Massachusetts security deposit rules for landlords, explained

What you can collect at move-in

• First month's rent.
• Last month's rent (which also earns interest for the tenant).
• A security deposit of no more than one month's rent.
• The cost of a new lock and key.

Nothing else: no pet deposit, no cleaning fee, no "administrative" fee at signing.

The paperwork, in order

1. Receipt when you take the deposit

   Showing the amount, the date, the premises and the landlord's name. If it is paid by check or online, the receipt still has to exist.

2. Statement of condition

   Given at or within 10 days after the start of the tenancy, listing any existing damage. The tenant has 15 days to add to it and sign; the landlord keeps a copy. Without this, deductions for damage are hard to defend.

3. The bank receipt within 30 days

   The deposit goes into a separate, interest-bearing account at a bank in Massachusetts, protected from the landlord's creditors, and the tenant gets a receipt with the bank's name and address, the account number and the amount.

4. Interest every year

   The tenant is owed interest on the deposit and on last month's rent, paid or credited each year on the anniversary of the tenancy, at 5% a year or the lower rate the bank actually paid. Deposit interest is owed once the tenant has stayed a year; interest on last month's rent has no one-year wait.

Returning the deposit

Within 30 days after the tenant moves out, return the deposit with interest, less only: unpaid rent, an unpaid share of a real estate tax increase if the lease allows it, and the cost to repair damage beyond reasonable wear and tear. Any deduction for damage needs an itemized list, sworn to by the landlord, with receipts or written estimates. No list, no deduction. Routine cleaning, carpet cleaning and repainting at move-out are not damage: in 2025 the Supreme Judicial Court (Peebles v. JRK Property Holdings) confirmed those costs cannot come out of the deposit.

What it costs to get it wrong

The statute awards the tenant three times the deposit plus interest, court costs and attorney's fees for failing to hold the deposit in a separate Massachusetts interest-bearing account, failing to transfer it to a new owner on a sale, or failing to return it within 30 days. Deducting without the sworn, itemized list can also cost the landlord the right to keep any of it. Courts apply this strictly, and it is the single most common and most expensive paperwork mistake small landlords make in Massachusetts.

When a building is sold or management changes

The deposits go with the building. On a sale, the deposits and the accrued interest are transferred to the new owner, who becomes responsible for them and must notify the tenants in writing within 45 days. When management changes, the deposits move to a compliant account under the new manager and each tenant gets written notice of the new bank and account. If the records do not exist, the new manager's first job is to rebuild them.

How Copper Bottom handles deposits

Every deposit on a building we manage is in a separate interest-bearing Massachusetts account, the receipts and statement of condition are in the tenant's file, interest is credited yearly, and move-out inspections are photographed and itemized the same way every time. When we take over a building, reconciling the deposits is part of the first 30 days.

Deposit questions

General information, not legal advice, checked against M.G.L. c. 186, s. 15B in October 2026. Talk to a Massachusetts attorney about your situation.

Official sources: M.G.L. c. 186, s. 15B · Mass.gov: Security deposits and last month's rent · Peebles v. JRK Property Holdings (SJC 2025)