Skip to main content

Stay Out of Trouble and Make Money: A Guide for the Novice Massachusetts Real Estate Investor

Posted by attorney John O'Donohue

If you are a novice real estate investor, Massachusetts is a terrible place to do business. In fact, it might be one of the worst places in the country for investors operating without enough capital to take some serious lumps.

If you want to enjoy the incredible ROI Massachusetts landlords enjoy, you must act responsibly and BEYOND reasonable at all times. “Reasonable" behavior keeps me in business. Behave in a manner consistent with that of a host/hostess at the Ritz-Carlton, and you should avoid unnecessary conflict.

Landlord-tenant disputes can be extremely costly in measures of time and real dollars. Massachusetts landlords are held to a higher standard of care and conduct by our civil justice system. Many tenant friendly laws provide for generous (and sometimes non-sensical) damages of attorneys fees and costs.

I’ve summarized the main problem areas into four categories with corresponding tips that if you follow, you will (hopefully) stay out of trouble!

The Condition of the Rental Unit

  1. Review the Massachusetts Sanitary Code and make repairs immediately if they are needed! Call your Board of Health/Inspectional Services Department for a pre-rental inspection.
  2. Obtain and review a signed Lead Law Notice disclosure and obtain a letter of compliance from a lead inspector.

Potential damages for the tenant for breaches of the implied warranty of habitability and/or breaching the covenant of quiet enjoyment are equal to 3x months rent plus attorneys fees and costs.

Discrimination

  1. I’m borrowing this rule from the Kindergarden chalkboard: Treat everyone as equals.
  2. Always have a completed rental application before considering interested parties as prospective tenants.
  3. Check every applicant’s prior landlord references, credit reports, and employment and pick the tenant most likely to pay rent every month! Make a legitimate business decision!
  4. You cannot refuse to show or rent an apartment on the ground that it contains lead paint. You may delay the start of the tenancy (by up to 30 days)
  5. You may not discriminate against recipients of federal, state, or local public assistance.

Potential damages in the tenants favor are at the mercy of the judge and/or jury!

Retaliation

This is complicated law. The wrong communication may cost you thousands of dollars!

  1. Most of the time, this claim arises when a tenant calls the board of health for an inspection. I’m always fielding calls about this claim. Be careful with your conduct. Act in the manner consistent with the prudent business person.
  2. Massachusetts landlords face a rebuttable presumption of retaliation.

Potential damages for the tenant are equal 1x-3x months rent plus attorneys fees and costs.

Security Deposit Violations/Bad Accounting Practices

  1. Always provide a Statement of Condition and receipts for all deposits.
  2. Keep the money in a SMART place. (S eparate interest bearing account, located in MA, beyond the R each of your creditors, and easilyT ransferrable.
  3. Return the security deposit plus interest within 30 days. You may deduct for unpaid rent, unpaid tax increases, and anything above/beyond reasonable wear and tear.
  4. If you are going to deduct from a security deposit, the remaining balance must be returned with an affidavit accounting for all deductions.

Potential damages for the tenant are equal 3x the security deposit plus attorneys fees and costs.

Author of this guide:

Was this guide helpful?