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May 17, 2016

Noncompliance with Security Deposit Law Could Be a Defense to Eviction

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It’s a familiar real estate story. A landlord rents space to a tenant for a period of time. For a variety of reasons, the lease is not renewed – maybe the tenant cannot afford a rent increase; or maybe the landlord wants to put a family member into the unit, convert the units to condominiums, or raze the building and re-build. The apartment and building are in good condition, there are no health or safety violations, and the tenant had quiet enjoyment of the space. However, the tenant refuses to vacate the unit upon the expiration of the lease. A simple notice to quit and summary process eviction case, right? Maybe not. Recently, the Massachusetts Supreme Judicial Court (“SJC”) ruled that if the landlord has not complied with the Commonwealth’s security deposit law, the tenant could assert that as a defense or counterclaim in a suit for possession and, in the process, stop or delay the eviction.

The facts in Meikle v. Nurse are similar to the situation described above. Patricia Nurse entered into a one year residential lease with Garth Meikle and paid Mr. Meikle a security deposit equal to one month’s rent. Upon expiration of the lease, Ms. Nurse continued to stay on the premises as a tenant at will. Sometime later, Mr. Meikle decided to terminate the lease by giving proper notice, and initiated a summary process eviction action in Housing Court, so that Mr. Meikle’s relatives could move into the apartment.

In response, Ms. Nurse filed a counterclaim alleging that Mr. Meikle violated the Commonwealth’s security deposit law by (1) not providing a receipt acknowledging acceptance of the deposit, (2) not providing Ms. Nurse with a receipt indicating the bank account into which the funds had been deposited, and (3) not paying Ms. Nurse the interest earned on the security deposit. Ms. Nurse argued that the landlord’s violation of the security deposit law was a defense against the landlord’s possession of the property. The Housing Court disagreed, finding that Ms. Nurse not only owed unpaid rent minus the security deposit, but ruled that Ms. Nurse’s counter-claim for her landlord’s failure to comply with the Commonwealth’s security deposit law did not preclude him from taking possession of the premises.

On appeal, the SJC disagreed, concluding that a violation of the security deposit law constituted a valid defense against a landlord’s claim for possession. The Massachusetts security deposit law, MGL ch. 186 s. 15B, sets forth numerous steps that landlords must follow. For instance:

  • The law requires landlords, at the time of receiving a security deposit, to provide a tenant with a receipt indicating the amount of the security deposit, the name of the person receiving the deposit with the date it was received, and a description and condition of the premises leased or rented.
  • The receipt must also be signed by the person receiving the security deposit.
  • The security deposit must then be held in a Massachusetts bank an interest-bearing account that cannot be claimed or attached by the landlord’s creditors.
  • Within thirty days of the deposit, the landlord must provide the tenant with a receipt stating the name and location of the bank that holds the security deposit, the amount deposited, and the number of the account in which the security deposit is placed.

The Massachusetts security deposit law is extremely specific with various details that require precise compliance – which means there is a high likelihood of noncompliance. In light of the holding of this case, such noncompliance can have significant consequences for landlords in the eviction process. Landlords are well-advised to have proper legal forms and processes in place to ensure that they can take action to evict and possess if and when they need to.

About the Authors

Robert Blaisdell

Robert Blaisdell is a Boston attorney providing general business and corporate legal services to healthcare clients. You can find him on LinkedIn.

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