Security deposits are where many well-meaning Maryland landlords get into legal trouble. The rules are specific, the penalties for getting them wrong can be several times the deposit, and the rules changed recently. Here's the current picture.
How much you can collect
For leases signed on or after October 1, 2024, Maryland generally caps the security deposit at one month's rent. (The previous limit was two months.) The law has narrow exceptions, so if you're thinking of collecting more than one month, check with an attorney first.
Holding the deposit
- Give the tenant a written receipt. The lease can serve as the receipt if it includes the required language.
- Keep the deposit in an escrow account at a federally insured financial institution doing business in Maryland. Never mix it with operating money.
- Deposits accrue interest owed to the tenant under a state formula, in six-month intervals, on deposits of $50 or more. The rate is set by statute and has changed over time, so check the current rate each year.
When you work with us, deposits are held in our sponsoring broker's escrow account. That's required by Maryland brokerage law, and it protects you.
Inspections the tenant can request
Tenants have the right to request a walk-through at move-in, and to be present at the move-out inspection if they ask in writing ahead of time. A detailed move-in report with photos is your best evidence later, which is why ours run to hundreds of photos.
Returning the deposit
Within 45 days after the tenancy ends, you must return the deposit plus interest, minus any lawful deductions, with an itemized list of damages and costs. Deductions are for unpaid rent and damage beyond ordinary wear and tear, not for normal aging of paint and carpet. Miss the deadline or withhold without a basis, and a court can award the tenant up to three times the amount wrongly withheld, plus attorney's fees.
How we handle deposits
- One month's rent, receipted, held in the broker's escrow account.
- A move-in condition report with photos of every room, signed by the tenant.
- A move-out inspection within days of key return, photographed against the move-in set.
- An itemized disposition well inside the 45-day window, with photos attached for every deduction.