## Facts

- A homeowner rented his single-family house to tenants under a written one-year lease (Sept. 1, 1997–Aug. 31, 1998) for $2,450 per month while he worked overseas.
- At lease inception, the tenants paid a real-estate agent $2,450 as last month’s rent and $2,450 as a security deposit.
- The agent placed those funds in a pooled bank “Security Deposit Account” used for multiple landlords’ tenants and kept internal records found sufficient to track individual deposits.
- The agent also maintained a separate operating account used to receive monthly rent and pay property expenses.
- The tenants paid rent through August 1998 but remained in possession after the lease expired and did not pay for September 1998.
- The tenants later made a court-ordered $2,450 payment for October 1998 as a condition of a continuance.
- The agent applied the “last month’s rent” funds to September 1998 use and occupancy.

## Issues

1. Whether holding a tenant’s security deposit and last month’s rent in a pooled “security deposit” bank account managed by a real-estate agent violates G.L. c. 186, § 15B(3)(a)’s prohibition on commingling with a landlord’s own funds and triggers statutory penalties.
2. Whether a landlord must return a security deposit within 30 days after the written lease term ends when tenants hold over and have not surrendered possession.
3. Whether alleged violations of § 15B related to a one-time rental of a single-family home during the owner’s temporary absence constitute unfair or deceptive acts “in trade or commerce” under G.L. c. 93A.

## Decision

- The Appeals Court affirmed judgment for the landlord on the tenants’ counterclaims.
- The pooled account arrangement, with adequate tracking and segregation from the landlord’s operating funds, did not constitute unlawful commingling under § 15B(3)(a).
- The statutory deadline to return the security deposit was not triggered by expiration of the written term while tenants remained in possession; return obligations arise upon termination of the tenancy and surrender of possession.
- The landlord was not subject to c. 93A because the rental was a personal, private transaction rather than conduct in “trade or commerce,” and use of a professional agent did not change that characterization.

## Legal Principles

- G.L. c. 186, § 15B(3)(a) targets a landlord’s use of a tenant’s deposit as the landlord’s own money; it does not bar a broker from holding multiple tenants’ deposits in a pooled security-deposit account if the funds are segregated from operating funds and reliably traceable.
- A landlord’s obligation to return a security deposit within 30 days is tied to termination of the tenancy and the tenant’s surrender of possession, not merely the calendar end of a written lease when the tenant holds over.
- Liability under G.L. c. 93A requires conduct occurring in “trade or commerce”; an isolated, temporary rental of an owner’s single-family residence may fall outside that requirement, even if a broker manages the rental.

## Conclusion

The court held that the landlord and his agent complied with Massachusetts security-deposit requirements by using a pooled, traceable security-deposit account; the deposit was not required to be returned while tenants remained in possession after lease expiration; and the landlord faced no c. 93A exposure because the rental was a private transaction rather than activity in trade or commerce.


Neihaus v. Maxwell, 766 N.E.2d 566 (Mass. App. Ct. 2002)