2024 Changes to Security Deposit Law, Explained
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SECTION 50. Section 15B of chapter 186 of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by inserting after the figure “(2)”, in line 25, the following words:-
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provided, however, that 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; provided further, that any such regulations shall: |
The EOHLC may create regulations that allow a landlord and tenant (or future tenant) to agree that a fee should be paid instead of a security deposit. There are restrictions on those regulations. |
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(A) require the lessor to utilize a fee collected to waive a security deposit to cover for unpaid rent or unit damage that applies to the tenant’s lease; |
The landlord can use the fee to cover unpaid rent or damage that occurs during the lease period. This will be in place of a traditional security deposit. You cannot collect both a fee and a security deposit. The lessor is not required to take the fee. If they take the fee, it must be used to cover rent or unit damage. Note that under the rest of 186 15B, a security deposit may be used also to cover unpaid water and unpaid taxes pursuant to a tax escalation clause. The fee does not work this way. |
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(B) require that a fee so collected be: (I) entirely or partially non-refundable; provided, however, that the lessor shall disclose that the fee is non-refundable in the lease; provided further, that the tenant shall agree to the fee and acknowledge that the tenant understand that it is entirely or partially non-refundable, as the case may be, in writing; |
The fee may be entirely or somewhat non-refundable, as long as the lease states this. The tenant must also agree to the fee and state in writing that they understand the fee is not refundable. |
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and (II) a recurring monthly fee, or payable upon any schedule and in an amount that the lessor and tenant agree upon, as authorized by the executive office; |
The fee can be charged every month, but it can also follow a different schedule offered by EOHLC that the landlord and tenant agree on. The amount of the fee is also negotiable (hold on). |
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(C) limit the total sum of the fee or recurring payments, regardless of the duration of the lease and any extensions thereto, to an amount not to exceed 1 month’s rent; |
No matter how long the lease is, the total amount of the fee the tenant pays cannot be more than one month’s rent. This includes if the lease is renewed. It is not clear what happens if you end one lease and start a new one with the same tenant. |
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(D) require that the fee be made optional for both the tenant and the lessor and that the tenant be permitted to choose to pay a full security deposit rather than the fee; |
If the tenant does not want to pay the fee, the landlord must let them pay a full security deposit instead. |
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(E) require a lessor who offers such a fee in lieu of security deposit: (I) to offer the option of a fee in lieu of a security deposit to every prospective tenant whose application for occupancy has been approved, regardless of income, race, gender, gender identity, disability, sexual orientation, immigration status, size of household or credit score; and |
If you offer a fee instead of a security deposit, you cannot discriminate. You must offer this option to every approved applicant, regardless of their income, race, gender, gender identity, disability, sexual orientation, immigration status, size of household or credit score. This conflicts with the existing discrimination law at 151b Section 4, which does not list size of household or credit score as protected class statuses. You can still refuse to rent to someone based on the size of household (see 105 CMR 410) or credit score. This conflicts further with existing discrimination law by specifying “gender” rather than “sex.” We read “gender” as interchangeable with “sex”, only because the provision separately calls out “gender identity,” but Chapter 151B Section 4 still uses “sex.” The new law omits religion, national origin, sex, genetic information, veteran status, disability, marital status and receiving public assistance. This implies that one may be able to use those attributes in deciding whether to permit the deposit replacement fee. As this poorly drafted law will fall to either EOHLC as regulator or a court or MCAD to interpret, play it safe and consult with an attorney before making any decision on protected class status defined either here or in Ch. 151B Section 4. |
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(II) not to consider such factors and categories when setting the amount of the fee; and |
You cannot change the amount of the fee for your tenants based on anything in that list. |
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(F) allow a tenant who agrees to pay a fee to waive a security deposit to opt-out of the obligation to pay such fee if such tenant pays the security deposit that would otherwise be in effect for the tenant’s apartment on the day the tenant chooses to opt-out of such fee; |
If your tenant agrees to pay the fee and then changes their mind, you have to let them. However, if your tenant changes their mind, you can require them to pay a security deposit instead. That becomes effective the day they tell you they do not want to pay the fee. If you used the fee to purchase an insurance policy to protect against damage, this section nullifies the renter's obligation to pay any going-forward premium. They could tell you near the end of their tenancy they want to pay a security deposit, and you would have to make that happen in order to prevent further fees. |
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provided further, that the sum of fees paid to waive a security deposit and the payment of the security deposit shall not exceed, in total, the amount of 1 month’s rent; |
If your tenant has already paid some amount of fees when they change their mind, you must subtract that from the security deposit they will have to pay. The security deposit and any fees already paid cannot be more than one month’s rent. This section protects fees previously paid. If you used a previously paid renter fee to purchase an insurance product, that fee remains yours. |
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and provided further, that the executive office shall consult with the office of the attorney general prior to promulgating regulations authorizing a fee in lieu of a security deposit under this section.
Before the EHOLC makes any regulations about fees that can replace security deposits, they have to talk to the attorney general’s office and get their input.
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It would have been nice if they had listed MassLandlords, too! | |
