Massachusetts Court Decision on Apartment Fees

[Rob L.]

I got this email earlier today, thought other mass investors might find this interesting....I know there have been some discussions about what we can and cannot charge in the past. 

"An important ruling has been issued by the Massachusetts Federal Court that has big waves in the residential management community - many of the commonplace "fees" charged to Tenants and Prospects are now unlawful. This includes: move-ins fees, application fees, and up-front pet fees. The decision on August 26th, 2014 against Equity Residential, which manages approximately 6,680 units in Massachusetts, affects not only the bottom line, but the way many communities conduct their leasing.

The decision clarifies M.G.L. c186, s. 15B - the law that addresses security deposits and payments. This law prevents any kind of "up-front charge" that is not specifically listed in the statute, even if that fee is deferred to a later point of the Tenant's occupancy (ie, second month).

The Effects to Massachusetts Property Managers are:

? No Application Fee

? No Amenity Fee / Amenity Use Fee / Move-In Fee

? No Community Fee

? No Up-Front Pet Fee

Monthly Pet Fees are permitted: "The monthly pet fee is not incurred up front, but rather each month during which the tenant owns a pet. Because the plaintiffs became obligated to pay the fee after they were already tenants, they may not turn to section 15B(1)(b) for relief."

So, what is allowed under 15B(b)?

1. Rent for the first full month of occupancy;
2. Rent for the rent for the last full month of occupancy calculated at the same rate as the first month;
3. A Security Deposit equal to the first month's rent...; and
4. Purchase and installation cost for a key and lock.

IREM Chapter 4 recommends that our property management colleagues perform a thorough evaluation of all leasing and marketing materials. Staff should be made aware of the changes as soon as possible. If you have any questions, we suggest you consult an attorney.

-Warren Lizio, Legislative Chair, IREM Chapter 4."