Submitted by admin on Thu, 07/30/2009 - 17:05
Massachusetts law thoroughly protects tenants and their security deposits after the sale of real estate. If you are a landlord and you sell your building, you must transfer all deposits to the new owner, along with any interest that has accrued on the funds. Then, within forty-five days of the sale of the building, the new owner must send your former tenants a notice informing them that he has their deposits and providing his “name, business address, and business telephone number, and the name, business address, and business telephone number of his agent, if any.” This issue is governed by Massachusetts General Laws Chapter 186, Section 15B(5). Review it thoroughly before buying or selling a rental unit.
Interestingly, both the old and the new owner of the building are responsible to the tenant for the effective transfer of the deposit. So, if you sell a building, it is a good idea to have the buyer sign a receipt at closing acknowledging that she has received the tenants' deposits. And if you are buying a building, you should make sure you get all deposits, or get a signed document at closing from the seller indicating either that she did not take any security deposits or that she returned them all to the tenants prior to the sale.
If you are a tenant and you do not get the notice from the new owner in a timely manner, you can demand that the old owner return your deposit to you. Moreover, even if the new landlord never received your deposit, he is still responsible for it, and a court may require him to refund the full amount to you (or allow you to deduct the amount from your rent). This rule does not apply in cases of foreclosure, however. In this situation, I would send a letter by registered mail to both the old and the new owner, make reference to Chapter 186 and to Chapter 93A (See our Quick Info Library for information about triple damages in cases where landlords mishandle deposits and about the proper form for 93A demand letters), and demand the deposit back. If you do not get it, you can go to housing court and file a complaint against both the old and the new owner.