Massachusetts Security Deposit Law: What Landlords Must Get Right
Updated 2026-07-19 · 7 min read · General information, not legal advice
Massachusetts has one of the strictest security-deposit statutes in the country — M.G.L. c. 186 §15B — and it is strict about procedure, not just fairness. A landlord who collects a deposit and skips a receipt, an escrow account, or an interest payment can lose the right to keep any of it, even against a tenant who caused real damage. Here is what the statute requires, in the order you'll hit it.
What you can collect at move-in
At or before the start of a tenancy, §15B lets a landlord collect only four things:
- First month’s rent
- Last month’s rent
- A security deposit of no more than one month’s rent
- The cost of a new lock and key
Application fees, pet deposits, “move-in fees,” and cleaning deposits are not on that list. If your lease or your ledger shows anything else charged up front on a Massachusetts tenancy, that clause deserves a hard look with counsel.
The deposit must sit in a separate Massachusetts escrow account
A security deposit is the tenant’s money in your care. The statute requires it to be held in a separate, interest-bearing account in a Massachusetts bank, protected from your creditors — not commingled with rent income or your operating account. The tenant is entitled to a receipt when they hand over the deposit, and within 30 days a second receipt naming the bank, its address, the account number, and the amount held.
This is the requirement self-managing landlords miss most often, and it is the reason a lease that is silent on where the deposit is held is itself a warning sign.
Annual interest — 5% or the actual bank rate
If you hold the deposit for a year or more, the tenant is owed interest each year — 5% per year, or the actual rate the escrow account earned. The same rule applies to last month’s rent collected in advance. If the interest isn’t paid within 30 days of each tenancy anniversary, the tenant may deduct it from their next rent payment.
The statement of condition
When you take a deposit, you must give the tenant a written statement of the unit’s condition within 10 days of the tenancy starting. The tenant then has 15 days to return their own list of existing damage. This exchange is the agreed baseline that any later “damage” deduction is measured against — the statute builds the deduction right on top of it.
What you can deduct — and what you can’t
§15B narrowly limits deductions to three categories:
- Unpaid rent
- The tenant’s unpaid share of a real-estate tax increase, if the lease has a valid tax-escalation clause
- Damage beyond reasonable wear and tear
Routine move-out cleaning, carpet shampooing as a matter of course, and generic “restoration fees” are not deductible. Deductions for damage must come with an itemized, sworn statement and supporting repair estimates or receipts, delivered within 30 days of the tenancy ending — along with whatever balance remains.
What non-compliance costs
Procedural failures — no escrow account, no receipts, no itemized sworn statement — can forfeit your right to retain any of the deposit. Wrongfully keeping a deposit can expose you to treble damages plus interest, court costs, and the tenant’s attorney’s fees. On a $2,400 deposit, treble damages alone is $7,200 — before interest, costs, and fees. The procedure is the protection.
What Leasella checks
Leasella’s lease review flags Massachusetts leases that authorize deductions broader than §15B allows (routine cleaning charged to the deposit is the classic), and leases that collect a deposit while staying silent on the escrow account and annual interest. The paid reconciliation audit goes further: it cross-references the deposit your lease names against your actual bank statements, so you can see whether the money is where the statute says it should be.