Tips on Security Deposits

Tips from Experts on Security Deposits
Tips - Maryland Code, Real Property Article, § 8-203

BNI logo
Working For Justice In Housing

"I properly ended my tenancy two months ago, but the landlord has ignored my requests for the return of my security deposit."

"My former landlord wants to repaint the apartment at my expense, but the apartment was not freshly painted when I moved in."

"Unfortunately I damaged the landlord's old refrigerator and he wants to charge me for a new one."

"My tenant moved without proper notice, but is demanding the return of his security deposit."

"My tenant is moving out and insists that I use the security deposit for the last month's rent."

Questions and complaints about security deposits are among the most frequent reasons for calling BNI. Almost every landlord requires a security deposit, and most tenants appear to be concerned about the possibility of not receiving back the full security deposit.

Security Deposit Basics
Fortunately, Maryland has a fair and strong security deposit law. A security deposit is a sum of money, usually equal to one or two month's rent, which is taken in advance to protect the landlords from lost rent, breach of lease or damage to the property, appliances or landlord's furniture (if provided). The security deposit includes pet, key and utility deposits, etc. The security deposit cannot exceed two month’s rent. Landlords do not usually allow a tenant to use the security deposit as the last month’s rent because the landlords would then have no protection against breach of lease or physical damage.

Deductions from Security Deposits
When the tenancy has been properly ended, the landlord has 45 days to send an itemized list of any charge to the security deposit and to return any balance. Simple interest is due at the rate of 2% for every 6 month period that the landlord has had the security deposit. If the landlord improperly fails to return the security deposit and interest, the landlord can be sued for up to three times the total amount which is due. At the time the tenant gives the security deposit, the landlord must inform the tenant in writing of tenant’s right to be present at a final inspection at the end of the tenancy.

Itemized list of charges
If the landlord fails to inform the tenant of this right or fails to send an itemized list of charges to the tenant within 45 days of the end of the tenancy, then the landlord loses the right to keep the security deposit for any reason.

More than "wear and tear"
The landlord can only charge for physical damage beyond ordinary wear and tear. This is a common sense rule. For example, if a rug is worn through proper usage this is ordinary wear and tear. If a rug is stained with ink, this is not ordinary wear and tear.

Must be Reasonable
Charges have to be reasonable. If something does needed cleaning, the landlord should charge a reasonable cleaning fee. Items such as stoves, refrigerators, carpeting, must be depreciated in determining the amount of any damage. A major landlord informs me that many companies depreciate such items over seven year. Thus, a ten-year-old refrigerator should have little residual value, if any.

At the end of the tenancy, a tenant should carefully clean the premises, including all appliances. It is suggested that one or two friends willing to go to court, should go carefully room by room taking notes as to the condition of the premises.

NOTE: If a tenant ends the tenancy improperly, then the tenant has to request in writing, within 45 days of leaving, an accounting of the security deposit. The request must include the tenant's present address. Upon receiving such a request, the landlord must send an itemization and any balance of the security deposit within 45 days of receipt of the request.

MARYLAND CODE, REAL PROPERTY ARTICLE, SECTION 8-203

This law applies to all residential tenancies, whether the lease is written or oral.

(a) Definition - a "security deposit" is any payment of money, including the final month’s rent paid in advance, which is given to the landlord by the tenant in order to protect the landlord against non-payment of rent or damage to the leased premises, common areas, major appliances, and furnishings.

(b) Maximum amount - the maximum amount which the landlord may require as a security deposit for each dwelling unit is the equivalent of two month's rent or $50, whichever is greater. This is regardless of the number of tenants in the unit. If the landlord charges more than this, the tenant may recover up to three times the excess amount plus reasonable attorney's fees. The tenant’s action to recover this amount may be brought at any time during the tenancy or within two years after termination.

(c) Receipt - the landlord must give to tenant a written receipt for the security deposit as specified in section 8-203.1 and is liable to the tenant for $25 if he fails to do so. The receipt may be included in the written lease.

List of existing damages- either the lease or the receipt must contain language informing the tenant of his right to receive from the landlord a written list of all existing damage to the leased premises if the tenant so requests in writing within the first 15 days of his occupancy.

If the landlord imposes a security deposit and receives a written request, the landlord must provide the list of damages. If he does not, he is liable to the tenant for three times the amount of the security deposit. This liability of the landlord may be reduced by any damages or unpaid rent which he is entitled to under this section.

(d) Bank account- the landlord shall maintain all security deposits in federally insured financial institutions, as defined in section 1-101 of the Maryland Financial Institutions Article, which do business in the state. The account must be devoted exclusively to security deposits and bear interest. The landlord must deposit the amount of each security deposit in that account within 30 days after receiving it. The security deposit account cannot be attached by the landlord's creditors. In the event of sales or transfer of any sort, including receivership or bankruptcy, the security deposit is binding on the successor in interest to the person to whom the deposit is given.

(e) Return of deposit to tenant; interest- the landlord must, within 45 days after the end of tenancy, return to tenant the security deposit minus any amount which he may rightfully withhold. Simple interest of 4% per year must be paid on security deposits of $50 or more and must accrue at 6 month intervals from the day the security deposit was given. Interest is not compounded. If the landlord, without good reason, fails to return any part of the security deposit within 45 days after the end of the tenancy, he is liable to the tenant for up to three times the withheld amount of the security deposit plus reasonable attorney's fees.

(f) Withholding of deposit- the security deposit, or any portion thereof, may be withheld for unpaid rent, damage due to breach of lease or for damage by the tenant or the tenant’s family, agents, employees, guest or invitees in excess of ordinary wear and tear to the leased premises, common areas, major appliances, and furnishings owned by the landlord.

If the tenant notifies the landlord by certified mail that he intends to move out, the date of moving and his new address, he will have the right to be present when the landlord inspects the premises to determine if any damage was done. The notice must be mailed at least 15 days prior to date of moving. Landlord must then notify tenant by certified mail of the time and date of inspection, which must be within 5 days before or 5 days after tenant's move.

If the landlord fails to notify tenant in writing at the time of payment of the security deposit, of his rights under this subsection relating to the inspection, then the landlord forfeits the right to withhold any part of the Security deposit for damages, including unpaid rent.

If the landlord attempts to use the deposit to compensate for breach of the leased agreement, he can only claim the actual amount of money lost due to the tenant’s breach. If the landlord re-rents the property before the end of the tenant’s term, his actual damages are reduced by the amount he gains from the new agreement.

(g) Notice to tenant- if the landlord withholds any part of the security deposit, he must send to the tenant's last known address, by first class mail, within 45 days after the termination of the lease, a written list of the damages he claims together with a statement of costs actually incurred. If the landlord fails to do this within 45 days after termination, he loses the right to use the deposit to offset damages, including unpaid rent.

(h) Tenant ejected or evicted or abandoning- where tenant has been evicted or ejected for breach of the lease, or has abandoned the premises prior to termination of the lease, the procedure for return of the security deposit is as follows:

Within 45 days after leaving the premises, tenant sends to landlord by first class mail a request for return of the security deposit, and informs landlord of tenant's new address.
Within 45 days of receipt of the notice, landlord sends to tenant, by first class mail, a list of damages deducted from the security deposit and a statement of costs actually incurred. Within 45 days of receipt of tenant's notice, landlord sends to tenant the security deposit with simple interest of 4% per year minus damages properly withheld.
If landlord fails to send the list of damages, he forfeits the right to withhold any part of the security deposit for damages. If he fails to return the security deposit as required, tenant may sue for up to three times the withheld amount, plus reasonable attorney's fees.

(j) Waiver of section's provisions- the provisions of this law cannot be waived in any lease.

Click here to see what Maryland law says about this issue

Legally Reviewed - BNI. Last Update - March 2001