Maryland’s security deposit laws give landlords a clear legal framework to avoid incorrect charges, missed return deadlines, or disagreements about repairs.
In this guide, landlords can learn everything they need to know about these regulations, including maximum deposit amounts, proper storage methods, interest requirements, valid deductions, return rules, how to handle tenant disputes, and more.
Statutes Regulating Maryland Security Deposits
Maryland’s security deposit laws are located in Section 8-203 of the Maryland Code, Real Property, and outline how landlords collect, hold, return, and deduct from residential deposits.
Maximum Security Deposit Amounts Under Maryland Law
Maryland law sets a clear limit on residential security deposits, capping them at 2 months’ rent. This cap applies to all standard residential leases, regardless of lease type or contract length, so landlords should follow this single consistent rule across their rental portfolio.
Maryland does not offer exceptions that alter the 2-month maximum for residential properties.
Security Deposit Storage Regulations
Maryland law requires landlords to place each security deposit in an escrow account at a federally insured financial institution located in Maryland. Landlords must also issue a written receipt stating the deposit amount and explaining the tenant’s rights. They only need to share the bank information if the tenant requests it.
For example, a landlord cannot place the deposit in a personal account that mixes escrowed funds with unrelated money.
Security Deposit Interest in Maryland
Maryland requires landlords to place every security deposit in an interest-earning account. The state sets the interest rate each year using the daily U.S. Treasury yield curve rate for 1-year maturity on January 1st, and landlords must pay this interest to the tenant when they return the deposit.
Landlords follow Maryland’s interest rules by applying the correct Treasury rate, prorating it based on the number of days they held the deposit, and adding the total interest owed to the final return amount.
Making Security Deposit Deductions
Security deposit deductions help landlords protect the health of their rental properties. Tenants sometimes default on rent payments or leave damage beyond normal wear and tear, and landlords need access to funds to cover these expenses.
When Landlords Can Deduct
Maryland landlords can draw from a tenant’s security deposit for the following reasons:
- Repairing damage that exceeds normal wear and tear under Maryland law
- Covering unpaid rent that remains overdue after the lease term
- Addressing tenant actions that create documented financial losses
- Replacing property the tenant removed or failed to return at move-out
- Managing heavy cleaning needed to restore a safe, sanitary unit
When Landlords Can’t Deduct
Maryland landlords cannot draw from a tenant’s security deposit for the following reasons:
- Addressing deterioration caused only by normal wear and tear
- Repairing minor wall marks or nail holes from everyday living
- Handling routine cleaning typically expected between standard turnovers
- Covering upgrades that improve the property beyond its previous condition
- Charging for issues that result from the landlord’s own lack of maintenance
Necessary Documentation to Accompany Deductions
Maryland landlords must give tenants an itemized list of damages and repair costs when making deductions. They also need to include receipts, estimates, or invoices that show how they calculated each charge. Landlords must send this information within the same timeframe required for returning any remaining portion of the deposit.
What to Do When Deductions are Greater Than the Deposit
Sometimes tenants cause damage that exceeds what the security deposit covers, and landlords are within their rights to recover the difference. Maryland landlords should send a written demand for payment and allow a reasonable chance for the former tenant to settle the balance. Maryland does not set a specific timeframe, but landlords should act sooner rather than later.
Landlords who cannot collect the remaining amount can hire a collection agency or file a claim in their local Maryland small claims court in an attempt to recoup what they’re due.
Returning Security Deposits to Tenants
Maryland law sets clear rules for how landlords must return any remaining portion of a tenant’s security deposit after making eligible deductions, including strict timelines and documentation standards.
Required Timeline for Return
Maryland requires landlords to return any remaining deposit within 45 days after the tenancy ends. The 45-day window starts when the tenant vacates the unit and returns possession. If deductions apply, landlords must also send an itemized list of damages within that same 45-day period.
Method for Return
Maryland landlords usually return deposits by check or another verifiable payment method that the tenant can access. When they make deductions, landlords must include an itemized list of damages with the returned amount (or with the notice stating that no funds remain) to give tenants a clear explanation of how they calculated each charge.
Penalties for Late Return
Maryland law imposes strict penalties when landlords fail to meet the return requirements. For example, a landlord who wrongfully withholds any part of the deposit may owe up to 3 times the amount withheld, plus reasonable attorney fees. Failing to meet the 45-day deadline or to provide proper itemization are also punishable under state law.
Security Deposit Disputes
Tenants who disagree with how a landlord handles their security deposit hold the right to challenge the decision. They should do so by contacting their landlord and sending a written objection, requesting documentation, or filing a claim through Maryland’s legal system if they believe the landlord acted unfairly.
Landlords can prepare for potential disputes by using move-in and move-out checklist tools, staying organized with accounting and bookkeeping, and including clear terms within all lease agreements. Thorough documentation, solid knowledge of Maryland law, and strict attention to all timelines can only serve to strengthen a landlord’s position during disagreements.
Using Condition Reports to Document Damage
Security deposits in Maryland become much easier to manage when landlords utilize move-in and move-out condition reports. These digital reports capture the property’s condition at both pivotal stages and help neutralize disagreements. They also help keep landlords organized and provide clear evidence that supports accurate deductions.
Landlords should consider using property management software to create digital reports, complete with detailed photos and videos, directly from their smartphones. Documenting the property’s condition before move-in and after move-out makes security deposit deductions far less negotiable, since both parties can visualize exactly what changed over the tenancy.
Sign up for a free TurboTenant account to simplify turnover and keep every part of the security deposit process legal.
FAQs: Maryland Security Deposit Law
Can a landlord deduct painting from a security deposit in Maryland?
A Maryland landlord may deduct painting costs only when a tenant leaves damage that goes beyond normal wear and tear. Damage from misuse, negligence, or unauthorized changes qualifies for a deduction, while routine repainting resulting from everyday use does not.
Are nail holes considered normal wear and tear in Maryland?
Small nail holes from everyday living usually count as normal wear and tear in Maryland, so landlords cannot deduct for them. Larger holes, wall damage, or excessive marks that exceed normal use may justify a deduction when they require repair.
Does the landlord or tenant have to pay for carpet cleaning in Maryland?
A landlord cannot charge for routine carpet cleaning in Maryland. Standard turnover cleaning counts as normal wear and tear. However, if a tenant leaves stains, odors, or damage beyond normal wear and tear, the landlord may deduct the costs of cleaning or replacing the carpet.
What happens if a landlord doesn’t return a security deposit within 45 days in Maryland?
A Maryland landlord who misses the 45-day deadline or fails to provide an itemized list of deductions may owe up to three times the amount wrongfully withheld, along with reasonable attorney fees. State law holds landlords accountable for failing to follow the required return process.
