April 29, 2016:- Security deposits are supposed to help cover the cost of damage to the landlord’s property. Yesterday, security deposits themselves sustained damage on an Alderaan scale.
In its decision in Meikle v. Nurse (see my earlier post) the Supreme Judicial Court held that a landlord’s violation of the security deposit statute provides the tenant not only with a counterclaim but provides a defense to possession. In plain English, a defense to possession means the tenant gets to stay.
For many years, Massachusetts landlords wise to the ways of the law have known that any mistake handling the security deposit (e.g. failing to give the tenant a piece of paper stating the name of the bank holding the deposit and the account number) could result in them paying the tenant multiple damages plus the tenant’s attorney’s fees. But yesterday’s decision means that a mistake gives the tenant the right not just to money but to remain in the landlord’s property. Not forever, of course: The tenant “does not enjoy that right in perpetuity,” the SJC states reassuringly. To avoid a tenancy in perpetuity the landlord need only bring “a second summary process action for possession after he or she has remedied the violation of the security deposit statute.”
So what does bringing a summary process action for possession ordinarily involve? Serving a new notice to quit; waiting either two weeks or a full rental period depending on the nature of the notice; completing the new summons and complaint and making sure it aligns perfectly with the notice to quit (on pain of dismissal if it does not); serving a new summons and complaint (with the attendant sheriff’s fees) at the right time, not too early and not too late (on pain of dismissal for premature or tardy filing); filing the summons and complaint (again, not too early and not too late on pain of dismissal); paying the court’s filing fee; appearing in court; being presented with the tenant’s list of interrogatories, which automatically postpones the trial for 10 days; prevailing at trial (if the stars are aligned); seeking a writ of execution; watching the judge grant the tenant a stay of execution; and then, when the first stay has expired, watching the judge grant another stay of execution, and so on. Not quite perpetuity, perhaps, but close. The line between ad nauseam and ad infinitum starts to get a bit blurry after a year or so.
Will this new decision discourage landlords from taking security deposits? One would think so, those who fall into the rational-economic-actor category at any rate. Without security deposits, how will these rational economic actors insure themselves against the risk of tenants damaging their property (bearing in mind that an increase in the risk involved in renting increases the cost of renting)? Applying some basic economics, perhaps landlords will respond to an increase in the cost by raising the [fill in the blank].