Key Takeaways
-Maryland strictly regulates security deposits. Landlords are generally limited to one month’s rent, must keep deposits in a Maryland escrow account with interest, provide required written notices, and follow precise timelines. Missing any step can lead to penalties, even if the tenant causes no damage.
-Only specific deductions are allowed, and documentation matters. Deposits may be withheld only for unpaid rent, damage beyond normal wear and tear, unpaid utilities, or lease violations. Walk-through inspections, itemized statements, and proper records are essential to avoid disputes and potential triple-damages liability.
-Timely compliance protects landlords and their investments. From issuing receipts and conducting inspections to returning deposits within 45 days or transferring them during ownership changes, staying organized and following the process reduces risk and ensures smoother move-outs and transitions.
Do you really know what Maryland law allows you to do with a tenant’s security deposit? Many landlords assume the rules are simple, but Maryland has specific requirements, and missing even one step can lead to disputes, penalties, and unnecessary stress.
When handled correctly, a security deposit can help cover unpaid rent, pay for damage beyond normal wear and tear, encourage tenants to care for the property, provide financial protection at move out, and reduce out of pocket repair costs.
Because Maryland law strongly favors clear rules and tenant protections, landlords must stay organized and timely. To help make compliance routine, PMI Chevy Chase created this practical guide to Maryland security deposit laws.
A Guide to Maryland’s Security Deposit Law
Maryland Security Deposit Limit
In Maryland, landlords cannot charge more than one month’s rent as a security deposit per dwelling unit, regardless of the number of tenants.
There is an exception that allows a landlord to collect up to two months’ rent, but only if all of the following conditions are met:
● The tenant qualifies for utility assistance through the Department of Human Services. ● The lease requires the tenant to pay utility bills directly to the landlord.
● The tenant and landlord agree in writing to the higher deposit amount.
In most situations, the one-month limit applies. Charging more without meeting these conditions can create legal risk for the landlord.
Nonrefundable Fees in Maryland
Maryland does not allow nonrefundable security deposits. By law, a security deposit must always be refundable, minus lawful deductions.
However, landlords may charge other nonrefundable fees, such as cleaning or administrative fees, if they are clearly labeled as nonrefundable in the lease and are not called a security deposit.
These fees must be reasonable and disclosed in writing. Mixing nonrefundable fees with the security deposit can create legal problems, so it is best to keep them clearly separate.
Storing a Tenant’s Security Deposit in Maryland
Maryland law requires landlords to keep a tenant’s security deposit in a separate escrow account at a federally insured financial institution located within the state.
The deposit may not be mixed with the landlord’s personal funds or used for any other purpose during the tenancy. A certificate of deposit is also an acceptable option.
The security deposit must be held in an interest-bearing account. The interest rate is set by the state and is based on the U.S. Treasury one-year rate in effect at the beginning of each year.
Interest is calculated based on how long the landlord holds the deposit and must be paid to the tenant when the deposit is returned.
If a tenant requests it, the landlord must provide written information identifying where the deposit is being held. Failure to properly store a security deposit can result in penalties, even if the tenant did not cause any damage.
Written Notice After Receiving a Security Deposit
In Maryland, landlords are required to provide a written receipt after collecting a security deposit. The receipt may be included in the lease or provided separately, and landlords must keep a copy for at least two years.
The receipt must explain the tenant’s rights, including the right to request a move-in inspection, be present at a move-out inspection, receive an itemized list of deductions, and have the remaining deposit returned within 45 days after the tenancy ends. Failure to provide the required receipt may result in penalties.
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Reasons to Withhold a Tenant’s Security Deposit in Maryland
Maryland law allows landlords to withhold all or part of a tenant’s security deposit only for specific reasons, including unpaid rent, damage beyond normal wear and tear, unpaid utility bills the tenant is responsible for, or other financial losses caused by a lease violation.
Landlords may not deduct for normal wear and tear or pre-existing conditions. Improper deductions can result in liability for up to three times the amount wrongfully withheld, plus attorney fees.
Walk-Through Inspections in Maryland
Tenants in Maryland have the right to request a move-out inspection. The tenant must request it by certified mail and give at least 15 days’ notice before vacating.
The landlord must notify the tenant in writing of the inspection date, which must occur within five days before or after the tenant’s move-out date. Conducting this inspection helps document the property’s condition and prevent disputes over deductions.
Security Deposit Refund in Maryland
After the tenant moves out, landlords have 45 days to return the security deposit.
If any deductions are made, the landlord must provide an itemized list of charges along with the remaining deposit. Returning the deposit on time with proper documentation protects landlords from penalties and potential legal claims.
Change in Property Ownership
When a rental property changes ownership, the outgoing landlord has two options:
First, the landlord may return the security deposit, minus any lawful deductions, directly to the tenant and notify the new owner that the deposit was returned.
Second, the landlord may transfer the security deposit to the new owner. In this case, the outgoing landlord must notify the tenant in writing. The notice must include the name and contact address of the new owner. Clear communication protects everyone involved and ensures continuity.
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Conclusion
Maryland security deposit law is detailed, structured, and enforced strictly. From the two-month deposit limit to escrow requirements, inspection rights, and the 45-day refund deadline, every step matters.
Landlords who follow these rules protect their investment and reduce the risk of disputes. When questions arise, it is wise to consult a qualified Maryland attorney who understands landlord-tenant law.
PMI Chevy Chase helps landlords stay compliant while maximizing the value of their rental properties. From proper deposit handling to inspections, documentation, and tenant communication, our team takes the pressure off owners.
If you want less stress and stronger results, contact PMI Chevy Chase today to learn how we can support your property management needs.
Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.
