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.