Compliance · South Boston
Massachusetts Security Deposit and Last Month's Rent Rules for South Boston Landlords
- At move-in you can collect first month's rent, last month's rent, a security deposit of up to one month's rent, and the cost of a new lock and key. Nothing else.
- Hold the deposit in a separate, interest-bearing account at a Massachusetts bank, and give the tenant a receipt with the bank and account details within 30 days.
- Both the deposit and last month's rent earn interest of 5% a year, or less if the bank pays less, owed to the tenant every year.
- Return the deposit within 30 days of move-out, with a sworn, itemized damage list and receipts for anything you keep, or you can owe three times the deposit.
Massachusetts has one of the strictest security deposit laws in the country, and most of the trouble comes from small, technical mistakes rather than bad intentions. A missing receipt or a deposit sitting in your regular checking account can turn a $3,000 deposit into a much bigger bill. Here's how the rules work for South Boston rental owners.
What you can collect at move-in
Under M.G.L. c.186, §15B, a landlord or their agent can require only four payments before a tenant moves in:
- First month's rent.
- Last month's rent, at the same rate as the first month.
- A security deposit of no more than one month's rent.
- The cost of buying and installing a new lock and key.
Application fees, pet deposits, move-in fees and holding fees aren't on that list. If you hire a broker to lease the unit, you also pay that fee yourself now. Our guide to the Massachusetts broker fee law explains that change.
Last month's rent: receipts and interest
When you take last month's rent, give the tenant a receipt that shows the amount, the date, that it's for the last month, who received it, a description of the unit, a statement that the tenant is entitled to 5% interest each year, and a request for a forwarding address.
Last month's rent doesn't have to sit in a separate account, but it earns interest from the first day of the tenancy: 5% a year, or the lower rate your bank pays if you hold it in a bank. If you raise the rent, you can ask the tenant to top up the last month's rent to match. And you can't quietly use the security deposit as last month's rent, or the other way around, unless you and the tenant agree.
Security deposits: how to hold them
This is the part that trips up owners most. A security deposit must be:
- Receipted when you take it. The receipt shows the amount, the date, who received it, a description of the unit, and is signed by whoever took the money.
- Paired with a statement of condition listing any existing damage, given within 10 days of the start of the tenancy. Our September 1 turnover checklist covers that step.
- Held in a separate, interest-bearing account at a bank located in Massachusetts, protected from your creditors. Not your operating account.
- Confirmed in writing within 30 days with a second receipt listing the bank's name and location, the account number and the amount.
Once a tenant has been in place for a year, the deposit earns 5% a year, or less if the bank pays less. Each year, send the tenant a statement with the bank, account number, deposit amount and interest owed, and either pay the interest or let them deduct it from rent. If they don't receive it within 30 days of the anniversary, the law lets them deduct it themselves.
Talk to a local property managerHolding deposits for several units or a whole building? Tell us about your property and we'll talk through how we handle leases, deposits and rent collection.
Start your intakeReturning the deposit after move-out
You have 30 days after the tenancy ends to return the deposit and any interest. You can deduct only:
- Unpaid rent or water charges the tenant didn't lawfully withhold.
- Unpaid real estate tax increases under a valid tax escalation clause.
- A reasonable cost to repair damage the tenant or their guests caused, beyond normal wear and tear.
To keep anything for damage, you must give the tenant an itemized list within the same 30 days, signed under the pains and penalties of perjury, with estimates, bills, invoices or receipts. You can't charge for damage that was already on the statement of condition.
What happens when the rules aren't followed
If you don't hold the deposit in a proper account, don't return it on time, or don't transfer it when the building sells, the tenant can recover three times the deposit, plus interest, court costs and attorney's fees. Missing the itemized list means you lose the right to keep any of it for damage. Lease clauses that conflict with the statute, and tenant waivers, are void.
Selling or buying a South Boston rental
When a building changes hands, deposits, last month's rent and accrued interest go to the new owner, who must notify each tenant in writing within 45 days. Buyers should ask for a deposit ledger and bank statements before closing.
Security deposit checklist for Massachusetts landlords
| When | What to do |
|---|---|
| Lease signing | Collect only first, last, deposit (up to one month) and lock cost. Give signed receipts for last month's rent and the deposit. |
| Within 10 days of move-in | Give the signed statement of condition. The tenant has 15 days to return it with any additions. |
| Within 30 days | Deposit is in a separate, interest-bearing Massachusetts bank account; send the bank receipt. |
| Each anniversary | Send the interest statement and pay or credit interest on the deposit and last month's rent. |
| Within 30 days of move-out | Return the deposit and interest, or send the sworn, itemized damage list with receipts. |
| For two years after | Keep records of each deposit, repairs, receipts and statements of condition. |
State law also now lets the state housing office write rules for an optional fee in place of a deposit. Check the current rules with your attorney before offering one.
Quick answers
Can a Massachusetts landlord collect first, last and a security deposit?
Yes. A landlord can collect first month's rent, last month's rent, a security deposit of up to one month's rent, and the cost of a new lock and key. No other move-in charges are allowed.
How long does a Massachusetts landlord have to return a security deposit?
30 days after the tenancy ends. Any deductions for damage need a sworn, itemized list with estimates, bills or receipts within the same 30 days, or the landlord can lose the right to keep any of it.
Sources
This article is general information for South Boston property owners, not legal or tax advice. Rules change, so confirm the current requirements with the agencies linked above or your attorney.