Security Deposits

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, damage due to breach of the lease or damage to the leased premises, common areas, major appliances and furnishings.

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.  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 extra amount charged, 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.

Receipt

The landlord must give the tenant a written receipt for the security deposit as specified in Maryland Real Property § 8-203.1. The landlord is liable for $25 if he fails to do so.  The receipt may be included in the written lease. Read the Law: MD Code Real Prop. § 8-203.1
The receipt must also inform the tenant of:

• The tenant’s right to have the unit inspected by the landlord, with the tenant present, in order to make a list of damages that exist at the start of the tenancy.  The tenant must request this inspection by certified mail within 15 days of the tenant’s occupancy.
• The tenant’s right to be present when the landlord inspects the unit at the end of the tenancy in order to determine if any damage was done to the premises during the tenancy.  The tenant must request this inspection by certified mail at least 15 days before the tenant’s indented move and the tenant must include in that request of the tenant’s intention to move, the tenant’s intended date of moving and the tenant’s new address.
• The landlord’s obligation to notify the tenant in writing of the date of the inspection and the landlord’s obligation to conduct the inspection within 5 days before or after the tenant’s intended move date.
• The tenant’s right to receive a written list of the charges against the security deposit claimed by the landlord and the actual costs, within 45 days after the termination of the tenancy.  This written list must be sent by first-class mail to the tenant’s last known address.
• The landlord is obligated to return any unused portion of the security deposit within 45 days after termination of the tenancy.  The landlord must send any unused portion by first-class mail to the tenant’s last known address.
• Finally, the receipt must contain a statement that the landlord’s failure to comply with the security deposit law may result in the landlord being liable to the tenant for a penalty of up to 3 times the security deposit withheld, plus reasonable attorney’s fees.

The landlord must keep a copy of the receipt for 2 years after the termination of the tenancy, eviction or abandonment of the property.

Bank Account

The landlord must 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 landlord must deposit each security deposit in that account within 30 days after receiving it.  The security deposit cannot be attached by the landlord’s creditors.  Read the Law: MD Code Financial Institutions § 1-101

Return of the Deposit to Tenant; Interest

The landlord must, within 45 days after the end of the tenancy, return to tenant the security deposit minus any amount which the landlord may rightfully withhold.  Simple interest of 3% 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 a reasonable basis, fails to return any part of the security deposit within 45 days after the termination of the tenancy, the landlord may be liable to the tenant for three times the withheld amount, plus reasonable attorney’s fees.

Withholding of Deposit

The security deposit, or any portion thereof, may be withheld for unpaid rent, damage due to breach of lease or 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 the date of moving.  The landlord must then notify the tenant by certified mail of the time and date of inspection, which must be within 5 days before or 5 days after the tenant’s move.

If the landlord fails to notify the tenant in writing at the time of payment of the security deposit of his rights under this subsection relating to the inspection, the then 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.

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 property usage, this is ordinary wear and tear.  If a rug is stained with ink, this is not ordinary wear and tear.

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.  It is also suggested that you document the condition of the premises when you leave by taking photographs of the condition of each room.

Notice to Tenant

If the landlord withholds any part of the security deposit, he must send to the tenant by first class mail to his last known address, 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 of the lease, he forfeits the right to withhold any part of the security deposit for damages.

Tenant Ejected, Evicted or Abandoning

Where the 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:

1. Within 45 days after leaving the premises, the tenant must send to the landlord, by first-class mail, a request for return of the security deposit, and inform the landlord of the tenant’s new address;
2. Within 45 days of receipt of the notice, the landlord must then send, by first-class mail, a list of damages deducted from the security deposit and a statement of costs actually incurred and must return to the tenant the security deposit with simple interest of 3% per year, minus damages property withheld.
3. If the landlord fails to send the list of damages, the landlord forfeits the right to withhold any part of the security deposit for damages.
4. If the landlord fails to return the security deposit as required, the landlord may be liable to the tenant for up to three times the withheld amount, plus reasonable attorney’s fees. Read the Law: MD Code Real Prop 8-203

Waiver of Section's Provisions

The provision of this law cannot be waived in any lease. 
Read the Law: Md. Code, Real Prop. § 8-203

What to Do If You Have a Problem with Your Security Deposit

If your landlord has violated the security deposit law, you may sue him/her in district court. Your lawsuit must be filed no later than two years from the end of your tenancy. If you file suit against your landlord and hire an attorney to represent you, you can ask the court for attorney’s fees. Read the Law: Md. Code, Real Prop. § 8-203

You may want to talk to an attorney about any problem concerning your security deposit. You may be eligible for free legal services or advice from Maryland Legal Aid or a volunteer lawyer program.

You can get the forms you need to file a small claims lawsuit against the landlord at your local district court. The forms are simple to use, and the court clerk can answer your questions about filling them out. The district court also has free brochures on how to file a small claims lawsuit and tenant/landlord law that include information on security deposits. You can obtain these brochures from the Internet or from a court clerk.

There is a small fee to file a small claims lawsuit. You also must have someone serve the papers on your landlord, or for an additional fee, you or the court can mail the papers by certified mail, restricted delivery, return receipt requested. You may not have to pay these costs if you are poor. Ask the district court clerk for the forms to ask for a waiver of these costs. The protection that you have under Maryland’s security deposit law cannot be taken away from you or changed by your lease.

Surety Bonds

New laws were passed in 2006 creating a provision for surety bonds to provide tenants with an alternative to paying a full security deposit. These new laws are fairly complicated and it is not yet clear how often tenants will actually use this option.

Under the law, a landlord cannot require that a tenant purchase a surety bond. The amount of the bond may not exceed two months rent per unit. At least 10 days before a landlord makes a claim against the bond, the landlord must notify the tenant by first-class mail. A tenant may choose to fight the claim by sending a written response to the surety within 10 days after receiving the landlord's claim.

The surety providing the bond should disclose in writing that:

1. the payment for a bond is nonrefundable;
2. the surety bond is not insurance for the tenant;
3. the surety bond is not being purchased to protect the landlord against loss due to nonpayment of rent, breach of lease, or damages caused by the tenant.
4. the tenant may be required to reimburse the surety for the amount of the surety paid to the landlord;
5. even after the tenant purchases the surety bond, the tenant is still responsible for payment of all unpaid rent and damages;
6. the tenant has the right to pay the games directly to the landlord or require the landlord to use the tenant's security deposit, if any, before the landlord makes a claim against the surety bond; and
7. if the surety fails to make the preceding disclosure, the surety forfeits the right to make any claim against the tenant under the surety bond.

Read the Law: Md. Code, Real Prop. § 8-203