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Real Estate Open Houses on Cape Cod

Be Careful Where You Put that Deposit


If you are a landlord of residential property, you want to be careful where you place the security deposits that you may receive from your tenants. Mass. Gen. Laws. Ch. 186, § 15B, among other things, requires that “[a]ny security deposit received by [a] lessor shall be held in a separate, interest-bearing account in a bank, located within the commonwealth under such terms as will place such deposit beyond the claim of creditors of the lessor . . . .”.

Recently, in Taylor v. Burke, the Appeals Court found that a security deposit that was physically deposited in a Citizens Bank located in New Hampshire was in violation of the statute. Although Citizens Bank has branches here in Massachusetts, the Appeals Court found that making the initial deposit at a New Hampshire branch, did not qualify as a bank “located with the commonwealth,” as it interpreted the statute to require that both the bank and the account be located within the Commonwealth of Massachusetts.

Reviewing the decision it appears clear that the courts are trying to sort out this technicality. If a landlord wishes to avoid any question with regard to the legality of the location of the security deposit as it relates to security deposit compliance law, they should open the account in a bank branch located in Massachusetts and deposit all funds at this same branch. MAR will monitor this case as it has been remanded to a lower court for further proceedings.

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