Security deposits play an important role in rental agreements, acting as a financial safeguard for landlords while reassuring tenants that their renter’s rights will be upheld. Maryland has specific security deposit laws that are critical for landlords and tenants to understand. Here, we’ll break down some key aspects of Maryland rental laws, including how much you can charge on a security deposit, how much can be deducted, and the proper return timeline for deposits.

Maximum Security Deposit in Maryland

In Maryland, a landlord can charge a regulated maximum amount for a security deposit. That limit is defined as two months’ rent, with certain exceptions, including:

• Fully furnished units: Tenants can expect to pay a higher deposit.
• Short-term rentals: A different amount may be proposed if residency is expected to last less than a year.
• Federal assistance housing: Tenants in this protected category fall under different guidelines.

Charging more than two months’ rent, outside of exemptions, is an illegal act that can result in fines, including liability for a tenant’s legal fees. In certain cases, the tenant may be eligible to recover up to three times the excess amount charged.

Speak to a Tidewater professional today to learn more about Maryland rental laws, including security deposit limits.

Pet Deposit

Maryland pet deposits are separate from standard security deposits. A pet deposit is collected to cover potential damage from a pet inhabitant. They do have certain restrictions and limitations, like:

• They can be nonrefundable, depending on the initial rental agreement.
• A typical amount is one month’s rent.
• Under the Federal Fair Housing Act, service animals are not subject to a pet deposit, however a tenant is still responsible for any damage.

Application Fees

Application fees are collected by a landlord or property manager to cover the processing costs for background and credit checks. They are usually nonrefundable and unrelated to security deposit fees, which are only applied once a tenant signs a lease. Maryland state law ensures that application fees are reasonably priced by enacting limits on the amount a landlord can charge.

Storing Security Deposits

Landlords are required to store security deposits in a federally insured financial institution within Maryland. The deposit must be securely transferred within 30 days of receipt. Failure to do so can result in legal action.

While not as common, landlords can place deposits in a “CD” or Certificate of Deposit. CDs offer a higher interest rate than a traditional savings account.

Returning Security Deposits

Maryland tenant laws have specific guidelines for the return of security deposits. Renters and landlords should be aware that the deposit amount, pending deductions, must be returned within 45 days of a lease termination. It is important to provide an itemized list for any deductions so that tenants have a transparent understanding. Withholding the cause for deductions, or the entire sum of the security deposit, follows improper protocol and is subject to local prosecution. Landlords must complete these steps in the following order:

• Conduct a thorough inspection of the property to assess damage.
• Produce an itemized list with detailed deductions.
• Calculate the remaining security deposit balance.
• Mail the deposit and itemized list to a tenant’s last known or current address.

Reasons for security deposit deductions may include:

• Unpaid rent
• Extensive damage beyond average wear and tear
• Cleaning costs
• Violations of the lease agreement, like installations or unauthorized subletting

Tidewater Property Management offers professional leasing services under our Rental Management Division. We help landlords draft clear, concise, and compliant leasing agreements. Our experts specialize in federal and state law and work throughout the Mid-Atlantic region. You can also contact us via our convenient online portal to speak to a live representative.

Maryland’s Security Deposit Laws Explained

Understanding Maryland rental law protects tenants and landlords. By having a comprehensive knowledge of deposit limits, pet deposits, safe storage, and deposit return procedures, you’ll be prepared to follow best practices.

Tidewater’s turnkey solutions and exceptional care make us a trusted property management, maintenance, and real estate services provider. We help Maryland landlords navigate the rental landscape with efficient, tailored offerings.

Tidewater Companies is Maryland’s most valuable resource for property management! Contact a representative today to answer all your rental service needs.