Security Deposit term (whether it is legal) in Rental Agreement in US
<p>I just read my rental agreement carefully and I found some bad terms. The security deposit term in my rental agreement said:</p>

<p>"<strong>No interest</strong> will be paid on this money (security deposit) and in no case will it be applied to back or future rent. It will be held intact by Landlord until at least <strong>thirty working days</strong> after Tenants have vacated the property. ... This deposit money minus any necessary charges for <strong>missing/dead light bulbs</strong>, repairs, cleaning, etc., will be returned to Tenant with a written explanation of deductions, within <strong>60 days</strong> after they have vacated the property".</p>

<p>But the laws said 1) there should be interest on the security deposit; 2) the landlord should give the itemized list of damages and return the deposit within 30 days (not working days).</p>

<p>Which should the landlord obey, the law or the agreement? Or is there any law said "unless the landlord and tenants got into agreement" to make the agreement legal?</p>

<p>Also, I did not receive the receipt of my deposit from my landlord, so I assume I can ask my deposit back. But can I get my deposit back even after the lease ended (I really doubt about whether the landlord will return my deposit, but it will be bad to do it when I still lived in the house with the landlord)?</p>

<p>Thanks</p>

<p>The terms of the lease are fairly illegal. The relevant statute is <a href="https://malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186/Section15B" rel="nofollow">here</a>. A security deposit must be deposited in a separate account (1e), a signed receipt must be given upon receipt of the deposit (2b), the deposit must go in an interest-bearing account with a receipt showing name and location of bank and account number provided within 30 days (3a), also note that "Failure to comply with this paragraph shall entitle the tenant to immediate return of the security deposit". Subsection 4 requires returning the deposit within 30 days (not "waiting at least 30 days", much less 30 <em>working</em> days), minus deductions for damage, specified under 4(iii) as damage <em>excluding</em> normal wear and tear (light bulbs burning out). This does not include cleaning. and "No deduction may be made from the security deposit for any purpose other than those set forth in this section".</p>

<p>Subsection 6 says:</p>

<blockquote>
  <p>The lessor shall forfeit his right to retain any portion of the
  security deposit for any reason, or, in any action by a tenant to
  recover a security deposit, to counterclaim for any damage to the
  premises...</p>
</blockquote>

<p>and the conditions triggering that forfeiture include under (6a) failing to deposit the funds per (3), or (6c)</p>

<blockquote>
  <p>uses in any lease signed by the tenant any provision which conflicts
  with any provision of this section and attempts to enforce such
  provision or attempts to obtain from the tenant or prospective tenant
  a waiver of any provision of this section</p>
</blockquote>

<p>which may be the case here and (6e)</p>

<blockquote>
  <p>fails to return to the tenant the security deposit or balance thereof
  to which the tenant is entitled after deducting therefrom any sums in
  accordance with the provisions of this section, together with any
  interest thereon, within thirty days after termination of the tenancy.</p>
</blockquote>

<p>("within" means "after N days or less"). </p>

<p>Subsection 7 states that </p>

<blockquote>
  <p>If the lessor or his agent fails to comply with clauses (a), (d), or
  (e) of subsection 6, the tenant shall be awarded damages in an amount
  equal to three times the amount of such security deposit or balance
  thereof to which the tenant is entitled plus interest at the rate of
  five per cent from the date when such payment became due, together
  with court costs and reasonable attorney's fees.</p>
</blockquote>

<p>And subsection (8) statutorily states DaleM's point about contract terms not being above the law:</p>

<blockquote>
  <p>Any provision of a lease which conflicts with any provision of this
  section and any waiver by a tenant or prospective tenant of any
  provision of this section shall be deemed to be against public policy
  and therefore void and unenforceable.</p>
</blockquote>

<p>It would be interesting to see if the Massachusetts courts interpret this as being an automatic severability clause.</p>

<p>[Addendum]</p>

<p>Security deposit law in Massachussets seems to be one of those cases where professional legal advice is virtually mandatory. Subsection 3a says</p>

<blockquote>
  <p>Any security deposit received by such lessor shall be held in a
  <em>separate</em>, interest-bearing account in a bank, located within the
  commonwealth <em>under such terms as will place such deposit beyond the
  claim of creditors of the lessor</em>, including a foreclosing mortgagee or
  trustee in bankruptcy, and <em>as will provide for its transfer to a
  subsequent owner of said property</em></p>
</blockquote>

<p>An attorney would be typically required to understand what the italicized portions mean. A reasonable interpretation would be that you have to set up an escrow bank account on behalf of the tenant. To do that, though, the tenant must cooperate to some extent (providing a Social Security number, providing acceptable ID). There is no law requiring a tenant to cooperate, which apparently puts the landlord in a legal bind.</p>

<p>The trick is that the statute has been interpreted "functionally" in <a href="http://masscases.com/cases/app/86/86massappct714.html" rel="nofollow">Karaa v. Kim 86 Mass. App. Ct. 714</a> citing <a href="http://masscases.com/cases/app/54/54massappct558.html" rel="nofollow">Neihaus v. Maxwell 54 Mass. App. Ct. 558</a> as simply meaning that the landlord cannot deposit the security money into their own personal bank account. In Neihaus, the landlord handed the problem over to a property management company, which had in place suitable accounting procedures so that the desiderata of being beyond the claim of creditors, being in a bank in the commonwealth, and being separate, were satisfied. In the case of Karaa, the tenants did not ever supply a Social Security number: the court ruled that the tenants action did not excuse violation of the statute, stating "The failure of the tenants to provide a Social Security number did not preclude the Karaas from establishing a separate account in compliance with § 15B(3)(a)". A Massachussets attorney with specialization in this area would know this, and that is why one needs to hire an attorney.</p>

<p><strong>No one can contract outside the law.</strong></p>

<p>If the law requires interest to be paid on a deposit and the agreement says it isn't then the <strong>whole</strong> agreement is void - it does not and never did exist. An agreement (or a statute) <em>may</em> contain a savings/severance provision that allows a court to "read down" the agreement where it conflicts with the law but if it is not there there is no contract.</p>

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