No. In a March 2024 decision, the Appeals Court affirmed that a $3,400 payment demanded to hold an apartment before any lease was signed was an illegal upfront charge under the Massachusetts security deposit law, and that refusing to return it was an unfair practice that earned the prospective tenant treble damages. This is an unpublished Appeals Court decision under Rule 23.0, which courts may cite as persuasive but not as binding precedent.
What happened
In spring 2020 a prospective tenant wanted to rent an apartment in a Boston building. The property manager told her agent that to reserve the unit he needed a hold fee equal to one month’s rent, plus a rental application. She submitted the application and a $30 fee and wired $3,400. The manager took the unit off the listing service and sent a draft lease, and after her agent said the lease terms were acceptable, he released the money to the management company. She then decided not to rent the apartment and signed a lease elsewhere. When she asked for her money back, the manager refused and said it would be kept as damages under the rental application. She sent a demand letter under G.L. c. 93A, the landlord refused again, and she sued. The landlord counterclaimed, saying it lost rent because the unit later rented for less. A Housing Court judge ruled for the prospective tenant on summary judgment, ordered the money returned, found a willful and knowing c. 93A violation, awarded treble damages and attorney’s fees, and dismissed the counterclaims.
What the court decided
In Merkulova v. LDJ Development, LLC, No. 22-P-1224 (Mass. App. Ct. March 12, 2024) (Rule 23.0 decision), the Appeals Court affirmed.
The hold fee was illegal. G.L. c. 186, § 15B (1) (b), lists everything a landlord may require at or before the start of a tenancy: first month’s rent, last month’s rent, a security deposit equal to one month’s rent, and the cost of buying and installing a lock and key. Section 15B restricts the upfront charges a landlord may collect from a tenant or prospective tenant. Flemming v. Greystar Mgt. Servs., L.P., 100 Mass. App. Ct. 469, 471 (2021). The court said that if a charge is on the list it is allowed, and if it is not, it is not. A fee to hold an apartment is not on the list. Calling the money first month’s rent did not help the landlord. It would have been credited toward rent only if she signed, and she had to pay it before any lease and before she moved in, just to reserve the unit.
Chapter 93A. The landlord argued there was no unfair practice. Under the Attorney General’s regulations, requiring a tenant or prospective tenant to pay more than the permitted upfront amounts is an unfair or deceptive practice. 940 Code Mass. Regs. § 3.17(4)(a). See G.L. c. 93A, §§ 2, 11. The landlord did not challenge the treble damages award in its brief, so the court treated that challenge as waived.
The counterclaims failed. The landlord’s reliance claim failed because the manager took the unit off the market before he even sent a draft lease or accepted her application, nothing required him to do so, and there was no evidence it lost other renters. The contract claim failed because the application was signed only by the prospective tenant, and its clause letting the landlord keep the money as damages conflicted with § 15B. Under § 15B (4), a landlord may deduct only unpaid rent or water charges, certain tax increases, and the reasonable cost of repairing damage, and only from a properly held security deposit. The landlord’s freedom of contract argument ignored the statute’s purpose, which is to limit what landlords and tenants may agree to about deposits. Mellor v. Berman, 390 Mass. 275 (1983).
What this means for you
Before you move in, a Massachusetts landlord may ask for no more than first month’s rent, last month’s rent, a security deposit no larger than one month’s rent, and the cost of a new lock and key. Effective August 1, 2025, the statute was amended so this limit also expressly covers the landlord’s agent. The law has since changed; check current rules. A deposit to hold or reserve an apartment is not on that list, even if the landlord calls it first month’s rent. A rental application does not let the landlord keep your money as damages if you decide not to rent. If a landlord collects an illegal upfront fee and refuses to return it, you may be able to recover multiple damages and attorney’s fees.
What to do now
- Ask for a written list of every payment the landlord wants before you sign a lease.
- If you are asked to pay to hold or reserve an apartment, say no or get advice first.
- Keep receipts, wire confirmations, texts and emails about any money you paid.
- If a landlord refuses to return an upfront payment, ask for it back in writing and keep a copy.
- Consider a G.L. c. 93A demand letter before you file suit.
If this is your situation, call Doubleday Law at (617) 575-2006 or tell us what happened. Housing Court deadlines are short.
Prior results do not guarantee a similar outcome.
