I'm a new landlord. Mass. general laws Part II, Title I, Chapter 186, Section 15B, subsection (3)(a) says "Any security deposit received by such lessor shall be held in a separate, interest-bearing, account..." (I got this law extract from http://www.malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186/S... ) But what about if the account does not pay interest? The law says the account must be interest-bearing. Seems to me that an account that pays no (0%) interest is not interest-bearing. The account would have to pay some, no matter how small, interest to be interest-bearing. My mortgage agreement for the rental property requires that all operating accounts associated with the property be held at the bank. And, you guessed it, the bank's business accounts pay no interest.
Submitted by John C. on Tue, 10/12/2010 - 13:43
Editor's Response
I think you are correct, John. As for your language re the operating accounts, I would check with the bank. I would argue that the deposit accounts are not operating accounts but, rather, money held by you in trust for the tenant. I'm sure, once you tell them about the law, the bank will agree with you.
Security Deposits MA
I agree, the money must be held in a seperate an interest bearing account and in a Massachusetts bank. I found some helpful information and explanation of the interest which is either 5% or whatever lesser amount is received from the bank. I found these links and information helpful.
http://www.rentlaw.com/dep/massdeposit.htm
http://www.masslegalhelp.org/housing/legal-tactics1
Both are helpful tools to tenants but also landlords because it shows you what type of information is given and is out there for a tenant, which is useful information when trying to avoid any negative legal action at the beginning or end of a tenancy.
Thanks for the responses
I will need to make sure the security deposits are in accounts that pay some interest. Thanks lisa99 for those links, also.