Collecting a rental security deposit is an essential task for Boston property managers. There are many things that can go wrong when you rent out a property in Boston.
According to Boston Magazine, roughly 3,000 Bostonians receive an eviction notice each month. There are countless more examples of property damage, missed rent, and lease violations.
Property rental deposits protect the landlord's financial interests from these scenarios. Read on for a comprehensive guide to security deposits in Boston, MA. Explore topics such as security deposit laws and how much the property manager should collect.
What Is a Security Deposit?
When a tenant signs a lease, it is commonplace for them to give the first and last month's rent. Also, the landlord or property manager will collect a security deposit.
Boston law caps the security deposit amount at one month's rent. This money is to protect the landlord in the event that the tenant misses rent.
Property managers also conduct inspections throughout the lease. If property damage is found, the security deposit can be used to pay for the repairs.
What Are Important Procedures to Follow?
The most important thing for a property owner or manager to know is that a security deposit is not income. The security deposit must be put in a separate bank account.
Then, the landlord must give the tenant a receipt with important information. The receipt must include the bank's name, account number, and security deposit amount.
It is important to understand that the tenant receives interest on the deposit. In Boston, this amount is up to 5% of the security deposit amount. Tenants collect an equal amount of interest on the last month's rent.
An interest check is paid out to the tenant on the anniversary of their lease signature. The property manager may opt to deduct the amount from the tenant's monthly rent.
How Are Security Deposits Returned to the Tenant?
There are some scenarios in which the landlord or property manager needs to return the security deposit. This can occur when Boston security deposit laws are not followed.
Most rule violations take place when the tenant is not given proper documentation. This includes receipts, deductions, and general security deposit records.
A security deposit refund occurs at the end of the lease. One common exception is damage to the property. If the property manager uncovers damage, they can keep all or a portion of the security deposit.
The catch is that a written summary of the damage must be given to the tenant. The landlord also needs to give a cost estimate or invoice for the repairs.
Your Guide to Security Deposits in Boston, MA
You are now ready to collect a landlord-tenant deposit. The security deposit is a necessary mechanism to protect the property owner's interests. These funds are essential in the event of property damage or missed rental payments.
PMI of Greater Boston has been collecting these deposits for over two decades. If you need assistance with security deposits and laws, contact us at PMI of Greater Boston to speak with an expert.
