While the taking and holding of rental deposits in Ireland is subject to conventions that have evolved over the years, the situation in other parts of the world is quite different.
In Boston, Massachusetts, where Deposify recently opened its first US office, there is an onerous set of Federal and State regulations that govern the landlord and tenant relationship generally and security deposits specifically, and govern them in a very exacting way.
For the landlord, any misstep in the management of the tenant’s deposit can be potentially litigious, and very expensive. With the threat of mandatory “triple damages” (three times the value of the deposit) at risk, as well as paying the tenant’s legal fees – staying within the strict letter of the law is essential.
The requirements for holding a rental deposit
There are a number of specific stages and time-limited aspects of taking and holding a deposit for a lease in Boston, and it is key for both landlords and tenants to be mindful of them.
Unlike in Ireland, where one month’s deposit is standard – in Boston, deposits can cover many month’s rent and other expenses.
And so when the tenant hands over a deposit, the landlord is required to give them a written receipt stating the name of the landlord or leasing (letting) agent, the address of the rental property, the amount of the deposit and the date of the receipt – and that’s just where it begins.
Lodging deposits and keeping a record of the property
The landlord or agent must then lodge the deposit in a separate interest-bearing bank account, which must be protected from the landlord’s creditors, in a Massachusetts financial institution (bank). If the deposit is held for over a year, the landlord must pay the tenant interest on the deposit annually.
Within 30 days of lodgement, the landlord needs to provide a receipt that identifies the institution holding the deposit, the account number and the amount that has been lodged.
Within 10 days of the rental commencing, the landlord must also provide a statement of the condition of the property and any damages present. The tenant can record any other damages or issues, and the landlord has to agree or disagree with the final statement of condition, and provide it to the tenant.
When the rental comes to an end
And at the end of the rental, the security deposit can be claimed by the landlord for things like reimbursing unpaid rent and reasonable damage to the property.
Within 30 days of the tenant vacating the property, the landlord should have returned the deposit (plus interest, as necessary) and provide an itemised list of the deductions being claimed for damages with estimates of the remedial works involved, if claiming.
A compliance problem
As you can see, the compliance requirements on landlords are significant, and can be very costly. Deposify is built to keep landlords compliant, let tenants manage and control how and when deposits are repaid and resolve deposit related disputes. If you’re a landlord, tenant or leasing agent in Boston – please get in touch if you’d like to get early access.
And remember, always take appropriate legal advice as necessary on landlord and tenant law generally – it can be very unforgiving.