How to Handle Last Month’s Rent
| Posted in advice, laws, News - 8 Comments.
By: Katherine Higgins-Shea, Esq.
There is more to properly handling a last month’s rent than giving the tenant or prospective tenant a receipt for their payment. Pursuant to General Laws Chapter 186, Section 15B, not only is the landlord required to give the tenant or prospective tenant a receipt, but the receipt must include “the amount of such rent, the date on which it was received, its intended application as rent for the last month of the tenancy, the name of the person receiving it and, in the case of an agent, the name of the lessor for whom the rent is received, and a description of the rented or leased premises, and a statement indicating that the tenant is entitled to interest on said rent payment at the rate of five per cent per year or other such lesser amount of interest as has been received from the bank where the deposit has been held payable in accordance with the provisions of this clause, and a statement indicating that the tenant should provide the lessor with a forwarding address at the termination of the tenancy indicating where such interest may be given or sent.”
Although many of us know that there is no legal requirement that the last month’s rent be placed in a separate, interest bearing account, it is important to note that if you don’t deposit the last month’s rent in an interest-bearing account, the tenant is entitled to interest at a rate of five percent per year. Furthermore, interest must be paid to the tenant each year on the anniversary date of the tenancy, or if the tenancy ends before one year, for all months except the last month of the tenancy. At the end of each year of tenancy, the landlord must send a statement to the tenant as to the amount of interest due with payment of that interest or a statement indicating that the tenant may deduct the appropriate amount of interest from the next rental payment. If a landlord does not send the statement to the tenant by the anniversary date of the tenancy, the tenant may deduct the amount of interest from the next rental payment.
If you do not pay the interest within 30 days after the end of the tenancy the landlord’s exposure to liability is three times the interest due, plus court costs and reasonable attorney’s fees. While three times the amount of the interest due may not be a lot of money, it is wise to consider the financial impact of court costs and reasonable attorney’s fees, which could be hundreds of dollars, if a tenant is successful.
This article was written before changes were made by the Appellate Court due to Gallo v Marinelli (2016). Read more about this case and decision here.
8 Responses to How to Handle Last Month’s Rent
The only place that ever treated my last month’s rent and security deposit with any respect was the last place I lived, run by Micozzi Management. I loved living there and will always be grateful for the respect they always treated me with.
My landlords never put our security into account and never paid interest on that or our last months rent. Now that we’re moving it’s becoming stressful figuring out how to get our money back without causing problems for future references and such. They’ve always said they don’t follow the rules and now we have to fight them on the money. Having a good relationship with landlords in the beginning is nice but make sure they’re sticking to the laws or it’ll be difficult when you leave.
Can a new landlord charge me last month’s rent even though I’ve been living there for 34 years?
I intend to return my MA tenant’s full last month’s rent and security deposit at the end of his tenancy on Feb. 28th, he is now angrily requesting it all now. It’s my and my wife’s house, the rent covers the mortgage and not much more and I want to do the right thing. Complicating matters we’re all now out of state and he has a friend managing the property. The tenant did not use the initial last month’s rent payment as his last month’s rent. We are also trying to arrange a proxy walk through with photos after which we were going to figure out how to get his last month’s, security and interest from South Egremont MA to Oakland CA where my tenant currently lives. And we’re having trouble arranging a proxy walkthrough, the tenant seems to be resisting. Do I currently owe him the last month’s rent and can he insist on receiving any or all of it before the end of his official tenancy? Up until this we’ve had a great relationship, rent’s always been on time. Wanting to do the right thing here ethically and legally.
This is probably a good time to update this article. The description that you MUST pay 5% if it’s not interest bearing seems to have been changed by the Appellate Court.
See however, Gallo v Marinelli, 90 Mass App Ct 1107 (2016)
I just re-read mass law chapter 186 section 15b which describes taking last month’s rent.
I see that I should give either the interest or a notice that they may deduct the interest from their rent. But if I do not send a notice then the tenant may deduct the interest from their next rent on their own. I’m okay with that.
In practice, complying with the law would be easier if we didn’t have to tracking tenants anniversary and send notices.
As long as I comply with receiving the last month’s rent and giving it back according the Mass law, would I still be liable for treble damages if I never sent annual notices that they may deduct the interest?
Also, for last month’s rent is treble damages just three times the interest? vs Security Deposit it could be three times monthly rent plus interest.
Brian, send us an email to firstname.lastname@example.org.