage listed on the statement, or on the tenant's list once you sign it, unless you repaired it and can show the new damage is unrelated and caused by the tenant. Section 15B ties your right to take a deposit to this statement, and the legal aid manual tells tenants they may demand the deposit back when it is missing. Is a move-in inspection required? covers how to record a unit's condition.

Keep a record of each deposit, with any damage, repair dates, costs, and receipts, plus copies of every receipt and statement, for two years after the tenancy ends. The tenant may inspect these records during normal business hours, and a wrongful refusal entitles the tenant to the immediate return of the deposit with interest.

Where the deposit must be held

Put the deposit in a separate, interest-bearing account at a bank located in Massachusetts, set up so your creditors cannot reach it and it can be transferred to a later owner. It cannot sit in your operating account. If you fail to do this, the tenant is entitled to the immediate return of the deposit. Storing security deposits compares bank account rules from state to state.

Last month's rent does not have to be in a separate account, but where you keep it changes the interest you owe, as the next section shows.

Paying interest on the deposit and last month's rent

At the end of each tenancy year, send the tenant a statement with the bank's name and address, the deposit amount, the account number, and the interest owed. Pay the interest or tell the tenant to deduct it from the next rent. If the tenant gets neither within 30 days after the year ends, the tenant may deduct it anyway. Interest built up since the last anniversary is due within 30 days after the tenancy ends. If you do not pay interest on last month's rent within 30 days after the tenancy ends, the tenant can recover three times that interest, plus court costs and attorney's fees.

Example: you hold a $2,400 deposit and $2,400 in last month's rent, both in a bank account paying 1.2%. Each earns $28.80 for the year, so you owe $57.60 at the first anniversary. If you kept the last month's rent outside a bank, its interest would be 5%, or $120, for a total of $148.80.

Deductions and the sworn list due within 30 days

Within 30 days after the tenancy ends, return the deposit with interest, minus only these deductions:

• unpaid rent the tenant did not lawfully withhold;
• unpaid water charges, but only if you bill water separately under the state's submetering law, which requires a submeter installed by a licensed plumber, water-saving fixtures, a lease term providing for the charge, and a certification to the local board of health;
• an unpaid property tax increase owed under a tax escalation clause that meets state rules; and
• the reasonable cost to repair damage caused by the tenant, household members, or guests, beyond reasonable wear and tear.

Under section 22(i), if the tenancy ends during a water billing period for which the water company has not yet billed you, give the tenant the final submeter reading and water bill on the tenancy's last day. If you cannot deliver them that day, mail both by the next day. That bill is due immediately, and you may deduct it from the deposit if unpaid.

For any damage deduction, send the tenant, within the same 30 days, an itemized list sworn to "under the pains and penalties of perjury." It must describe each item of damage and the repair needed, with written proof of the cost, such as estimates, bills, invoices, or receipts. The legal aid manual treats routine painting and cleaning, new locks and keys, and small carpentry repairs as reasonable wear and tear.

You may enter in the last 30 days of the tenancy, or after either side gives notice to end it, to inspect for damage. Arrange the visit with the tenant, photograph each room before the tenant leaves and again after move-out, and get repair estimates in writing so the sworn list is ready before day 30. When a tenant damages your property covers recovering repair costs, and if willful or malicious damage exceeds the deposit, you can still sue for the rest. Small claims court handles claims of $7,000 or less.

Forfeiture and treble damages

You lose the right to keep any part of the deposit, and to counterclaim for damage in the tenant's suit, if you:

1. do not hold it in a separate Massachusetts bank account as required;
2. do not send the sworn, itemized list within 30 days;
3. try to enforce a lease term that conflicts with section 15B, or ask the tenant to waive any part of it;
4. do not transfer it to a new owner when you sell; or
5. do not return the balance with interest within 30 days.

For items 1, 4, and 5, the tenant recovers three times the deposit or balance owed, plus 5% interest from the date it was due, court costs, and reasonable attorney's fees. Example: a $2,400 deposit not returned within 30 days, with no lawful deduction, becomes a $7,200 judgment before interest, costs, and fees.

If you sell, transfer the deposit, any last month's rent, and the interest on both to the buyer. The buyer must notify each tenant in writing within 45 days, with the owner's and agent's names, business addresses, and phone numbers. You stay liable until the transfer and notice are done or the deposit is returned, and a buyer who never receives the money is still liable for it.