When a real property owner rents out their space, they will typically require a tenant’s security deposit. This is, as its name suggests, money to be held for the purpose of protecting the landlord in the event of damage to the property or for nonpayment of rent. It may not be used by either the landlord or the tenant during the term of the tenancy, but is placed in a secure account and kept until the tenant moves out. Security deposit money may only be retained by the landlord after the end of the lease for certain specific reasons, and even then, only after following detailed legal requirements. For both landlord and tenant, there are particularities in the Maryland state law that trigger rights and obligations. Failing to take the appropriate steps can mean sacrificing money.
Interest Account Required
In the state of Maryland, the maximum amount of the security deposit may not exceed the amount of two months’ rent. If a landlord charges more than this amount, a tenant may recover up to three times the extra amount charged, as well as attorney’s fees.
A Maryland landlord must provide a security deposit receipt to the tenant for the security deposit received. The written lease itself may serve as this receipt. Within 30 days, the funds must be placed with a financial institution in an interest-bearing bank account or certificate of deposit (CD) or U.S. Treasury surety bond devoted exclusively to security deposits on properties owned by the same landlord. If a landlord sells the property or dies, the security deposit account transfers to their successor in interest. Security deposit funds may not be attached by creditors of either the landlord or the tenant, and are available for the use of neither until the move out date.
Return of the Security Deposit
At the end of the tenancy, a landlord must return the security deposit to the tenant, with accrued interest, within 45 days. The landlord may retain any damages “rightfully withheld,” and must provide a detailed written list of damages claimed, including actual cost of repairs, sent by certified first-class mail. If a landlord keeps any portion of the security deposit beyond 45 days without a reasonable basis, they can be liable to the tenant for three times the improperly withheld amount, plus attorney’s fees. If the landlord fails to provide correct written notice and documentation, they forfeit the right to withhold any portion of the tenant’s deposit.
Upon vacating, a tenant is expected to leave the property in the same condition as when they first began their rental agreement, minus ordinary wear and tear. Because the majority of security deposit disputes arise out of disagreements over the condition of the premises and what constitutes damage caused by the tenant, it is important for all concerned to document as thoroughly as possible. Tenants can protect themselves by doing a complete inventory upon moving in, taking pictures of anything that might be considered less than pristine, and notifying the landlord of such by certified mail. Do the same upon moving out, prior to turning over the keys.
A tenant may request to be present at an inspection of the rental unit after they move out, by making a written request to the landlord, mailed at least 15 days before moving out. The landlord must respond to this request by certified mail, providing the time and date of the inspection, which must occur within five days after the date of moving provided in the tenant’s notice. If the landlord doesn’t comply with these steps, they forfeit the right to retain any portion of the security deposit.
Keeping the Security Deposit
A landlord may only keep security deposit funds for:
- Unpaid rent,
- Damage due to a breach of the lease agreement, or
- Damage to the premises beyond ordinary wear and tear
Security deposit funds are meant to provide a way to make the landlord whole, and are not to be used for anything but actual losses. If a tenant breaks the lease, but the landlord is able to re-rent the place, the landlord may only recoup the amount of rent actually unpaid during the unleased period, not for the remainder of a breaching tenant’s lease. Similarly, the landlord may not charge the tenant for the kind of damage that occurs through ordinary, reasonable use.
Examples of ordinary wear and tear would be worn carpet or walls that need repainting. A bad stain in the carpet or hole in the wall that happened during the tenant’s possession of the premises would be the type of repair a landlord could charge to the tenant.
Eviction or Abandonment
Note that in the case of eviction or abandonment of the premises by the tenant, a tenant is not entitled to automatic return of their security deposit, but must make a written request. Upon receipt of such a request, the landlord is required to reply within 45 days explaining reasons for withholding, or the landlord forfeits the right to any portion of the security deposit.
Because the requirements regarding security deposits and landlord-tenant laws in Maryland are specific, with significant penalties, it can be helpful to get legal advice from a landlord-tenant attorney in your area
. Successful tenants are entitled to recover reasonable attorney’s fees.