Security Deposit and Last Month’s Rent
When you move into a new apartment, in addition to the first month’s rent, your landlord may ask you to pay (up front) a Security Deposit, your Last Month’s Rent, and the cost of a new lock and key. He cannot legally ask you to pay anything else. “Pet fees”, “holding deposits”, “fees for credit checks”, and “cleaning fees” are all illegal!
The Security Deposit cannot exceed the amount you pay for your first month’s rent (even if your rent increases later on). Your Last Month’s Rent cannot exceed the amount of your first month’s rent, but can be increased later on (if your rent increases) to the current rent price.
In other words, if your first month’s rent payment is $600, then the maximum amount you will pay up-front will be $1,800 (plus the possible cost of a new lock and key). The $1,800 will include: $600 for your first month’s rent, $600 (maximum) for your Security Deposit, and $600 (maximum) for your Last Month’s Rent. But, if your rent increases in the future, your landlord may ask you to pay him the increase on your Last Month’s Rent. Some landlords only ask for one or the other (a security deposit or last month’s rent), and some don’t ask for either, so your total up-front payment may be much less.
Because landlords have often misused Security Deposits and Last Month’s Rent for their own benefit, Massachusetts has adopted strong laws that protect tenants. Even if your lease contradicts the Security Deposit and Last Month’s Rent laws, the laws still apply and that part of your lease is illegal. This chapter will explain what the Security Deposit and the Last Month’s Rent are, what they are supposed to be used for, and how to make sure they are being used properly.
NOTE: Some smaller landlords may not yet know about these laws. If your landlord requests a Security Deposit and/or Last Month’s Rent but doesn’t follow through with the rest of his obligations because he truly doesn’t know the laws, it is okay for you to let him know about what he is legally expected to do. This will benefit both you and your landlord.
What is a Security Deposit?
The purpose of a Security Deposit is to cover the landlord’s costs if you damage the apartment or leave owing rent. It is a “deposit”, which means it is your money and you will get it back when you move out. Because it is your money, your landlord must keep it in a bank account separate from his own money and must pay you the interest it earns (up to 5% per year). At the end of each year of your tenancy, you should receive the interest payment or a notice to deduct the amount from your next rent payment. But, if you don’t receive the payment or the notice within 30 days from the end of each year of your tenancy, you can legally deduct the year’s interest amount from your next rent payment, on your own accord. Just be sure to write your landlord a letter explaining what you have done, and keep a copy of the letter for yourself.
If your landlord requests a Security Deposit, there are certain obligations he must legally fulfill:
- At the time that you give him your deposit, he must give you a written receipt that includes the following information:
· both your name and your landlord’s name
· your address and apartment number
· the amount of money received
· the date it was received
· the intended use of the money
· a statement that you are entitled to the interest on the deposit.
- Within 10 days, your landlord must provide you with what is called a Statement of Conditions, which lists all the damage that exists in your apartment and in the building’s common spaces at the time that you move in. The purpose of this document is so that you aren’t charged for damage that was done before you occupied the space. Check the apartment over carefully before signing the statement; and if you notice something that was left out of the list (even a small defect), you can attach an additional list and send it back to your landlord within 15 days of receiving it. Then, he has 15 more days to sign it and return it to you. If you approve this time, sign and send it back within 15 days. Remember to keep a copy for yourself.
- Within 30 days of taking your deposit, your landlord must give you a written statement of the name and location of the bank and the account number where he has placed your money, as well as the percentage of interest it accrues.
If you don’t get this receipt, there is no proof that you ever paid the security deposit. Don’t lose this receipt!
When you move out of the apartment, your landlord has 30 days to return your Security Deposit (along with the remaining interest) to you. This is unless money is deducted from it to pay for unpaid rent or to repair any damage that was done by you or your guests, which does not include “reasonable wear and tear.” If your landlord wants to make a deduction for repairs, he must give you a complete list of the damaged items and the repair costs needed to correct them, within 30 days of your moving out. If he doesn’t do this within the 30 days, he gives up the right to keep any portion of your security deposit.
If your landlord refuses to return your security deposit to you, it is usually advised that you write him a letter, after the 30 days have past, requesting that he return your security deposit (in full) to you immediately or you will take further action.
IF you don’t receive the security deposit or an itemized letter of deductions (and the remainder of the deposit) within 30 days of moving out, or
IF your landlord does not properly deposit your security deposit in a bank account separate from the landlord’s own funds, or
IF your landlord doesn’t transfer your deposit (along with its interest) to your new landlord when he sells the building,
THEN, you might be entitled to receive three times the amount of your deposit in court!
(If it comes to this point, however, and it looks like you might be headed to court, it is very important that you get in touch with a tenants’ advocate or lawyer to advise you and to make sure that you proceed correctly.)
What is Last Month’s Rent?
The purpose of a Last Month’s Rent deposit is to protect the landlord from a tenant leaving without paying rent for the last month of their tenancy. You should not expect to get this money back when you move out, but you also should not pay rent for the last month that you live in your apartment – it’s already been paid. Unlike the Security Deposit, your Last Month’s Rent does not have to be put into a separate account, but you are supposed to receive the interest it earns (up to 5%) from the account where your landlord placed it.
At the time you give your landlord your Last Month’s Rent, you should receive a written receipt that includes the same information as does the receipt from your Security Deposit (refer to #1, on page 15). But your landlord does not need to give you information about the bank or account in which your Last Month’s Rent was placed, although he should tell you the percentage of interest that it earns.
At the end of each year of your tenancy your landlord must send you information on how much interest your Last Month’s Rent has earned in that year, along with either the payment of that interest or a notice to deduct the amount from your next rent payment. If you haven’t received this information from him within 30 days of the end of each year of your tenancy, you can legally deduct the year’s interest amount from your next rent payment yourself. Just be sure to send your landlord a letter explaining what you have done, and keep a copy for your records.
Security Deposits and Last Month’s Rent for Section 8 Tenants
This policy has recently changed! A landlord of a Section 8 tenant can now ask for up to the full amount of the “contract rent” (the tenant’s monthly contribution plus the Housing Authority’s monthly contribution) as an up-front Security Deposit. In other words, if you pay $300 per month and the housing authority pays $500 (to make up the full $800 rent payment that your landlord receives every month), then your landlord can request up to $800 from you as a Security Deposit. This can often be hard for Section 8 tenants to afford, and for this reason there are funds that exist to specifically help low-income tenants pay their up-front tenancy costs. Call the Mayor’s Hotline, your local tenant advocacy group, community center or health center to find out about these funds. These numbers can be found in the Tenants Resource List at the back of this manual.
On the other hand, a landlord of a Section 8 tenant who asks for an up-front Last Month’s Rent payment may only request the tenant’s monthly contribution from the tenant. The Housing Authority will pay the diference. In other words, (according to the example above) your landlord can only ask you to pay $300 as a Last Month’s Rent payment, and the Housing Authority will pay the other $500.
Landlords who rent under Section 8 leases and ask for Security Deposits and/or Last Month’s Rent are subject to the same laws as are other landlords (which are explained above).