September 27, 2021

Volume XI, Number 270

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September 27, 2021

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Residential Security Deposits Provide Protection for a Landlord, but There Can Be Unexpected Pitfalls

On April 27, 2016, the ever-perilous legal landscape for Massachusetts residential landlords developed an additional potential pitfall. The statute governing residential security deposits, G.L.c. 186, §15B, imposes several requirements for handling security deposits, all of which must be followed precisely. This has often given landlords a rude surprise, particularly landlords who are renting their own home, or just a few apartments. In Meikle v. Nurse, SJC-11859, the Supreme Judicial Court held that a residential tenant may defend against, and potentially defeat, a landlord’s eviction (summary process) action by asserting landlord’s violation of the security deposit statute.

The case began when landlord sued in the Housing Court, seeking to evict tenant and recover unpaid rent. After trial, the Judge awarded possession to landlord, plus three months of unpaid rent.  On tenant’s counterclaims, the court found that landlord had violated the security deposit statute by failing to provide tenant with a receipt acknowledging acceptance of the deposit, and failing to pay interest earned on the deposit over the multi-year tenancy. The trial Judge ruled that the security deposit violations were not a defense to landlord’s claim for possession, and awarded security deposit damages to the tenant, plus interest. After an offset for the Judge’s award of security deposit damages, the tenant still owed a balance of approximately $2,000 in unpaid rent.

Eviction notice

On tenant’s appeal, the Supreme Judicial Court reversed, holding that even though the tenant was behind in rent after return of the security deposit plus interest, the security deposit violations may be a defense to landlord’s claim for possession.

The Court neatly breaks the “plain language” of an otherwise unwieldy eviction statute, G.L.c. 239, §8A, into everyday English: “a tenant may retain possession if two conditions are met: (1) the tenant prevails on a counterclaim or defense” related to the landlord-tenant relationship; “and (2) the damages on that defense or counterclaim exceed the amount due the landlord, or if the damages are less than the amount due the landlord, the tenant pays to the court the amount due within one week.” Since the security deposit law violation was related to the tenancy, the Court remanded the case to Housing Court. If tenant pays the balance due landlord to the clerk within the statutory one week time limit, tenant may retain possession of the premises.

Although landlords will not view it as much of a concession, the Court explained that the victorious tenant does not retain the right to possession “in perpetuity.” Once landlord has cured whatever violation was successfully asserted in defense, and tenant has paid any damages owed, landlord may re-institute an eviction action and regain possession so long as there are grounds to do so.

Meikle illustrates the problems Massachusetts landlords encounter when they do not scrupulously follow requirements applicable to residential tenancies. As happened in Meikle, failure to comply with the security deposit statute may expose landlords to return of a security deposit mid-tenancy, treble damages with costs and interest, attorneys’ fees, and potential inability to regain possession from a tenant who is clearly in breach.

Whether renting a single home, apartment, or an entire multi-unit apartment complex, landlords (and tenants) should consult a lawyer familiar with the applicable requirements, learn the complexities of the law, and ensure that they are adhered to without exception.

© 2021 SHERIN AND LODGEN LLPNational Law Review, Volume VI, Number 120
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About this Author

David A. Michel, Complex Civil and commercial litigator, Sherin and Lodgen, Boston Law Firm
Partner

David A. Michel assists clients in resolving complex business, real estate, construction, and employment disputes.

A partner in the firm’s Litigation Department, his experience includes representing companies in a variety of complex civil and commercial disputes in federal and state court and through alternative dispute resolution. In particular, David represents companies, developers, and landlords involved in real estate and construction disputes, including adverse possession, construction and design contracts, and zoning. He also represents...

617-646-2032
Partner

Sander A. Rikleen is a partner in the firm’s Litigation Department. Sander’s practice includes a wide variety of commercial trial work, with considerable experience in real estate litigation, securities arbitrations, and appellate work. He has more than 40 years of trial experience in the state and federal courts and in the FINRA (formerly NASD and NYSE) and AAA arbitration forums.

Sander is frequently called upon to solve business problems through the development of strategies to avoid litigation as well as the use of litigation as part of a...

617.646.2026
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