Security deposits in Massachusetts are regulated by Massachusetts General Laws, Chapter 186, § 15B. Certain municipalities may have local laws that supplement state regulations. To ensure full compliance, verify the regulations applicable in your area.

KEY POINTS AT A GLANCE: Massachusetts

Deposit Cap: 1x Monthly Rent

Holding Requirements: Yes

Interest Required: Yes

Return Window: 30 days

COLLECTION & HOLDING REQUIREMENTS

Deposit Cap: Massachusetts state law limits security deposits to one month’s rent.

Holding Requirements: Massachusetts state law requires security deposits to be held in an interest-bearing account located in Massachusetts. Security deposits cannot be commingled with the landlord/property manager’s personal funds.

Information Provided to Tenant: When the security deposit is received, landlords/property managers must give tenants a receipt indicating the amount of the security deposit and the name of the person receiving it. Landlords/property managers must also provide tenants with a written statement about the condition of the premises, which must include a comprehensive list of any damage and a statutorily required disclosure. Within 30 days of receiving the security deposit, landlords/property managers must also provide tenants with a receipt stating the name and location of the bank at which the security deposit is being held, the account number, and the amount deposited.

Interest on Deposits: Landlords/property managers who hold a security deposit for 1 year or longer must pay the tenant the lesser of 5% interest or the amount of interest earned by the bank where the security deposit is being held on the anniversary date of the lease. Landlords/property managers must either pay the interest due to the tenant or tell the tenant that they may deduct the interest amount from the next rental payment. If the tenancy ends before the anniversary date of the lease, the tenant must receive accrued interest within 30 days of termination. 

Landlords/property managers must also give the tenant a statement on the anniversary date of the lease that includes the name and address of the bank where the deposit is being held, the amount of the deposit, the account number, and the amount of interest payable for that year.

RETURN

Timeline: Security deposits must be returned within 30 days of the tenant vacating the rental property. The landlord/property manager must either (1) return the full security deposit with any interest due, or (2) provide the tenant with an itemized list of damages together with the portion of the deposit and interest being returned.

Documentation of Deductions: The itemized statement of damages delivered to the tenant must specify in precise detail the nature of the damage, the repairs necessary to correct the damage, and written evidence such as estimates, bills, invoices, or receipts to show the actual or estimated cost of repair. The statement must be sworn under penalty of perjury. 

Permissible Deductions: Landlords/property managers may deduct the following from security deposit funds:

• Unpaid rent or utilities
• Unpaid increase in real estate taxes (where the tenant is obligated to pay pursuant to a tax escalation clause in the lease)
• Damages beyond normal wear and tear

Penalties: Certain actions, such as failure to hold the security deposit in an interest-bearing account, return the deposit and accrued interest, provide the itemized statement of damages, or transfer the deposit to a successor owner of the premises as required may result in the landlord/property manager forfeiting the security deposit or being liable for up to 3x the amount wrongfully withheld, plus interest, reasonable attorney’s fees, and court costs if the tenant wins in a lawsuit.

SALE OF THE RENTAL PROPERTY

If the rental property is sold, the landlord/property manager must transfer the security deposit and accrued interest to the new owner. The new owner must provide notice to the tenant within 45 days after the sale, which includes notice of the security deposit transfer and the new owner’s name, address, and telephone number.

SECURITY DEPOSIT ALTERNATIVE 

Massachusetts’ security deposit statute was amended on August 6, 2024 to permit payment of a fee in lieu of a security deposit. Pursuant to the amendment, the “Executive Office of Housing and Livable Communities may promulgate regulations to authorize a lessor and a tenant or prospective tenant to agree to the payment of a fee in lieu of payment of a security deposit.” At this time, it does not appear that any such regulations have been announced.