Massachusetts laws are very strict about this. You cannot be charged for water unless the water for your apartment has its own meter. You should contact a local attorney to help you. Most attorneys will give a free consultation.
I believe you are NOT correct. If they are now living there, you need to go to court to evict. To put it bluntly, you screwed up - big time. If they call the board of health, you will be forced to replace/fix the furnance.
Never, ever let someone move in without getting all the money. Also, why are you renting a place with a broken furnace?
At this point, I'd play nice and beg them to move, then call a local attorney to help you get them out.
In my opinion you're in an extremely...
You need to start eviction proceedings.... Send a 14 day notice to quit, then call a local attorney to help guide you....
You must be EXTREMELY careful taking their security deposit, as the penalties are SEVERE if you mishandle it...
You can only be forced to move by court order. Call a local landlord attorney. Anytime a landlord "plays" with a security deposit he will likely lose. But seek the advice of a local landlord/tenant attorney.
When you went to court, what was the agreement you signed ? Did it mention attorney fees ? You should contact a landlord tenant attorney in your area, most give a free consultation. A landlord/tenant attorney can likely help find a number of claims for a tenant...
Under no circumstances should you call the boh. YOU will be responsible for ALL violations, regardless of who caused them. The other answers here are correct, do a notice to quit and mention all the health problems they are causing ( make them think twice about calling the boh too).
Then call a LOCAL atty who does landlord tenant law.