Congratulations, you’ve got a brand new tenant and he just handed you a pile of cash: his first month’s rent, last month’s rent, and a security deposit.
Wonderful! But before you book a Caribbean Cruise, let’s make sure you handle these monies in compliance with Massachusetts state law. Any mistake, however slight or innocent, could subject you to penalties of up to triple the amount of the deposit, plus the tenants’ attorney’s fees. And who needs that?
So let’s take a closer look at how to handle a tenant’s last month’s rent, and the security deposit. These payments seem similar, so some landlords handle them the same way. But they are not the same, and mishandling them is probably one of the easiest mistakes a Massachusetts landlord can make.
Part I: Holding of Last Month’s Rent:
When holding last month’s rent, there are only two main things you need to do: give your tenant a receipt, and pay your tenant interest every year. Sounds easy enough, but what should go on that receipt? It’s pretty straightforward:
- The amount received.
- The date received.
- What it’s intended for (i.e. last month’s rent).
- The name of the person receiving it (if an agent receives it, then also the name of the landlord or owner).
- A description of the premises (property address).
- A statement that the tenant is entitled to interest; and
- The fact that the tenant should provide a forwarding address at termination of tenancy.
And just exactly how much interest do you pay? That’s pretty straightforward too:
- Pay your tenant interest at the end of each year, at a rate of 5% or at the same rate as that paid by the bank, if it is less than 5% (excluding interest accrued during the last month of tenancy).
Unlike the security deposit, last month’s rent does not have to be held in any special account! You don’t need to give your tenant a statement of condition for the apartment, either. And you don’t need to give the tenant a receipt stating the location of these funds. For additional information on handling last month’s rent, please refer to M.G.L. ch. 186 §15B, https://malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186/Section15b.
Well, that wasn’t too difficult, was it? Now you know why we’re lawyers–we love this stuff! Stay tuned for next week when we discuss Part II: Holding of the Security Deposit. In the meantime, if you have any questions about handling your tenant’s last month’s rent or security deposit, or any leasing or eviction questions or issues, we’re here to help! Please contact Shur Law Group at (617) 959-1499 or email@example.com.
Disclaimer: This blog is made available by Shur Law Group for educational purposes only to convey general information and a general understanding of the law, not to provide specific legal advice. Therefore, the information contained in the articles, blog entries or elsewhere on this Website cannot be construed as individual legal advice. Shur Law Group uses reasonable efforts in researching, collecting, preparing and providing quality information and material on this Website, but Shur Law Group does not warrant or guarantee the accuracy, completeness, adequacy, appropriateness, applicability or currency of the information contained in this Website, in websites linking to this Website, or in websites made available through links found either on this Website. By using this blog site you acknowledge there is no attorney client relationship between you and Shur Law Group. This blog should not be used as a substitute for competent legal advice from a licensed professional attorney applied to your circumstances. Users of information contained on this website acknowledge that the information may contain inaccuracies or errors and do so at their own risk.