426 Main Street Suite 2

Stoneham, MA 02180

Call: 781-438-1375

Fax: 781-438-6790

Mon - Fri: 8:30 - 5:00

Contact Us 24/7 Online

Security Deposit Guide

Rental Agreement vs Lease Agreement
Table of Contents

If you’re planning to rent a home or apartment, there are some significant costs that you have to be prepared to pay upfront. Some of the most common charges include an application fee, first and last month’s rent, pet fees, renter’s insurance, and a security deposit.

With such a big list of fees, it’s easy to wonder exactly what you’re getting for your money. No matter what type of home you rent, you can expect to pay a security deposit, but all too often, there’s not a clear definition of what this deposit covers or how it works.

This guide can help you understand what security deposits are, why landlords charge them, and the different circumstances surrounding refundability.

What Is a Security Deposit?

When renting a home, landlords need reassurance that tenants won’t cause damage to the dwelling. A security deposit is a specific amount of money paid to a landlord by a tenant before moving into a rental property. The purpose of the transaction is to pay for potential damages that might occur during the tenant’s lease period. If no damages occur, the deposit returns to the tenant when the lease terminates.

Instant. Simple. Smart We Make Insurance Easy

Instant. Simple. Smart
We Make Insurance

Find Out How Much You Can Save Today

Take the first step towards peace of mind with LoPriore’s team. Experience tailored insurance solutions that fit your lifestyle and budget. Get your free, no-obligation quote today and see the difference expertise makes!

In Massachusetts, landlords can collect the first and last month’s rent, a security deposit equal to one month’s rent, and money for the purchase and installation costs of a lock and key. The deposit cannot be used for another purpose (like last month’s rent) unless agreed upon by both parties.

Upon receiving the security deposit, the landlord must deposit the full amount in a separate interest-bearing account in a Massachusetts bank. Within 30 days of receiving a deposit, your landlord must provide a receipt that lists the name of the bank, the account number, the amount of the deposit, and a statement that explains the tenant is entitled to all interest received from the deposit if the resident lives in the home for at least 1 year.

How a Security Deposit Is Used

The purpose of a security deposit is to pay for damages caused by you as a tenant. To protect tenants, there are also certain laws around how damage deductions are taken from a security deposit. If the premises are damaged, the landlord must provide the tenant with a detailed list of damages and necessary repairs,  including evidence of the costs of these repairs. A landlord can deduct from the amount of your deposit for these reasons.

  • Unpaid rent, which deducted for non-legal reasons
  • Unpaid increase in real estate taxes if it was an obligation in your lease
  • A reasonable amount is necessary to repair damages (beyond reasonable wear and tear) caused by the tenant
  • Pet damage

If the premises become damaged, the landlord must provide the tenant with a detailed list of damages and necessary repairs within 30 days of when the tenancy ends. Repayment of any unused funds from the security deposit must also be paid within this timeframe.

Security Deposit vs. Last Month’s Rent

Typically, a renter must pay the first month’s rent before moving into a rental home or apartment. The landlord can also require the renter to pay the last month’s rent to ensure tenants won’t move out without paying the complete amount they owe. If the landlord requires last month’s rent, there are specific laws surrounding how the money must be held. However, the last month’s rent requirement doesn’t double as a security deposit.

If your landlord collects the last month’s rent before you move in, it applies to the final balance when you move out. In the event that your landlord requires last month’s rent and a security deposit, your deposit will be refunded if there were no damages to the property during your residency.

Why Do Landlords Require Security Deposits?

While some landlords may not require a security deposit, it’s a very common charge. A deposit acts similarly to insurance in that the payment covers damages that could occur in the future. However, a security deposit offers another incentive in the form of refundability. The renter will be out a considerable amount of cash if the home is damaged, creating a reason for the renter to be more careful.

These are the most common reasons landlords require security deposits.

  • Protect the property: Accidents happen that can damage a home. When tenants know they’ll lose money if damage occurs, they’re more likely to be careful.
  • Avoid lost funds: Landlords take on a considerable risk that tenants might not meet financial obligations. In some cases, the security deposit can be used for non-payment.
  • Protect against pet damage: Some landlords require deposits to protect against the damages caused by pets. When animals live indoors, carpets often become soiled and other damages can occur from scratching or chewing.


Signing a rental agreement that includes a security deposit.
The property manager gives house keys to a renter after signing an agreement in the office

Will My Security Deposit Be Refunded?

Whether you have your security deposit returned to you depends entirely on your specific situation. Your deposit may be used in part or in full for repairs or unpaid rent. Sometimes, a tenant and landlord can agree to the deposit being used as last month’s rent. If none of these situations apply, your security deposit should be refunded within 30 days of when your tenancy ends.

How Much Is a Security Deposit?

It’s up to the landlord to decide how much to charge tenants for a security deposit. However, in Massachusetts, the deposit cannot exceed the cost of one month’s rent.

How Much Interest Will I Get From the Security Deposit?

You’re entitled to either 5% interest or whatever lesser amount is received from the bank where the deposit has been held if the deposit wasn’t used for repairs. Interest is payable to the tenant each year on the anniversary date of their tenancy.

What Happens if Damages Cost More Than My Deposit?

Typically, you’ll receive an itemized list of any repair costs and the effect they have on your security deposit. If the amount exceeds your deposit, you’ll be billed for the difference. Failure to pay can land you in small claims court.

What Steps Can I Take to Be Sure I Get My Security Deposit Refunded?

Take care of your rental home to avoid unnecessary damage. If you’re responsible for minor damages, have them repaired immediately. When it’s time to move out, make sure to leave the apartment or home clean, and take photos of the shape it’s in when you prepare to leave. Make sure you provide your landlord with your new address to avoid potential delays in getting your refund.

Get the Basics Right
Time for an Insurance Quote!

Following our guide? Ensure your insurance is up-to-date too! Click below to get a quick quote from LoPriore Insurance.

Are You Paying Too Much For Insurance?

Talk with an Agent and see how we can help you save!