Security deposits are common when renting in Maryland, and they are very useful for landlords to ensure that they have funds that can be used if a tenant damaged the property and repairs need to be made. However, since landlords are required to hold onto security deposits, many problems can arise if they are improperly handled. What are some of the most common mistakes that landlords make when handling these deposits?
5 Common Mistakes Landlords Make with Security Deposits
Charging Too Much: Maryland places a limit on how much a landlord can charge for security deposits and caps the amount at two months’ rent. If a landlord collects more than that, the tenant could be entitled to collect up to three times the amount over two months’ rent, along with attorney’s fees.
Storage: In Maryland, the deposit must be placed in a specific account just for security deposits. The money must be placed into that account within 30 days of the deposit. If the amount given is more than $50, it needs to be put in an account with an interest rate of 3% or more a year, and that interest must be added at least every 6 months from the date that the deposit was received. Landlords can also put the deposit into an insured certificate of deposit at a financial institution.
Notification: In Maryland, the law requires that landlords give the tenant a receipt when the deposit was collected. The receipt can be included into a rental agreement or lease or be give out separately. It also must include a clause granting the tenant the right to be present when the unit is inspected for damage at the end of tenancy.
Inspection: Maryland requires landlords to perform a walk-through inspection within five days before or after the move out occurs. The landlord has to notify the tenant of their right to be present, but does not have to do the walkthrough with the tenant if the tenant does not elect to be present.
Returning the Deposit: Landlords have 45 days from the date that the tenant leaves to return the deposit in its entirety, with interest, or without a portion used to cover repairs. If deductions have been made, the landlord needs to include an itemized list explaining what was taken and why. If the security deposit is not returned in a timely fashion, triple damages and counsel fees can be granted at the discretion of a judge.
Make Sure You Understand Landlord-Tenant Law with Lebovitz Law
If you are concerned that you might not be using the best practices with your tenants or you are a tenant , Lebovitz Law can help. To learn more about how we can assist you, please contact us today.