By: Attorney Ryan Prophett | Associate
Many individuals in Massachusetts view buying rental property as a good investment and an alternative to putting their money in the stock market where they have no control. However, most new landlords do not hire an attorney to advise them and create the necessary lease documents to protect their interests. The two biggest mistakes that we see new landlords make are: (1) failing to comply with the Massachusetts Security Deposit Law, M.G.L.c 186 ’15b; and (2) waiting too long to send a Notice to Quit after a tenant defaults for the first time.
1.Failure to Comply With the Massachusetts Security Deposit Law.
To a new landlord, the Massachusetts Security Deposit Law can be complex and confusing. While some new landlords are able to research and figure out that they are required to put the security deposit in an interest bearing account, most fail to comply with the other technical aspects of the law. This can result in the immediate forfeiture of the security deposit and, more importantly, the potential for an award of treble damages and attorneys’ fees in the tenant’s favor.
First, a landlord must always give a tenant a receipt when they receive a security deposit. When a landlord receives a security deposit from a tenant or prospective tenant, they must provide a receipt indicating the amount of the deposit, the name of the person who received it, the date in which it was received, a description of the premises and the receipt should be signed by the person receiving the security deposit. Second, either upon receipt of the security deposit or no later than ten (10) days after the commencement of the tenancy, the landlord must provide to the tenant a separate written statement indicating the present condition of the premises. The Statement of Condition must be a comprehensive list of all damages in the premises including sanitary and building code violations, must contain the statutory required language, and must be signed by the landlord. The tenant is then to submit a list of separate damages and has fifteen (15) days to return the list to the landlord.
Third, the security deposit must be placed in a separate, interest bearing Massachusetts account. The security deposit cannot be comingled with the lessor’s assets. Many landlords make the mistake of putting the security deposit in an interest bearing account and fail to separate the same into an identifiable separate account. The Security Deposit Law was written this way so that the security deposit is not subject to attachment by the landlord’s creditors. Finally, after putting the security deposit into a separate account, the landlord must give the tenant a receipt indicating the name and location of the bank, the deposit amount and the account number within thirty (30) days.
If the landlord fails to comply with any of the aforementioned steps, the same will require an immediate return of the security deposit to the tenant if they so demand pursuant to M.G.L.c. 186 ’16B(3)(a). If after demand, the landlord continues to refuse to turn over the security deposit, Massachusetts Law provides that the tenant may be entitled to three times the amount of the security deposit and their attorneys’ fees incurred in enforcing that claim. Massachusetts Courts consider this law strictly even if tenant has failed to comply with the provisions of the lease or they owe any back rent to the landlord.
As an attorney representing landlords, we see this time and time again. A landlord, who has complied with its obligations under a Lease Agreement, is still required to return the security deposit to a tenant who breached the Lease. However, Wynn & Wynn, P.C. can prepare these documents and can assist a landlord in protecting their rights and their properties.
2. Failure to Immediately Send Out a 14 Day Notice to Quit After the First Instance a Tenant is Late With its Monthly Payment.
Most new landlords do not realize that the eviction process can take months to reach completion. Even the simplest eviction can be continued due to no fault of the landlord. This allows a tenant who has failed or refused to pay their rent, to continue to live in the property rent free.
All eviction actions are governed by the Uniform Summary Process Rules of Massachusetts General Law 186. All procedures that are not governed by the Uniform Summary Process Rules are governed by the Massachusetts Rules of Civil Procedure. When a tenant fails or refuses to pay rent as is required by a Lease, the landlord may terminate the Lease either (i) in accordance with the provisions of the Lease; or (ii) in the absence of such Lease provisions by a 14 Day Notice to Quit given in writing to the tenant. The Notice to Quit should be served upon the tenant/defendant by a person authorized to make service of process such as a Constable or Sheriff. The 14 Day Notice to Quit must include statutory language that informs the tenant that if they have not received a Notice to Quit for nonpayment of rent within the last twelve (12) months, they have the right to prevent termination of their tenancy by paying the landlord the full amount of rent due within ten (10) days of the receipt of the 14 Day Notice to Quit. This safeguard provision gives the tenant the right to prevent a termination of the Lease by paying or tendering to the landlord the full amount of rent due within ten (10) days after the receipt of the Notice to Quit. The tenant may only cure if they have not received the Notice within the last twelve (12) months.
Many landlords wait too long to serve a 14 Day Notice to Quit. Landlords want to believe tenants who indicate that they will have the full amount of rent the following month or at a later point in time. While the tenant may be telling the truth, a landlord may potentially waste valuable time if they fail to serve a 14 Day Notice to Quit and the tenant does not pay. The safer option is to serve the tenant with the above-referenced 14 Day Notice to Quit the first time the tenant is late on paying their rent. This will begin the eviction process in the event the tenant does not pay their rent in the following months.
While owning an investment property can be profitable, landlords should be aware of the potential risks they take on when entering into Lease Agreements with prospective tenants. One bad tenant can significantly hurt your investment and therefore, we always recommend that landlords hire legal representation to assist them with all matters involving their property.
If you are a landlord and have any questions or would like assistance, please call the attorneys at Wynn & Wynn, P.C. at 1.800.852.5211 or request a free consultation.