Massachusetts Supreme Judicial Court Addresses Security Deposit Limits for Assisted Living Residences

Landlords in Massachusetts, Rhode Island, and Connecticut must comply with the consumer protection laws of each state when charging security deposits or other refundable or non-refundable fees to incoming residents pursuant to a lease or rental agreement. Move-in fees charged for atypical types of living arrangements, such as inpatient hospitalizations or residency in an assisted living or retirement community may also fall under these consumer protection laws, however, the proper application of security deposit laws in such cases may be difficult to ascertain. A state appellate court recently published a ruling in a Massachusetts property law case concerning the application of a state security deposit limitation to a lease agreement at an assisted living residence in the state.

The plaintiff in the recently decided case is the estate of a woman who signed a residency agreement with an assisted living residence (ALR) operated by the defendant in 2013. In addition to the first and last month’s rent that she was required to pay under the lease agreement, the woman was charged a $2800 “community fee” by the defendant, which functioned similarly to a non-refundable security deposit within the residency agreement. After the resident passed away, her estate filed a lawsuit against the defendant, alleging that the $2800 community fee was a violation of Massachusetts state law, as it was not refunded to the resident’s estate after her tenancy expired, and was not used as the law requires of a security deposit.

The defendant answered the plaintiff’s complaint and moved the court to dismiss the claim, arguing that the community fee was not a security deposit at all, and that the statutes governing security deposits do not apply to ALRs, because they are not based on a traditional landlord-tenant relationship. The trial court granted the defendant’s motion and dismissed the complaint, resulting in the case being appealed to the state high court.

On appeal, the Supreme Judicial Court determined that the statutes governing security deposits do apply to ALRs as a matter of law, but with some exceptions. The Court found that the security deposit protections apply to ALRs to the extent that the ALRs resemble an ordinary landlord-tenant relationship, but that some services offered by ALRs fall outside the realm of an ordinary landlord-tenant relationship, and certain fees not allowed under the security deposit restrictions could be charged to residents of an ALR. Because the exact nature of the “community fee” was not properly determined in the lower court proceedings, the high court reversed the dismissal and remanded the case to the lower court to determine whether the disputed fee was proper under the newly determined guidelines.

Do You have a Massachusetts, Rhode Island, or Connecticut Security Deposit Issue?

If you are facing a dispute with a landlord or tenant over a security deposit or other fees charged under a residency or other lease agreement, consumer protection laws in the jurisdiction where the property is located may come into play. Parties found in violation of consumer protection laws governing security deposits or other lease terms may be liable for substantially more damages than the initially disputed amount. Whether you are a landlord or a tenant, if you’re unsure if a term of your lease agreement is legally permissible, seeking qualified legal advice on the matter can help. The skilled Rhode Island property law attorneys at Bilodeau Capalbo, LLC can advise you to determine the validity of the terms of your lease agreement, and represent your claim if appropriate. Talk to an experienced Rhode Island real estate attorney today. To schedule a no-obligation consultation to discuss your case with an attorney at Bilodeau Capalbo, contact our office at 401-300-4055.