If you are a Massachusetts landlord, when you leased your premises, you took a security deposit from your tenant. Unfortunately, you did not comply with the strict requirements set forth in the Security Deposit Act.
Perhaps you failed to deposit the funds in a separate, interest-bearing account in a bank located within the Commonwealth but instead deposited the money in your own checking account, which is a violation of the Act.
Now, the tenant falls behind on his rent and you want to evict the tenant.
While it may seem counterintuitive, it would be prudent for the landlord to return the security deposit prior to serving a notice to quit.
The landlord will be shocked upon hearing this suggestion. It sounds bizarre and contrary to common sense!
Under the scenario described above, where the landlord fails to deposit such funds in an account as required, or where the landlord fails to give a receipt to the tenant within thirty days after such deposit is received, the tenant is entitled to immediate return of the security deposit plus the tenant shall be awarded damages in an amount equal to three times the amount of such security deposit . . 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.
Let's say the security deposit was $2,000. The landlord would have to return the $2,000 deposit, and pay the tenant $6,000 in damages, pay the tenant 5% interest, and pay the tenant's court costs and reasonable attorney's fees.
If the tenant files a counterclaim for violation of the security deposit as a defense to the eviction and if the value of the tenant's security deposit counterclaim against the landlord exceeds the value of the landlord's nonpayment of rent claim against the tenant, the tenant wins and the landlord loses.
Thus, the landlord will not be able to evict the tenant.
Is there anything that the landlord can do to prevent this nightmare from happening? The landlord can likely avoid this result by returning the tenant's security deposit plus interest prior to starting the eviction process.
If you are a landlord contemplating to evict a tenant, whether for nonpayment of rent, or where the tenancy has been terminated without fault of the tenant or occupant, or in an eviction for cause, it is important to first analyze whether the the security deposit law has been violated.
As a landlord you should anticipate that the tenant will raise the security deposit as an issue in the case. If you have violated the security deposit law, consider returning the security deposit as a first and necessary prerequisite to starting the eviction process, and to reduce exposure to liability.
Renee Lazar is a Massachusetts landlord-tenant lawyer who practices in Middlesex and surrounding counties.
Whether you are a landlord or tenant, call 978-844-4095 to schedule a FREE one hour no obligation consultation.