Guide
Your Landlord Owes You Interest on Your Security Deposit in Massachusetts
One of the least-known parts of Massachusetts security deposit law: if your landlord held your deposit for a year or more, they owe you interest on it, every year, not just at move-out. Most tenants never see a cent of it. Here's what M.G.L. c. 186, §15B(3)(b) requires and how to add it to your claim.
The interest rule
Under §15B(3)(b), a security deposit held for one year or longer earns interest at 5% per year, or the actual amount of interest received from the bank where the deposit is held if that's less. The interest is payable at the end of each year of the tenancy. Your landlord is supposed to give you a statement of the interest owed annually, and you're entitled to deduct it from your rent if it isn't paid within 30 days of each anniversary.
A similar rule applies to last month's rent collected in advance, which also earns interest under §15B(2)(a).
How to calculate what you're owed
The straightforward version: deposit × 5% × full years held. A $2,000 deposit held for two full years is $2,000 × 0.05 × 2 = $200 of interest. If your landlord can show the deposit sat in a bank account that earned less than 5%, the actual bank interest is what's owed, but that's the landlord's number to prove, and it presumes the deposit was properly held in a Massachusetts escrow account in the first place.
Unpaid interest and your bigger claim
Unpaid interest doesn't carry treble damages by itself. But it's part of the balance you're owed when you move out, and if that balance isn't returned within 30 days of the end of your tenancy, the failure to return it is a §15B(6)(e) violation, which can carry treble damages, court costs, and attorney's fees under §15B(7). In practice, unpaid interest is one more line item that strengthens a demand letter.
Frequently asked questions
My landlord never mentioned interest. Do they still owe it?
The obligation comes from the statute, not from the lease or the landlord's say-so. If the deposit was held a year or more, interest is owed under §15B(3)(b) whether or not anyone talked about it.
Is it always 5%?
It's 5% per year, or the actual interest received from the bank holding the deposit if that's less. If the landlord never properly escrowed the deposit, they're in a poor position to argue for the lower bank rate, and improper escrow is its own, more serious violation.
Keep reading
Add interest to your claim
Our free tool calculates the interest you may be owed and folds it into a demand letter automatically.
Check my deposit for freeThis tool provides general legal information, not legal advice, and does not create an attorney-client relationship. For advice about your situation, consult a licensed Massachusetts attorney.