Landlords in Maryland can collect a security deposit from their tenants but must follow certain rules in doing so. These rules, which are important for both landlords and tenants to understand, are a part of Maryland’s landlord-tenant law. Here are seven basic questions about security deposits in Maryland.
7 Basics of Maryland's Security Deposit Law
- Security Deposit Maximum: Two Months' Rent
- Storing Deposit: In a Separate Account. See Exceptions.
- Written Notice: Yes. If Not Provided, Tenant Entitled to $25.
- Keeping Deposit: Unpaid Rent, Damages, Breaches of Lease.
- Walk-Through Inspection: Required. Tenant Allowed to Be Present
- Returning Deposit: Within 45 Days of Tenant Move-Out
- Selling Property: Must Transfer Deposit to New Owner
Is There a Security Deposit Limit in Maryland?
In the state of Maryland, the maximum amount a landlord can charge a tenant as a security deposit is two months’ rent. If a landlord collects more than two months’ rent as a security deposit, the tenant may be entitled to collect up to three times the excess amount of security deposit charged, plus reasonable attorney’s fees.
Storing the Security Deposit
In most cases, a Maryland landlord must place the deposit in a separate account specifically for security deposits. This must be done within 30 days of receiving the deposit.
All security deposits that are $50 or more must be placed in an account that bears interest at a rate of three percent per year and must accrue every six months from the date the security deposit was received.
Instead of placing the deposit in an account, the landlord can hold the security deposit in an insured certificate of deposit at a financial institution.
A tenant also has the option of purchasing a surety bond to be used as the security deposit. The landlord does not have to accept this form of deposit. The same rules that apply to all security deposits would apply to a surety bond.
A landlord must mail the tenant, by first class mail, an itemized list of any damages and deductions he or she intends to make from the security deposit at least 10 days before he or she attempts to make any deductions from the surety bond. The tenant has the right to dispute any deductions within 10 days of receiving the letter.
Is Written Notice Required After Receipt of the Security Deposit?
Yes. In the state of Maryland, landlords must provide the tenant with a receipt after collecting the security deposit from the tenant. This receipt can be an included part of the lease or rental agreement, but it must include the following information:
- Within 15 days of move in, the tenant can request, by certified mail, that the landlord inspect his or her unit and make a written list of any existing damage.
- The tenant has the right to be present when the landlord again inspects the unit for damages at the end of a tenancy. In order to be present, the tenant must contact the landlord in a written notice, by certified mail, at least 15 days prior to their intended move out day. This notice must include:
- A statement of the tenant’s intention to move.
- The intended move-out date.
- The tenant’s new address.
- The landlord must keep a copy of this security deposit receipt for two years after a tenancy is terminated, a tenant is evicted, or a tenant abandons the property.
- If a landlord does not provide the tenant with a security deposit receipt, the tenant is entitled to $25.
There are many other clauses that must be included in the security deposit receipt. For a complete list of the items that must be included, please see Maryland Real Property Code § 8-203.1.
Reasons You Can Keep a Tenant’s Security Deposit
In the state of Maryland, a landlord can keep all, or a portion of, a tenant’s security deposit for the following reasons:
- To cover unpaid rent
- Damage in excess of normal wear
- Other breaches to the lease agreement
Is a Walk-Through Inspection Required?
Yes. Landlords in the state of Maryland must perform a walk-through inspection. This inspection must be done within five days before or after the tenant moves out. The landlord must notify the tenant in writing of the tenant’s right to be present at this walk-through inspection and must include the date the inspection will take place.
Returning a Tenant’s Security Deposit
In the state of Maryland, a landlord has 45 days from the date of tenant move out to return all, or a portion of, the tenant’s security deposit plus any interest. This must be sent by first-class mail to the last known address of the tenant. Along with the portion of the security deposit that is owed to the tenant, the landlord must include a written itemized list of any deductions that have been taken from the security deposit.
If a landlord wrongfully withholds all or a portion of the deposit, the tenant could be awarded up the three times the amount wrongfully withheld, plus reasonable attorney’s fees.
Tenant Eviction or Abandonment:
Tenants who have been evicted or have abandoned the property before their lease is over are responsible for giving written notice, by first class mail, to the landlord within 45 days of moving out of the property. This notice should include their new address. The landlord then has 45 days from receiving this notice to mail the tenant a written itemized list of all damages plus whatever amount of the security deposit still owed to the tenant.
What Happens to the Security Deposit if You Sell Your Property?
If a landlord in the state of Maryland sells the investment property or the property otherwise changes ownership, the landlord must:
- Transfer all security deposits to the new owner.
- Provide the new owner with a written list that includes:
- Each tenant’s name
- Last known address of the tenant
- Date the security deposit was received
- The amount of the security deposit
- The interest rate
- If the landlord fails to transfer all or a portion of tenants’ security deposit to the new owner, the landlord is still liable for any portion that has not been transferred.
Maryland's Security Deposit Law
If you are interested in viewing the original text of security deposit law in the state of Maryland, please consult Maryland Real Property Code Annotated § 8-203 and § 8-203.1.