Maryland Security Deposit Basics (2025 Update)
This post is general information, not legal advice. Consult counsel for specific matters.
Scope and Definitions
Maryland’s residential security deposit rules appear primarily in Real Property § 8-203 and § 8-203.1. A “security deposit” includes any money advanced to secure a tenant’s performance—this covers traditional deposits and payments commonly labeled “last month’s rent,” “pet deposit,” or “move‑in fee” if the purpose is to secure performance under the lease.
Maximum Deposit (Recent Change)
Effective October 1, 2024, a landlord may not charge more than one month’s rent as a security deposit for most residential tenancies. Attempts to “stack” first month’s rent, last month’s rent, and a separate deposit to exceed one month are treated as security deposits and subject to the cap. Limited statutory exceptions may apply in specific assistance arrangements—verify before relying on any exception.
Holding the Funds (Escrow)
Within 30 days of receipt, security deposits must be placed in a Maryland branch of a federally insured financial institution (or in insured certificates of deposit or specified government securities). The account must be devoted exclusively to security deposits and maintained in an amount at least equal to the landlord’s outstanding deposit liability.
Interest Accrual and Rate
If the deposit is $50 or more and is held for at least six months, the landlord must pay simple interest (not compounded), accruing monthly at the greater of 1.5% per year or the one‑year U.S. Treasury yield for the period. The Maryland Department of Housing and Community Development publishes an interest calculator landlords may use to compute the amount owed.
Required Receipts and Disclosures
Upon receiving a deposit, the landlord must provide a written receipt (the lease can serve as the receipt). The receipt/lease must advise the tenant of inspection rights at move‑in and move‑out and other statutory notices. Failure to provide the receipt can trigger a $25 statutory penalty, and landlords must keep a copy for two years.
Inspection Rights
If the tenant, by certified mail at least 15 days before move‑out, provides the landlord the intended move date and a forwarding address, the tenant has the right to be present at the final inspection. The inspection must occur within five days before or after the stated move‑out date. The landlord must provide written notice of the inspection date and time (usually by certified mail) consistent with statute.
Permissible Deductions
A landlord may withhold from the deposit only for: (1) unpaid rent; (2) damage due to breach of the lease; or (3) damage in excess of ordinary wear and tear to the premises, common areas, major appliances, or landlord‑provided furnishings. A security deposit may not be treated as liquidated damages for a breach unrelated to actual loss.
Itemization and Return
Within 45 days after the tenancy ends, the landlord must (a) mail to the tenant’s last known address an itemized statement of damages and actual costs, and (b) return the remaining balance of the deposit with statutory interest. Wrongful withholding can result in up to treble damages plus reasonable attorney’s fees.
Record‑Keeping and Successor Liability
Security deposits are not subject to creditor attachment and bind successors to the rental property; a purchaser/assignee becomes liable for lawful return with interest. Maintain contemporaneous records: escrow confirmations, all correspondence, inspection notices, photos, invoices, and interest calculations.
Local Nuances
Counties and municipalities (e.g., Montgomery County) echo state requirements and may publish local handbooks; confirm any licensing, inspection, or lead‑safety obligations that interact with deposit handling.
2024–2025 Changes at a Glance
- Cap reduced to one month’s rent (effective Oct. 1, 2024).
- Anti‑stacking: “last month’s rent” and similar payments count toward the cap.
- DHCD released plain‑language guidance (including a Tenant Bill of Rights) explaining deposit and related fee rules.
Compliance Checklist (Landlord’s Short Form)
- Written receipt provided; statutory notices included; copy retained 2 years.
- Deposit ≤ one month’s rent (confirm no stacking).
- Funds escrowed in Maryland within 30 days; account used exclusively for deposits.
- Interest paid at greater of 1.5% or one‑year Treasury yield (simple interest); use DHCD calculator.
- Certified‑mail protocol and 5‑day inspection window honored when requested.
- Within 45 days of tenancy end: first‑class mailing of itemization and return of balance + interest.
Templates (Fill‑In)
A. Security Deposit Receipt
Property: [Address]
Tenant(s): [Name(s)]
Amount Received: $[Amount] (security deposit) on [Date]
Total Monthly Rent: $[Amount]
Deposit Cap: Maryland law limits deposits to one month’s rent.
Escrow: Funds will be deposited within 30 days in a Maryland financial institution devoted exclusively to security deposits.
Interest: Simple interest owed if the deposit is $50+ and held 6+ months, at the greater of 1.5% per year or the one‑year U.S. Treasury yield.
Inspection Rights: Tenant may request a move‑out inspection and be present if written notice by certified mail is sent at least 15 days before move‑out.
Landlord/Agent: [Name, Address, Phone, Email]
Signature: __________ Date: __
B. Move‑Out Inspection Notice (to Tenant)
Date: [Today’s Date]
To: [Tenant Name(s)] – [Forwarding Address, if known]
Property: [Address]
Move‑Out Date Provided by Tenant: [Date]
Inspection Date/Time (within 5 days before/after move‑out): [Date/Time]
Notes: You have the right to be present at this inspection. Please bring keys and provide your forwarding address for the return of any deposit balance and itemization.
Statutory citations: Md. Code, Real Prop. § 8‑203, § 8‑203.1, and related DHCD guidance (2024–2025).