The Worst Mistake a Landlord Can Make

by Michael S. Kraft on May 6, 2010

in landlord and tenant,last month's rent,security deposit

There are many ways in which landlords can cross the line and get into Mishandling security deposits creates traps for landlordsserious trouble with their tenants, but perhaps the easiest is by misappropriating their security deposit. The security deposit belongs to the tenant, not the landlord. Period. End of story.

Yes, the landlord may be entitled to retain the security deposit at a later time, but only after jumping through several very important technical hurdles. Until then, hands off!

The Massachusetts statute governing residential security deposits is chapter 186, section 15B. It is long and confusing. Nevertheless, the statute carries heavy penalties. A landlord who mishandles a tenant’s deposit, even by mistake, may be obligated to reimburse the tenant for three times the deposit, plus attorney’s fees, plus any court costs incurred.

The basic principal is to avoid any co-mingling of the security deposit with other money. The trouble often begins when the landlord first receives the deposit. In essence, the landlord becomes a trustee of the tenant’s money. Since the deposit must be kept separate from other money, the tenant should not give a single check that combines the security deposit with any other payments. The security deposit should be paid with a separate check or money order. Payment should be made directly to the security deposit account and not to the landlord. Accepting cash for the security deposit is ill-advised since there is no way to distinguish between cash belonging to the landlord and that of the tenant. It doesn’t matter that the cash is later deposited in a separate account – the violation has already occurred.

Once accepted, the money must be placed in a separate bank account that is properly labeled as a security deposit account. In the event that the landlord becomes subject to claims of creditors, the tenants’ money must be held in an account that is clearly identified as escrow funds that do not belong to the landlord. The money may be placed in an account with other security deposits as long as the account is properly labeled and contains none of the landlord’s money.

Another common mistake by landlords is keeping any last month’s rent in the same account as the security deposit. Unlike the security deposit, last month’s rent is money that does belong to the landlord – it is simply rent that was paid in advance. So putting it in the same account with the security deposit would result in co-mingling and would be a violation of the statute.

The security deposit needs to stay in the account until the end of the tenancy. The only exception is if the tenant does not pay the rent. Here is another trap for the unwary landlord. The landlord may not deduct rent from the security deposit if the tenant has withheld paying rent for a valid reason. However, tenants often do not tell the landlord immediately why they are withholding their rent. So a landlord who is quick to withdraw funds from the account without verifying the reason for the lack of payment may be in for a nasty surprise later.

Of course, the primary purpose of the deposit is to protect the landlord in case of unpaid rent or damage beyond reasonable wear and tear. In order for the landlord to apply the security deposit, he or she must have taken several other important steps designed to protect the tenants before the deposit can be applied. These include providing a statutory “Statement of Condition” and detailed receipt at the outset of the tenancy, notification of the bank account where the money is held, paying annual interest, and providing a sworn statement itemizing any damages that are being claimed, together with evidence of the repair or cleaning costs.

The bottom line for any residential landlord is to consult an attorney to be certain you understand your rights and obligations before accepting a security deposit. The modest cost for this advice will pale in comparison to the penalties that may be faced after the damage is done.

Are you a landlord or tenant? Do you have questions about housing or real estate investment? I would love to hear from you. Please click below to let me know any comments or concerns.

{ 32 comments… read them below or add one }

Shilpa Asija October 4, 2016 at 1:19 pm

We leased this apartment on November 1st 2016 in CT.
We have been getting excessive amount of electricity bill around $500 each month since we started. when we complained this to the Landlord he did not show any concerns. when summers came, the AC was not working , we kept texting the landlord for 2 months , he sent a person once to fill the gas, after a week it was still the same, but the landlord did not even bother to reply us. we spend our whole summers almost without the AC, Ac was on but never maintained the temperature. In August we paid $2500 bill for electricity for 3 months, and decided to move to another apartment. spoke to the landlord he said you can only move after 2 months notice, ended up breaking the lease on Oct 1st 2016 with mutual consent.
Now we got to know that he did not even open the Escrow Account and quite not interested in giving us back our 2 months security around $4250.

please suggest.

Michael S. Kraft October 2, 2016 at 11:35 am


I replied privately to your questions. Publicly let me point out that I am not licensed in Pennsylvania, so I cannot speak to the laws there. Here in Massachusetts, the law requires a landlord to place the funds in an escrow account and outlines the steps required to deduct from the deposit. Failure to do the former can result in forfeiture of the deposit in its entirety, although as a practical matter, a judge may offset the return of the deposit with the landlord’s legitimate claims of damages. Regarding the deductions, the tenant would certainly be free to argue that they were not reasonable.

All the best.

Michael Kraft

Michael S. Kraft October 2, 2016 at 11:22 am


I replied to you privately.

Thank you.

Michael Kraft

michel Lellouche September 27, 2016 at 4:12 pm

I am in commercial lease .My normal lease should finish September 30, 2016.
I have still 5 years options (addendum 2 pages)I claimed 6 months ago as the landlord refute saying that he does not have these documents .
I am going to fight this in court but I ask a simple question:
Having the last month and security deposit ,do the landlord has the right to claim i pay the month of September as he claims that i have to leave September 30,2016?
Michel Phone 323 533 1442

Dan Yeung September 9, 2016 at 1:12 am

I live in PA. My landlord sent me a list of security deposit deductions that exceeded the total amount of security deposit on the 31st day after I left the apartment. Some of the items on there is quite non-sense and I think even the landlord knows it. Upon arguing with the landlord, I found out that she doesn’t even know what an escrow account is. When I asked to see the evidence that security are in escrow, she told me it is illegal to ask for her personal bank account info. What should I do now? Dispute for the deductions or dispute for the escrow account?


Jimi Helms August 28, 2016 at 1:10 pm

I was a few days late on a 12 month lease. The last month of the lease I was unable to pay on the first of the month and contacted my landlord to explain why. I have full intentions on paying last months rent and told him so. I’m waiting on a judges decision on a Social Security Disability claim, which I explained to him. He said pay when you can. The next week I had a text he was not renewing my lease. He taped and sent a notice of eviction on my door and I have to be out in a few days. I need a few more days to move out. After I pay my last month’s rent,what happens to my security deposit, is it forfeited? I don’t want this to get ugly. I have never complained of all the repairs he initialed that were ignored. Help, in Florida!

Maureen June 20, 2016 at 7:52 pm

Hi, My tenant paid rent on 6/5/16 within grace period. I was in hospital and deposited it 6/12/16 soonest date I could. A few days later I checked my account and saw rent check had not passed NSF. I immediately called tenant and informed them, they have deposited cash to my account for rent. They are saying they are not responsible for any fees b/c I deposited check late and did not inform them right away. Are they right thanks? This is California

Maureen June 20, 2016 at 7:48 pm

Hi, My tenant paid rent on 6/5/16 within grace period. I was in hospital and deposited it 6/12/16 soonest date I could. A few days later I checked my account and saw rent check had not passed NSF. I immediately called tenant and informed them, they have deposited cash to my account for rent. They are saying they are not responsible for any fees b/c I deposited check late and did not inform them right away. Are they right thanks

Kate June 15, 2016 at 11:14 pm

My tenant told me he was moving out July 1st. I found a renter to move in July 1st. The new renter signed a security deposit agreement and gave me a security deposit.
Today my tenant said he is not moving out and wants to stay another year. Since he is a good tenant, I would like him to stay.
The new renter did not sign a lease. Am I obligated to still rent it to him? Are there any legal repercussions? The property is in Cook County, in Illinois. In my opinion, I can just return his security deposit and be done.

May June 6, 2016 at 4:23 pm

In New York State, is it okay if the landlord puts all the tenants security deposits
in a sub-account (appears to be under a master checking account that states: Landlord Account Number and above, Checking Account Statement

Michael S. Kraft June 6, 2016 at 10:47 am


I have responded to you privately.

Michael Kraft

Michael S. Kraft June 6, 2016 at 10:39 am


I have responded to you privately.

Michael Kraft

scott June 5, 2016 at 2:05 pm

i live in pa ,my landlord is stating he will not return any of our deposit , also the money was never put in escro for us we were never given documentation about our S Dep, and it has been almost 30 days now , do you have any advice ? thank you .

sincerely scott diana …

norma kinsey May 3, 2016 at 10:58 am

When I moved in to my place the landlord ask for 600.00 deposit plus 900.00 they called extra deposit. now my lease is up and they are only counting the 600 what happened to the 900 i lost my lease and the land Lord said they can’t find there’s but I did take a picture of it when I signed it and it says 600 deposit and 900 extra deposit I live in Oklahoma

David McCormick April 20, 2016 at 12:16 pm

My landlord gave me a 40 day notice of increasing my rent by 20% per month ( $550 extra per month. Was paying $2725. ) This was done via telephone. Told him I could not afford it. Gave him 33 days written notice that I was moving. He has since kept my entire security deposit plus my $500 pet deposit totaling $3225. This is for California. I plan on taking him to small claims to get a refund. But since the notice he gave me was by phone and not in writing might I still have a case?

Claire April 5, 2016 at 8:02 am

About 5 years ago I privately rented a condo in ca from a lady. My deposit was 1200.00. I was a great tenant and left the place in tip top condition. 5 years later without even realizing it.. I found my 1200.00 refund check I never cashed. I took the checks to the bank and the teller told me I have to get into contact with landlord and have her reissue my check. I got in contact with her but she’s trying to say money came out of her acct which clearly it didn’t. 1200.00 is a decent amount of money. What are my rights? It’s been 5 years.

cindy April 1, 2016 at 9:15 am

My landlord refuses to supply a copy of the deposit slip, account number and bank where our security deposit is held. Can I sue? And for how much? It’s been 2 months since we vacated and we still have not received the return of our security deposit or a list of damages. I’m afraid that she doesn’t have our money ($2000). We are already suing for double security deposit and court fees.

steve duquette February 23, 2016 at 6:35 am

I have bought a property in which the seller had collected 1500 security , 1500 last month , and 100 pet deposit. He only disclosed and included the security deposit and pet deposit and kept the last month rent and did not include in HUD settlement . The tenant is moving and has produced documents that they already paid the last months rent so I am now out the 150o. Is there any recourse. I emailed the seller and he has no intention or returning the funds,, because he said ” tenants did not maintain the property while he was showing it for sale so he lost money on the sale amount ” . Is there any recourse???

Adelita Mitchell February 4, 2016 at 2:10 pm

In calif

Adelita Mitchell February 4, 2016 at 2:10 pm

Hello, I was recently sent to collections 10/15 for an apt I rented in 2012 backed 2 years. The property manager will not talk to me and his assistant has hung up the phone on me more than 3 times. I paved last months rent deposit which they kept and the taking me to collections. I gave the collection agency my address I received nothing to this day on their letter head and she didn’t even want to give me their physical address. Trying to collect 1,900. Wtf is going on I need a lawyer but over whemed by the anxiety of it all. Help

Nicole Vega January 28, 2016 at 1:41 pm

I moved out of my apartment recently and did a final walk-through with a member of the apartment complex. She took pictures and noted any damages and told me she was just taking pictures of everything then it was up to the main manager and the maintenance manager on what would be deducted from the security deposit. Made sense to me so I said ok. They’re now saying there was more damage than what was even noted with my walk-through and even used a UV light for pet stains without me there(even though there weren’t any looking at them and they MADE me pay for the carpets to be professionally cleaned regardless of what the carpets looked like before they did this test).
Can they add things even if it wasn’t noted?
Can they make me pay for professional cleaners?
Can they determine the carpets have to be replaced from UV light (keep in mind also they never told me they would use that or I would have asked to see it in person before I moved in also)?

Mg January 22, 2016 at 10:18 pm

Tenant moved out August 31, 2015 and the Notice of Intent To Sue (Certified Mail) was recieved PO Box on November 20, 2015 — but, I didn’t recieved the letter to my desk until January 21, 2016 and I called, emailed and text tenant notifying that I, have the full deposit ready on January 23, 2016 and to meet me at the bank to sign and notarized release and get her full deposit back. She never made it to the bank emailed, called or texted. Should I send a Certifiied Mail of email and text that I already send or what is my next step?
Thanks …… Mg #305-905-0822

Heidi January 14, 2016 at 9:14 pm

I am on an SS/SSI fixed income and am living in low income housing. My rent is based on my gross income from disability. I am disabled and don’t work. I wanted to try to save a little money from my checks each month for emergencies or whatever but, my landlord raised my rent because she said my savings was considered extra income. I don’t understand this as this money was already figured in my gross income. Can she legally do this?

don byrd December 13, 2015 at 2:17 pm

HI. I enjoyed reading this article, and let me say, i found it very enlightening! im in a situation where, my landlord did not disclose the bank where the deposit was located.. infact , the ex landlord didnt even give a receipt upon recieveing cash for my deposit payment. we are now in litigation. i live in the state of tennesse. could you possibly help me with any advice?

Gary Clayton November 27, 2015 at 8:39 am

I’ve lived in the same apartment for about 3 years and never been late on my rent. I paid it on the 5th of November 2015. He didn’t take it out till the 11th of November even though I had the money on the 5th . Do I still have to pay him rent when he deposited the check and the money wasn’t in the bank then.

Deborah Winton November 1, 2015 at 7:58 pm

My lease said my landlord was to give me my deposit back within 10 days what are my rights?

Valerie November 1, 2015 at 7:52 pm

My landlord is trying to make me deposit money into an account instead of paying by money order like I usually do. I told him that I am not comfortable doing that & I refuse. So then he has a lady call me saying that she is the land lord and that I don’t need to be scared to deposit money into her account and that she will mail me a receipt. The land lord said at first he wants me to do this because employees at the rent office might be stealing the money orders. Then said it was because it takes the money order too long to post to the account. Then said because they need to pay the mortgage and insurance or whatever. What should I do?

John McWherter October 18, 2015 at 9:41 pm

I have been leasing a space where I had but my beer and wine garden. My initial lease was for three years with first and last deposits. The agreement was rent for $1700 for 6 months an then move up to $2200. This is my fourth year and my rent has been kept at $1700, but he never came in with a lease for any of the commercial tenants. After the first lease was up, he never came to any one of us. Over the years I have maintained my space and dealt with all the problems including running thousands of dollars for electric because the space was not equipped for a kitchen. I lost thousands of dollars because a fuse would get hot and shut my whole area down always during push times. Never asked him for anything, even though he was supposed to, because of keeping rent at $1700. Now what are my rights in this situation i am going to tell. Owner hired a property manager, coming in balls to the wall, Mr. Hard Ass. Raises every ones rent, double net lease and charging a security deposit, basically if you don’t like it leave. There s 6 space for commercial rent ones been empty for a year, and three of us are contemplating leaving. My space I cant do what I need to do, but I can survive if he work with me. He is trying to charge what the nice plazas are charging per square foot. My question is can he charge me a deposit after I have been there for 4 almost 5 years and can he give me 30 day and force me to move, also do I have a right to have my area brought up to codes as far as all the equipment like ac, heater, the crappy hole parking lot, not lights in the parking lot, and up to code with the handicap disability act. What are my options if any legally. After the property manager told me if the place is ever sold I wont know if they would keep me here or not and may be I should go up the street if I didn’t like it. Well I am opening a restaurant up the street and I am trying to keep my bar where its at. Also I rent two units. Can he make me keep both or can I say I don’t want the other unit. There are two electric bills. My bar may be in a documentary about Ferguson. I had the third and largest Darren Wilson Rally and Fed Officers and Guard in Ferguson for two weeks and again on the anniversary. I also started Officer Needs Assistance USA. Which I run out of my location. My attorney represents my landlord also, so has a conflict of interest. Please, what are my options to leverage the property manager, if any to negotiate terms? I am not gong to leave just that easy, only because I don’t like how he is handling the situations and his arrogance. I just want to knock him down a few notches legally. Thanks for any advice

m October 12, 2015 at 2:54 pm

I’m a tenant i moved in last April gave 1300 for security and 1300 for last. both were checks. My landlord came by in December with bank paperwork about the two seperate accounts I thought he did put the money in the accounts. But Saturday I recieved a statement from the bank saying that there was only 100 in each accounts. I called the bank they said that’s all that has ever been in there from when he opened the accounts. I am from M.A. so the might be a little different but i feel like he has stolen my money because i still live there and have never been behind or late on a payment. any advice or info would be great

Michael S. Kraft October 4, 2015 at 7:19 am


I replied to you privately. Thanks for contacting me through my blog.

Michael Kraft

Eric Masker October 3, 2015 at 10:47 pm

Hello, I stumbled across your site, and I’m thrilled to see this as someone who has been affected by issues with a landlord. Do you have some advice for someone who is seeking legal respite from a landlord? We currently live in Eagle River Alaska.
My previous landlord of the home we just moved out of, held on to additional rent checks made out to her. I have Bill Pay through my credit union, and every two weeks they send her a check for half the rent, $800. Over the course of 2 years of our tenancy, additional checks from mutliple pay periods in a month, and overflow checks of that nature were sent to her. She told me she destroyed them, and I have e-mails from her saying that she had gotten rid of them, and will not deposit them. After we moved out, she held on to those checks and deposited them, 6 checks for $800, totaling $4800 from my account just yesterday. I have attempted to contact her several times (courteously and professionally), via e-mail and phone with no results. My bank cannot assist as the checks were legally written to her with my name on them. I can only prove through the withdrawals made from my account electronically that we have paid rent, and the e-mails she sent to me stating that the checks will not be deposited, as we were paid through the end of September (2015). She verbally agreed over the phone to destroy them. So I’m going to take her to small claims for the $4800, plus our $1600 deposit, and damages. I have our e-mail correspondence documented, and our lease agreement, I left her a forwarding address to our new residence over the phone. Now, a walkthrough was not complete of the premises. My wife and my landlord were unable to meet up on the 1st of October to perform the walkthrough, and I believe this is what prompted her to do this. Nothing in the house was damaged, especially beyond normal wear and tear. She was made aware several times of small issues such as the moldings on the floors and door frames that were not properly nailed in, and the house was cleaned prior to our departure with no property left behind. The only issue that she has reason to deduct from our deposit is perhaps painting areas of the walls, and we asked several times for the left over paint that she had to cover this, and she couldn’t remember the paint number or type when we offered to take care of it.
Do you think this is wise? What are some things I can do to make sure we have an effective case if so? I have researched the Alaska Tenant and Landlord Act of 2014, and I believe that because our security deposit was not returned (yet, she still has 11 days) with no accounting/receipts of the ‘damage’; and that we believe she was not in compliance with the Tenant and Landlord Act we seek injunctive relief by charging for damages caused by “normal wear and tear” (assuming that’s what she did with the additional rent checks and the deposit), and that “washing walls and dry cleaning draperies are major cleaning tasks that cannot be charged against a tenant’s security deposit if the tenant fails to perform these tasks at the termination of the tenancy,” which I believe she will claim. We haven’t received an itemized list of accrued rent (of which there is none) and damages (which there is none with the exception of painting the walls)along with any refund due the tenant in 14 days of the date the tenancy is terminated. And if she fails to comply, we can seek up to twice the amount withheld by the landlord. I just want the $4800 that was taken out of my account, which the fraud department and Anchorage Police Department assured me I could get back because of the documentation of paid rent, and correspondence, and because of the lack of compliance with the tenant landlord act. I’m also seeking the $1600 deposit back because we made every effort to perform the walkthrough with her, I have correspondence (e-mail) documenting this, and was unable to get a hold of her via phone or e-mail, then she deposited checks she told me she had destroyed and/or would not deposit.
Any advice you might have would be greatly appreciated.

Augustine Felix September 24, 2015 at 12:43 am

On 1st August 2012 me and my family rented this place in Tallahassee, Florida and moved out of this place on 10th Aug. 2015. We actually moved out of state and now my landlord doesn’t want to pay back the security deposit of $995. He is claiming things which are false. After great altercation through email he is still making false claims and forwarded me a list of charges which gives me back ~$95. He has all false claims and allegations against us. We underwent a lot of troubles and disrespectful behavior from the maintenance man who the landlord appointed. When we vacated the place the landlord was not there and he asked us to leave the key and the next day the maintenance man did the inspection. Till now the landlord didn’t email/text me about it(which is our major mode of conversation). He never got back to me about the deposit- when I tried to bother him about the security deposit- finally on 9/20/2015 he texts me that the cost of the repairs will be more than the deposit. He finally after a lot of altercation, sent me a written letter with lots and lots of false allegations with a letter and another letter with the cost of repairs which is totally a false statement as well as a inflated price. During our stay we suffered a lot in the sense that we payed him $540/yr for doing the lawn for 2 yrs, which was barely done and lots of other false allegations and humiliation from his maintenance man, since the landlord never showed up. Actually, though we left the house on Aug. 10, 2015 but he still demanded the rent till Aug. 15, 2015 and we payed. We got the house cleaned by a professional service and still he has false allegations about missing things and untidiness. The landlord doesn’t have any document to prove how the house was when he handed over to us- and he claims that the house was redone and everything was good. It is a big fat lie and he claims that there are so many things missing like light bulbs or fixture cases, smoke alarm, walls are marked badly- which is a big fat lie. Of course, I don’t have any way to prove that he is lying and I fell in the trap. I don’t have any documentation regarding when we moved in but the house was worse than we moved out and I am being very honest on this. Now the landlord is playing games with false accusations and inflated price list for fixing things which we haven’t even done it. We need our rest of the deposit ($995 – $95) which is $900. Please help. Thanks for your kind assurance and I genuinely appreciate it.

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