Key Takeaways

• Maryland landlords cannot charge more than one month’s rent as a security deposit, and exceeding this limit can result in significant financial penalties, including up to three times the excess amount plus legal costs.
• Security deposits must generally be held in a separate account within 30 days of receipt, with deposits over $50 earning interest in an approved interest-bearing account or similar financial instrument.
• Landlords may deduct from a security deposit for unpaid rent, excessive property damage, or lease violations, but they cannot charge tenants for ordinary wear and tear resulting from normal use of the rental property.
• Maryland security deposit law requires landlords to conduct move-out inspections, provide tenants with an itemized list of deductions when applicable, and return the remaining security deposit with accrued interest within 45 days after the tenant vacates the property.

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Maryland landlord-tenant law permits landlords to collect a security deposit from their tenants. In doing so, however, a landlord must follow certain basic rules. The following are answers to commonly asked questions regarding the collection and handling of renters’ security deposits in Maryland.

What’s the Security Deposit Limit in Maryland?

The maximum amount to ask for as a security deposit must not exceed the equivalent of one month’s rent. If as the landlord, you exceed this limit, the financial repercussions may impact your bottom line. Specifically, you may be liable for paying the tenant up to 3X the excess amount. Plus, reasonable attorney’s fees and local district court costs.

How Must Landlords Store Their Tenants’ Security Deposits in Maryland?

Generally speaking, under Maryland security deposit law, landlords must keep their residential tenants’ security deposits in separate accounts. A landlord must do this within 30 days of receiving it. If the security deposit exceeds $50, the landlord must store it in an interest-bearing account. The interest payment must be at least 3% per annum and generate interest twice a year.

Another option you, the landlord, has is to store the tenant’s deposit in an insured certificate of security deposit at a financial institution. A tenant can also use a surety bond instead of a security deposit. As a landlord, though, you reserve the right to reject this form of security deposit.

Do Landlords Need To Provide Tenants with a Written Receipt of the Security Deposit in Maryland?

You need to do this as a landlord once you have received the renter’s security deposit. You can include it as part of the written lease agreement. Besides stating the amount received, the written notice must also include the following details:

• The Maryland tenant’s right to request that the landlords inspects the leased premises, and include a list of any pre-existing damage. Under the state’s security deposit laws, they will need to do this within 15 days, though.
• The tenant’s right to be present during the final walk-through assessment. The tenant will have to notify the landlord about their intention to be present at least 15 days before their lease agreement ends. In the notice, the tenant must also state their new address and intended move-out date.
• As the landlord, you must also keep a copy of the security deposit receipt for two years after the tenant moves out.

What Situations Can Make a Landlord Keep Part or All of a Tenant’s Deposit?

In Maryland, landlords can keep part or all of a tenant’s security deposit to cover:

• Overdue unpaid rent
• Costs of damage in excess of ordinary wear and tear.
• Other violations in the lease agreement result in financial ruin.

That said, always exercise caution when making deductions for damages in excess of ordinary wear and tear. Under security deposit laws, a landlord should ensure that they are indeed negligent damage like:

• Large holes in walls or ceilings
• Broken or damaged appliances
• Stains, burns, or holes in carpets
• Ripped or stained wallpaper or curtains
• Missing or broken exterior fixtures
• Damage caused by illegal activities

In these cases, you’d be well within your rights as a landlord to hold the tenant liable for the restoration costs and may even be entitled to proceed with eviction. Of course, the deductions must be reasonable and appropriate. The landlord must not, however, hold the tenant responsible for damages resulting from ordinary wear and tear. This is because such damages occur as a result of everyday use of the leased premises. The following are some examples of such ordinary wear and tear:

• Minor scuffs or faded paint on walls
• Faded tile or slight scratches on hardwood floors
• Minor scratches or dents on appliances
• Peeling or faded paint on exterior surfaces
• The cost of fixing such type of damage is squarely the landlord’s.

Do Landlords in Maryland Need To Perform Walk-Through Inspections?

Yes, this is a requirement under the Maryland landlord-tenant laws. The following are some important things to note in this regard:

• A landlord must do walk-through assessments within five days before or after the tenant vacates the premises.
• Landlords must notify the tenant about their intention to conduct inspections and their right to be present.
• The landlord must include the date and time of the assessment.

When Should Landlords Return the Renter’s Security Deposit?

You must do this within 45 days of the tenant moving out from the rental unit, less any allowable deductions. You must also include any interest earned. You must then send this to the tenant’s last known address via first-class mail.

If you’re not returning the security deposit in full, you must include a written itemized list of deductions as well. Wrongfully withholding a renter’s security deposit can have serious financial repercussions on your bottom line like owning the full security deposit plus interest. If you have questions work with a legal processional and budget for a reasonable attorney’s fees.

What Happens to the Security Deposit if a Landlord Sells Their Rental Property in Maryland?

If the property ownership changes hands while the unit is occupied by the tenant, you must transfer the entire security deposit to the incoming landlord. Next, you must provide them with the following information:

• Name of each tenant staying in the premises.
• The tenant’s last known forwarding address.
• Date of receiving the renter’s security deposit.
• The total and maximum security deposit amount.

• The rate of interest per annum if you have kept the security deposit in an interest-bearing account.

Bottom Line

Now you’re familiar with the basics of the Maryland security deposit laws. However, there are many other rental laws that landlords need to remain up-to-date on. If you need help work with a professional to help budget for repairs plus reasonable attorney’s fees.

If you have a question or need to hire an expert management company, Astoria Charm can help. We provide quality and dependable property management services to property owners in Baltimore City and Baltimore County. Contact us today for more information about our services!

Disclaimer: Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to rental premises management may change, rendering this information outdated by the time you read it.