Security Deposits: Landlords and Tenants' Rights and Obligations

When tenants move out of their rental unit, they often feel as if their landlord unjustly took their security deposit.  When that is the case, tenants have recourse. Under Maryland law, landlords cannot take money from a tenant’s security deposit for normal wear and tear.  That means that landlords ordinarily cannot charge a tenant to clean a house that the tenant left in broom clean condition.  Unfortunately for landlords, they have to repaint walls and replace a carpet every now and then; that is the cost of doing business. So depending on the circumstance they may not even be able to charge the tenant for those costs. 

In Maryland, the cost of the security deposit is limited to no more than two month’s rent.  When a tenant pays a security deposit the landlord should provide the tenant with the receipt.  Often, the receipt is embedded in the contract.  The receipt has to include information about tenants’ rights.  The receipt should inform the tenant that the tenant can inspect the property for damages that exist at the start of the tenancy.  Also, the receipt should indicate that the tenant has the right to inspect the premises at the end of the tenancy, that the landlord needs to inspect the property within 5 days before or after the tenant moves out, and the landlord has an obligation to notify the tenant in writing of the date of the inspection.  These are just some of the provisions that need to be included in the receipt.  Landlords need to keep the security deposit receipt for two years. 

Security deposits can be withheld for unpaid rent, damages due to breach of lease, or for damage caused by the tenant to the rental unit.  In the majority of cases, the landlord will have to return the unused part of the tenant’s security deposit with interest.  Landlords must deposit all security deposits in federally insured financial institutions that do business in Maryland within 30 days after receiving the security deposit.  In addition, the landlord has to return the security deposit to the tenant and provide a written list of damages and a statement of the costs actually incurred within in 45 days of the end of the tenancy.  If the landlord does not inform the tenant of damages, the cost of the damages or does not return the security deposit within 45 days, the landlord is unable to keep any of the security deposit.  If the landlord erroneously withholds any part of the security deposit for too long, the landlord is subject to triple damages and may have to pay the tenant’s attorney fees.  If the tenant is ejected, evicted, or abandons the premises prior to the termination of the lease, the landlord does not have to return the security deposit within 45 days, unless the tenant requests so by first-class mail and only upon receipt of the letter by the landlord does the 45 day clock start.

Of note, if the tenant informs the landlord by certified mail of the tenant’s desire to be present at the inspection, the tenant has a right to be there upon inspection.  For both landlords and tenants it is a good idea to take pictures of a rental unit at the start of occupancy and after the tenant moves out.  This will help protect you should there be a landlord-tenant dispute involving the tenancy.

If you have a question regarding landlord-tenant issues, contact Phillip Chalker by phone (443) 961-7345 or by email to schedule a free consultation where we will review the facts of you case and create a plan going forward.