Tuesday, February 8, 2011

Tenants win interpretation of security deposit law

The Massachusetts security deposit law imposes severe obligations on landlords. Tenants have argued a strict interpretation of the law and landlords have argued for good faith compliance. In the case of Lopes v. Williams, 2010 Mass. App. Div. 227 (2010) the court sided with tenants in this argument. In this case, the landlord failed to place the security deposit in an escrow account. This failure required the landlord to return the security deposit to the tenant within thirty days of receiving the security deposit. An argument advanced in the past was that the tenant had to request the return of the security deposit. This case makes it clear. The landlord either holds the money properly in an escrow account or must return the security deposit to the tenant in thirty days even if the tenant does not request a return of the money. Failure to do so will cause the landlord to pay three months rent and attorney fees to the tenant. This case also dismissed the good faith argument. It is clear that landlord’s intentions or understanding of the law is not relevant to the landlord’s obligations and liabilities. The landlord must strictly follow the requirements of the security deposit law.

I think that this law is so difficult for landlords that unless they are professional landlords, they shouldn’t take a security deposit. They shouldn’t run the risk of paying three months rent and attorney fees.