Amenity Use Fees - Hermida v. Archstone

A Massachusetts federal court recently came down with an important and interesting ruling regarding security deposits and fees that can be taken by a landlord prior to the commencement of a tenancy.  Under the Massachusetts SecurityDeposit Statute, landlords are restricted as to how much they can charge a new tenant for upfront fees, including first and last months’ rent, security deposit, and fees for changing locks; but what about fees for the use of community amenities such as pools and gyms?

According to the recent Massachusetts federal case of Hermida v. Archstone, Judge William Young upheld the strict interpretation of the Massachusetts Security Deposit Statute and held that “amenity use fees” collected prior to the commencement of a lease are illegal under the Statute.  In the Hermida case, the Hermidas were prospective tenants of Archstone Reading and were charged a one-time $475 amenity use fee prior to the start of their lease.  The Security Deposit Statute states that the landlord may not “require a tenant or prospective tenant to pay any amount in excess of” first and last months’ rent, a security deposit equal to the first month’s rent, and a fee for changing the locks.  The parties differed on the interpretation of that language.  The Hermidas contended that Archstone was prohibited from charging a fee that is not specifically enumerated under the Statute; however Archstone argued that the statutory language lists “calculable components which, summed all together, result in total maximum amount a landlord can charge at the inception of the tenancy.”  The court took a strict interpretation of the statute and disagreed with Archstone.  The court interpreted the statutory language as “prohibiting the landlord from charging a prospective tenant any amount for any purpose other than those listed, and in excess of the amount of each provision.”  In short, the amenity use fee was not explicitly allowed by the Statute, and thus violated the Security Deposit Statute.

It is important to note that the Hermida case focused solely on fees that may be charged by a landlord prior to the commencement of the lease.  Judge Young explicitly noted that the court would not determine the validity of any fees charged during or after the tenancy at this juncture.

The Security Deposit Statute is designed to protect both sides of the landlord-tenant relationship, so landlords and tenants alike should take this opportunity to clarify their rights under the Statute.  Landlords should review the up-front fees they typically charge to comply with court’s recent hardline decision; and tenants should be sure they understand each fee that the landlord is charging at the commencement of the lease and how it fits into Security Deposit Statute.

We will be discussing this important issue as well as other significant issues surrounding the practice of being a landlord in Massachusetts during our upcoming free seminar.  Please join us:  Be A Smart Residential Landlord