Overview
Maryland security deposit laws are governed by Maryland Code, Real Property § 8-203. The "Renters' Rights and Stabilization Act of 2024" significantly changed the maximum deposit amount. Maryland is one of the few states that requires landlords to pay interest on deposits and has strict storage requirements. Using security deposit management software helps property managers stay compliant with these complex rules.
Maximum Security Deposit
As a result of the Renters' Rights and Stabilization Act of 2024, for leases signed on or after October 1, 2024:
- Maximum deposit: One month's rent
- This includes any pet deposit
Pre-October 2024 Leases
For leases signed before October 1, 2024, the maximum was 2 months' rent.
Exception for Two Months
Landlords may charge up to 2 months' rent only when all of these conditions are met:
- The tenant is eligible and has qualified for utility assistance through the Department of Human Services
- The lease requires the tenant to make utility payments directly to the landlord
- The tenant and landlord agree in writing to the amount
Return Timeline
Landlords must return any unused portion of the security deposit within 45 days after the end of the rental period.
- Must be sent by first-class mail to the tenant's last known address
- A written list of charges and actual costs must accompany the return
- The itemized statement must be sent within the same 45-day period
Interest Requirements
Maryland requires landlords to pay interest on security deposits for any tenancy longer than six months.
Interest Rate
Within 45 days after the tenancy ends, the landlord must return the deposit together with simple interest calculated at: (Virginia has comparable provisions—see Virginia security deposit laws.)
- The daily U.S. Treasury yield curve rate for 1 year (as of the first business day of each year), OR
- 1.5% per year, whichever is greater
Interest Calculation
- Interest accrues at monthly intervals from the day the tenant gives the deposit
- Interest is not compounded
- Only applies to tenancies longer than 6 months
Storage Requirements
Maryland has strict storage requirements:
- Within 30 days of receipt, deposits must be placed in a federally insured financial institution doing business in Maryland
- The account must be interest-bearing
- The account must be exclusively for security deposits
- Options include: bank account, certificate of deposit (CD), or U.S. Treasury surety bond
Receipt Requirements
Maryland has specific receipt requirements:
- Landlords must give tenants a written receipt for payment of a security deposit
- Failure to provide a receipt may result in a $25 fine
- The receipt must include written information about Maryland security deposit laws
- Must include the tenant's right to be present at move-out inspection
- Must include the right to receive an itemized statement of deductions
Allowable Deductions
Landlords may deduct from the security deposit for:
- Unpaid rent
- Damages beyond normal wear and tear
- Breach of lease terms
- Actual costs incurred for repairs and cleaning
Normal wear and tear cannot be charged to the tenant.
Penalties for Non-Compliance
Maryland has strong penalties for violations:
Excessive Deposit
If a landlord charges more than the maximum allowed, the tenant may recover up to three times the excess amount charged, plus reasonable attorney's fees.
Wrongful Withholding
If a landlord keeps any portion of the deposit beyond 45 days without reasonable basis:
- Liable for three times the improperly withheld amount
- Plus attorney's fees
Statute of Limitations
Tenants can sue to recover improper charges at any time during the rental period or within 2 years after the end of the rental period.
Common Compliance Questions
What counts as "normal wear and tear"?
Normal wear and tear includes minor scuffs on walls, slightly worn carpet in high-traffic areas, small nail holes from hanging pictures, and faded paint from sunlight. It does not include large holes in walls, stained or burned carpet, broken fixtures, or damage from pets. When in doubt, document the condition at move-in with dated photos.
How should I document the unit's condition?
Complete a detailed move-in checklist with the tenant, noting existing damage, appliance conditions, and overall cleanliness. Take timestamped photos or video of every room. At move-out, repeat the process. This documentation protects both parties and makes deduction decisions defensible if disputed. Schedule a demo to see how Passive simplifies move-in and move-out inspections.
Can I deduct for unpaid utility bills?
Only if your lease specifically allows it and the utilities are in your name. If utilities are in the tenant's name, contact the utility company directly—they have their own collection processes. Never make unauthorized deductions, even for amounts you believe the tenant owes.