MassLandlords Security Deposit Forms Overhauled

Just a little joke. We’re actually pretty proud of how concise our forms are. We are immensely grateful to the volunteers and attorneys who have contributed.

Owners and managers should review the October 2017 updates to our Massachusetts security deposit forms.

On October 9, MassLandlords released a major update to our Massachusetts security deposit forms. The update will help members avoid inadvertent non-compliance, which carries penalties equal to three times the amount of the deposit, attorneys’ fees, and risk of a class action lawsuit.

Move-in Money Receipt

The first form in the sequence is the new “move-in money receipt.” This form identifies the purpose and tender for up to four transactions prior to commencement of tenancy. These transactions are first month’s rent, last month’s rent, security deposit, and lock change fee. The form has wording that makes it clear no tenancy has yet been created. This allows owners to take personal checks two weeks prior to intended move-in date to wait for those to clear before signing any agreement. This receipt provides both parties documentation of the preliminary transaction.

Previously this form was called a “security deposit receipt (before bank).” That name has been discarded. The intent is that the move-in money receipt should be issued at the first moment an owner, manager or agent accepts money from the tenant, but before said funds are deposited into an account. The form does not derive from security deposit law. The law does not require a move-in money receipt. This form derives from business best practice.

The move-in money receipt should be used during the application phase of the rental process. The ability to clear checks or provide bank checks ought to be the final evaluation you perform on a tenant.

Security Deposit Receipt

The second form in the sequence is a dedicated “security deposit receipt.” This form is intended to comply with MGL Chapter 186 Section 15B. The form identifies the name and address of the bank where the deposit has been made, the account number of the bank account, and the amount of the deposit. The form also has wording to make the legally mandated disclosure on interest payments.

This form was previously called “security deposit receipt (after bank).” That name has been discarded. The intent is that the “security deposit receipt” is to be issued within 30 days of the owner, manager, or agent having accepted the security deposit money. The owner, manager, or agent must open the security deposit account and deposit the funds prior to issuing the receipt.

The security deposit receipt should be considered part of the application process. If the tenant presents pre-cleared funds (e.g., cash or cashier’s check), the security deposit receipt can be completed before lease signing.

Security Deposit Annual Statement

The final form in the sequence is the “security deposit annual statement.” This form is intended to comply with MGL Chapter 186 Section 15B. We believe it makes all required disclosures, including repetition of the bank account number, bank name and address, as well as the interest earned the previous 12 months. The form also provides checkboxes for compliant return of interest paid. Note that it is not compliant to have the tenant agree to defer payment. A statement of interest and the interest itself must be distributed annually in order to avoid triple damage violations.

This is a new form. The security deposit annual statement should be considered part of your ongoing operations.
Note that we have also added a last month’s rent annual statement. Although interest need not be paid annually, MGL Chapter 186 section 15B does require issuance of a last month’s rent statement. The two forms are separate so you can use one, both, or neither according to your business.

Security Deposit Withholding

If you wish to withhold from a security deposit, your statement of deductions must come with actual documentation of expenses (e.g., vendor or provider receipts). It must also say, “Signed under the pains and penalties of perjury.”

We have not modified our example letter as part of this review.

Where to get the forms

Members can visit MassLandlords.net/forms and view the “Applications” and “Operations” sections.Massachusetts security deposit forms are provided subject to our website’s terms of use. You should consult with an attorney to verify that the forms you use are compliant for your business and circumstances, and that your operational practices conform to statute and regulation. Feedback on the forms can be sent to forms@masslandlords.net.

3 Responses to MassLandlords Security Deposit Forms Overhauled

  1. Dave Powers says:

    It is absolutely ridiculous that landlords are required to pay interest annually from sec deposit accounts or the tenant gets triple the rent? In most cases this amounts to pennies and rarely over $1. Your saying if there is a dispute in housing court because the landlord did not send a check for 23 cents they owe the tenant triple rent (2 – $3000)The stamp cost more than that to send it to them. This needs to be changed. Can anyone at Mass Landlords get a bill sponsored to change this? I start out with a one year lease that converts to a month to month after one year retaining all the stipulations of the original lease because I never remember when a lease expires and don’t have or want a system to remind me. I’ve been in court before and as long as the money is in an interest bearing account, I gave them a letter with the account information and initial deposit amount, and I sent the disposition letter with “signed under the pains and penalties of perjury”, it has never been a problem. I would shit bricks if I lost an eviction case and had to pay the tenant up to $3000 because I didn’t mail them a check for 23 cents.

  2. sheila Grove says:

    I second Dave Powers suggestion that Mass Landlords include changing the outdated rules that require returning security deposit interest to the tenant annually. Maybe add it to the agenda for rent escrow.

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