Rent Escrow: When the Landlord Fails to Make Repairs

Maryland law imposes an obligation on landlords to repair and eliminate conditions which constitute, or if not promptly corrected will constitute, a fire hazard or a serious and substantial threat to the life, health, or safety of occupants. Read the Law: MD Code, Real Property, § 8-211

Under this law, if a landlord fails to repair serious or dangerous defects in a rental unit, you have the right to pay your rent into an escrow account established at the local district court. But the law is very specific about the conditions under which rent may be placed in escrow. You must give the landlord proper notice and adequate time to make the repairs before you have the right to place rent in escrow. The escrow account can only be set up by the court. You can file a petition to establish a rent escrow in District Court by filling out a "Petition in Action of Rent Escrow" form. 

Rent escrow provides tenants with a procedure for ensuring the repair of serious and dangerous defects in their dwellings, whether the defect is within a single unit or in an area used jointly by all tenants. The defects covered by this law are those which constitute "a substantial and serious threat of danger to the life, health, and safety" of a tenant. Rent escrow is not provided for defects that just make the apartment or home less attractive or comfortable, such as small cracks in the floors, walls or ceiling. Also excluded are non-dangerous violations of a local housing code and dangerous conditions in the community at large.

The serious or dangerous conditions include, but are not limited to:

  • lack of heat, light, electricity or water, unless you are responsible for the utilities and the utilities were shut off because you didn't pay the bill;
  • lack of adequate sewage disposal; rodent infestation in two or more units;
  • lead paint hazards that the landlord has failed to reduce;
  • the existence of any structural defect that presents a serious threat to your physical safety;
  • the existence of any condition that presents a serious fire or health hazard.

It is the public policy of the state that sanctions be imposed on landlords who permit dangerous conditions to exist in their leased property, and that an effective mechanism be established to prevent and repair these conditions.

This law applies to all residential dwelling units except farm tenancies.

It applies equally to publicly and privately owned units and to single and multiple unit dwellings.

Minor defects or non-dangerous violations

Minor defects or non-dangerous violations of a local housing code are not covered by this law. There is a rebuttable presumption that the following conditions, where they are not a serious and substantial threat to the life, health and safety of the occupants, are not covered: lack of fresh paint, rugs, carpets, paneling or other decorative amenities which only reduce the aesthetic value of the premises; small cracks in the walls, floors, or ceiling; lack of linoleum or tile on the floors, provided the floors are structurally sound and safe; or the absence of air-conditioning.

Steps in the rent escrow procedure

The tenant must notify the landlord of the defective condition. The required notice to the landlord may be any one of the following: a written notice sent by certified mail, listing the dangerous condition or defect; actual notice of the defect or condition; or a written violation, condemnation, or other notice from an appropriate government agency identifying the condition or defect.

After receipt of the notice, the landlord has a reasonable time to make repairs. The actual length of time considered reasonable is for the court to decide, taking into account the seriousness of the defect and the danger it presents to the occupants. There is a rebuttable presumption that a period of more than 30 days after receipt of notice is unreasonable.

If the landlord refuses to make repairs, or fails to make repairs within a reasonable time, the tenant may bring an action of rent escrow, asking to be allowed to pay the rent into court, or may withhold rent from the landlord and wait to be sued.

Before an escrow account can be established, the court will hold a hearing to listen to both sides of the story. If the facts call for a rent escrow account to be set up, the judge can take several actions, including returning all or part of the money to you as compensation, returning all or part of the money to you or the landlord in order to make repairs, or appointing a special administrator to ensure that the repairs are made. Once the escrow account is established, you must continue to regularly pay rent into this account.

The tenant may request any of the remedies provided by this law, whether he uses the rent escrow law affirmatively or defensively. In addition, if the landlord does not correct the condition within 90 days after the court finds that the condition exists, the tenant may seek an injunction in District Court to order the landlord to correct the condition.

With either an affirmative or defensive approach, relief for the tenant is conditioned upon the following:

1) the landlord received proper notice and, if appropriate, had reasonable time to correct the defect;

2) the tenant paid into court the amount of rent required under the lease, unless that amount is modified by the court;

3) in monthly tenancies or tenancies measured by a period of more than one month, there have not been 4 or more judgments of possession for rent due and unpaid entered against the tenant in the 12 months preceding the filing of the action;

4) in weekly tenancies, there have not been 6 or more judgments of possession for rent due and unpaid entered against the tenant in the preceding 12 months, or, where the tenant has lived in the dwelling for 6 months or less, there have not been 3 or more judgments of possession entered against the tenant.

The landlord will prevail if he can prove one of the following:

  • the defective condition was caused by tenant or a member of his family, or by his agent, employee, assignee, or guest; or
  • landlord or his agent was denied reasonable and appropriate entry to the premises to make the repairs.

Representation at a rent escrow hearing

Non-lawyers may represent landlords in a rent escrow or summary ejectment proceeding in District Court. Non-lawyers may represent a tenant in rent escrow or summary ejectment proceeding in District Court if the person is

  1. a law student practicing in a clinical law program at an accredited law school with the in-court supervision of a faculty member; or
  2. employed by a nonprofit organization receiving grants from the Maryland Legal Services Corporation, the person has training and is experienced, the person is supervised by a lawyer, and the lawyer is entered in the proceeding.  Read the law: MD Code Business Occupations & Professions § 10-206

What Court may order

The court shall make appropriate findings of fact and may make any order that justice requires. Such an order may include one or more of the following:

  • order termination of the lease and surrender of the premises to the landlord, subject to the tenant's right of redemption (tenants right to stay on the property by paying amounts owed);
  • dismiss the rent escrow action;
  • reduce the amount of rent required under the lease, whether paid into court or to the landlord, to an amount that fairly represents the condition of the premises; or
  • order the landlord to make certain repairs or correct the conditions complained of by the tenant and found by the court to exist.

Note: Failure to obey an order of the court constitutes contempt of court, which is punishable by fine or imprisonment.

If a proper rent escrow case is shown and the escrow account is established, the court may do one of the following:

  • shall, after a hearing, if one is ordered by the court or requested by the landlord, order the money in the escrow account to be given to the landlord after the necessary repairs have been made;
  • may, after an appropriate hearing, order some or all of the money in the escrow account to be paid to the tenant, or to the  landlord, or to any other appropriate person or agency, for the purpose of making necessary repairs;
  • may, after a hearing if one is requested by the landlord, appoint a special administrator who shall cause the repairs to be made, and who shall apply to the court to pay for them out of the money in the escrow account;
  • may, after an appropriate hearing, order some or all of the escrow funds to be used to pay a mortgage or deed of trust on the property to prevent foreclosure;
  • may, after a hearing if one is requested by the tenant, order, if no repairs are made or if no good faith effort to repair is made within 6 months after the initial decision to place money in the escrow account, that the funds in escrow to be given to tenant. The tenant must continue to pay rent into court. However, if the landlord appeals the case, this forfeiture of escrow funds to the tenant will be stayed; or
  • may, after an appropriate hearing, if the tenant does not regularly pay his rent into the escrow account, order the accumulated money to be given to the landlord.

NOTE: Baltimore City has a rent escrow law that is very similar to the state law. Baltimore residents must exercise their rent escrow rights under city law. If you reside in a county where such a rent escrow law has been adopted, you must follow procedures required in the local law for setting up an escrow account. Read the Law: MD Code, Real Property, § 8-211

Source: 

Baltimore Neighborhoods, Inc. (BNI), Maryland Attorney General
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