The Massachusetts Supreme Judicial Court issued an important decision on Massachusetts’s security deposit law earlier this year which clarifies the damages than a tenant can obtain from a security deposit violation.
In Phillips v. Equity Residential Management, LLC, the Supreme Judicial Court held that treble damages are not required for every security deposit violation. Like Massachusetts’s security deposit law itself, Phillips is a complex case.
Overview of Massachusetts’s Security Deposit Law
Massachusetts’s security deposit law heavily regulates a landlord’s acceptance, holding, and return of a tenant’s security deposit. This law is so detailed that I, along with many other landlord/tenant attorneys, warn landlords to never accept a security deposit. This law, among other things, has requirements on where a security deposit must be held, what information must be provided to a tenant about the acceptance of the deposit, and what deductions may be taken from the deposit at the end of the tenancy.
Damages for a Security Deposit Violation
Failure to comply with the security deposit law can come with harsh consequences. The law imposes treble damages, attorney fees, and costs for failure to comply with many of its detailed requirements. In Phillips, the Supreme Judicial Court clarified which security deposit violations permit treble damages against a landlord.
The security deposit law contains a number of “forfeiture” provisions, where a landlord is required to automatically return a deposit. The law also imposes treble damages for a failure to “return to the tenant the security deposit or balance thereof to which the tenant is entitled after deducting therefrom any sums in accordance with the provisions of this section, together with any interest thereon, within thirty days after termination of the tenancy.” Phillips determined whether a tenant gets treble damages for failing to return a portion of the deposit that was otherwise forfeited under the law.
Prior to Phillips, many courts took the position that treble damages applied anytime a landlord violated the security deposit law. Now, the law is clear that for some violations of the law, a tenant is simply entitled to the full return of his deposit, without treble damages.
While Phillips places limits on the damages one can receive for a security deposit violation, it would be a mistake to under estimate the importance of complying with this law if you are a landlord, and understanding its protections for tenants if your security deposit has been wrongfully withheld.
In my opinion, one of the dire consequences of Phillips is that tenants may not be able to obtain attorney fees for certain security deposit violations. They may be able to get their full deposit back, but nothing for the expenses of hiring an attorney to assist with the case, making it cost prohibitive to hire a lawyer for such a matter: the reason why the harsh penalties of this law exist in the first place.
However, there is an often unknown law that may provide help in such a scenario. G.L. c. 186, § 20 provides that, if there is a written lease agreement allowing the landlord to get attorney fees against a tenant, the tenant is also allowed attorney fees against a landlord for any violation of the lease agreement. This law suggests that a tenant may be able to obtain attorney fees for security deposit violations that are not within the scope of treble damages, attorney fees, and costs, per Phillips.
If you find yourself involved with a security deposit violation, contact me for a consultation. An experienced attorney is essential in one of these tricky matters.