It’s Called “Security Deposit” for a Reason. But is it Security for the Landlord or the Tenant?

Landlords in Massachusetts should sit up and pay attention. A recent decision from the Supreme Judicial Court illustrates yet another potential consequence (in addition to the already widely known potential for treble damages, costs and attorney’s fees) for mismanagement of a tenant’s security deposit. See Meikle v. Nurse, SJC-11859, slip op. (April 27, 2016).

In Meikle a landlord brought a no-fault summary process action for possession. The tenant counterclaimed, raising defenses of improper termination, insufficient notice to quit, retaliation, breach of the warranty of habitability and violation of the security deposit statute. The trial judge ruled in favor of the landlord and granted possession, but reduced the use and occupancy monies owed to the landlord by the monies due the tenant as a result of the landlord’s improper handling of the tenant’s security deposit. The tenant then appealed on the question of whether a violation of the security statute constituted a defense to possession.

The S.J.C. looked at G.L. c 239 Section 8A, and observed:

…A tenant may retain possession only if two conditions are met: 1) the tenant prevails on a counterclaim defense; and 2) the damages…exceed the amount due the landlord, or if the damages are less than the amount due the landlord, the tenant pays to the court the amount due within one week.

Additionally, the Court noted that the same statute provided that a tenant could raise as a defense, “a violation of any other law.” It was this singular phrase upon which the Court reasoned: “[W]e have no difficulty interpreting [this] phrase…to include any law enacted to protect a tenant’s rights in the landlord-tenant relationship. See Lawrence v. Osuagwu, 57 Mass. App. Ct. 60, 63 (2003).”

Accordingly, because the Court determined that a violation of the security deposit statute germane to landlord-tenant disputes, a violation of that statute could be raised by a tenant as a defense against possession. Thus, the Court determined that the trial judge had erred in awarding possession to the landlord. The S.J.C. remanded the case with the instruction that the tenant be afforded one week, per the statute, to pay the landlord any monies due, and continue her possession of the premises.

Lest landlords misinterpret the Court’s decision, the Court also noted that even if a tenant cures the monetary balance due, nothing prevents the landlord from instituting a second summary process action for possession; or, “that the statute does not impose an obligatory tenancy on the landlord.”

This case is a further warning to landlords — do not mishandle security deposits! If you do, you may be allowing tenants a right to continue in their tenancy. If you have questions about this, or any other legal issue, consult the attorneys of Hutchins Law, P.C. today.

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