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I just read my rental agreement carefully and I found some bad terms. The security deposit term in my rental agreement said:

"No interest will be paid on this money (security deposit) and in no case will it be applied to back or future rent. It will be held intact by Landlord until at least thirty working days after Tenants have vacated the property. ... This deposit money minus any necessary charges for missing/dead light bulbs, repairs, cleaning, etc., will be returned to Tenant with a written explanation of deductions, within 60 days after they have vacated the property".

But the laws said 1) there should be interest on the security deposit; 2) the landlord should give the itemized list of damages and return the deposit within 30 days (not working days).

Which should the landlord obey, the law or the agreement? Or is there any law said "unless the landlord and tenants got into agreement" to make the agreement legal?

Also, I did not receive the receipt of my deposit from my landlord, so I assume I can ask my deposit back. But can I get my deposit back even after the lease ended (I really doubt about whether the landlord will return my deposit, but it will be bad to do it when I still lived in the house with the landlord)?

Thanks

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2 Answers 2

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The terms of the lease are fairly illegal. The relevant statute is here. A security deposit must be deposited in a separate account (1e), a signed receipt must be given upon receipt of the deposit (2b), the deposit must go in an interest-bearing account with a receipt showing name and location of bank and account number provided within 30 days (3a), also note that "Failure to comply with this paragraph shall entitle the tenant to immediate return of the security deposit". Subsection 4 requires returning the deposit within 30 days (not "waiting at least 30 days", much less 30 working days), minus deductions for damage, specified under 4(iii) as damage excluding normal wear and tear (light bulbs burning out). This does not include cleaning. and "No deduction may be made from the security deposit for any purpose other than those set forth in this section".

Subsection 6 says:

The lessor shall forfeit his right to retain any portion of the security deposit for any reason, or, in any action by a tenant to recover a security deposit, to counterclaim for any damage to the premises...

and the conditions triggering that forfeiture include under (6a) failing to deposit the funds per (3), or (6c)

uses in any lease signed by the tenant any provision which conflicts with any provision of this section and attempts to enforce such provision or attempts to obtain from the tenant or prospective tenant a waiver of any provision of this section

which may be the case here and (6e)

fails to return to the tenant the security deposit or balance thereof to which the tenant is entitled after deducting therefrom any sums in accordance with the provisions of this section, together with any interest thereon, within thirty days after termination of the tenancy.

("within" means "after N days or less").

Subsection 7 states that

If the lessor or his agent fails to comply with clauses (a), (d), or (e) of subsection 6, the tenant shall be awarded damages in an amount equal to three times the amount of such security deposit or balance thereof to which the tenant is entitled plus interest at the rate of five per cent from the date when such payment became due, together with court costs and reasonable attorney's fees.

And subsection (8) statutorily states DaleM's point about contract terms not being above the law:

Any provision of a lease which conflicts with any provision of this section and any waiver by a tenant or prospective tenant of any provision of this section shall be deemed to be against public policy and therefore void and unenforceable.

It would be interesting to see if the Massachusetts courts interpret this as being an automatic severability clause.

[Addendum]

Security deposit law in Massachussets seems to be one of those cases where professional legal advice is virtually mandatory. Subsection 3a says

Any security deposit received by such lessor shall be held in a separate, interest-bearing account in a bank, located within the commonwealth under such terms as will place such deposit beyond the claim of creditors of the lessor, including a foreclosing mortgagee or trustee in bankruptcy, and as will provide for its transfer to a subsequent owner of said property

An attorney would be typically required to understand what the italicized portions mean. A reasonable interpretation would be that you have to set up an escrow bank account on behalf of the tenant. To do that, though, the tenant must cooperate to some extent (providing a Social Security number, providing acceptable ID). There is no law requiring a tenant to cooperate, which apparently puts the landlord in a legal bind.

The trick is that the statute has been interpreted "functionally" in Karaa v. Kim 86 Mass. App. Ct. 714 citing Neihaus v. Maxwell 54 Mass. App. Ct. 558 as simply meaning that the landlord cannot deposit the security money into their own personal bank account. In Neihaus, the landlord handed the problem over to a property management company, which had in place suitable accounting procedures so that the desiderata of being beyond the claim of creditors, being in a bank in the commonwealth, and being separate, were satisfied. In the case of Karaa, the tenants did not ever supply a Social Security number: the court ruled that the tenants action did not excuse violation of the statute, stating "The failure of the tenants to provide a Social Security number did not preclude the Karaas from establishing a separate account in compliance with § 15B(3)(a)". A Massachussets attorney with specialization in this area would know this, and that is why one needs to hire an attorney.

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  • I know that a security deposit must be deposited in a separate account. But months ago, the landlord asked me (and my roommate) to sign an agreement (say we agreed that she did not put the deposit into the bank) since I refused to sign W-9 table (it is not BOA but Merrill Edge, and I don't know what she would like to do). Is such an agreement illegal no not? Thanks for you help.
    – wind_wings
    May 21, 2016 at 1:46
  • A separate agreement to set aside a provision of the law is covered in subsection 8: "shall be deemed to be against public policy and therefore void and unenforceable". Mass. law on those accounts is different from WA law so I may have a hard time getting details: you raise an interesting point about tenant non-cooperation in setting up an account.
    – user6726
    May 21, 2016 at 4:22
  • I signed on a table which may be used to set a landlord-tenant account at first (that after about 2 months I moved in). On the next day, I argued with landlord because of some other stuffs. Several days later, she said that table was not enough and I must signed on a W-9 table. She forwarded me an email from Merrill Edge. Considering the recent quarrel and because I don't know she must save the deposits into a separated account at that time (I still don't know whether I must sign the table now), I suggested that she don't need to do it since I don't want to sign it.
    – wind_wings
    May 21, 2016 at 14:36
  • I don't believe in her. She said it is a landlord-tenant account which will be given to me directly after I left. But it is just "she said".
    – wind_wings
    May 21, 2016 at 14:44
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No one can contract outside the law.

If the law requires interest to be paid on a deposit and the agreement says it isn't then the whole agreement is void - it does not and never did exist. An agreement (or a statute) may contain a savings/severance provision that allows a court to "read down" the agreement where it conflicts with the law but if it is not there there is no contract.

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  • Thanks. What I am afraid is that I did not read the law carefully, so I may miss some statement like "unless they went into agreement".
    – wind_wings
    May 21, 2016 at 1:51

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