Maryland is one of the best states for landlords. 27.1% of residents rent, and the vacancy rate is 5.7%.
The average monthly rent is $1,415, the third highest in the country. Renters may not have enough money for properties that also have high security deposits. Making them too high can even cause legal trouble.
Read on to learn the laws regarding security deposits in Upper Marlboro, Maryland.
What Are Security Deposits?
A security deposit is a payment of rent to the landlord before the tenant moves in. The amount is typically a month's rent.
The security deposit protects the landlord from:
- Non-payment of the rent
- Damage due to breach of the lease
- Damage to the rental unit
Maximum Amounts
Maryland security deposit laws say that the landlord can't charge more than two months' rent as a security deposit. This applies regardless of the number of tenants.
The tenant has a right to receive up to three times anything beyond this maximum plus reasonable attorney fees. They can sue any time during or up to two years after the rental period.
Receipt
One of the most important security deposit regulations to understand is the receipt. Landlords must provide one or face a $25 fine.
This document must outline the tenant's rights, a list of damages deducted, and the dates of move-in and move-out inspections. The landlord must keep a copy for at least two years after the tenant leaves.
Where to Keep the Deposit
Security deposits can't be kept in just any bank account. They need to be in federally insured financial institutions as insured certificates of deposit. The account needs to be used exclusively for deposits and bear interest.
Determining how much interest the deposit earns requires a complex formula. Use the Rental Security Deposit Calculator to get an idea of the amount.
Surety Bonds
A surety bond is another way to cover all or part of a security deposit. The maximum amount still applies.
They're nonrefundable and aren't insurance. Tenants pay on average 4% of the amount and are responsible for any unpaid rent or damage. The bond is illegal if it doesn't disclose this information.
Landlords can't require them but don't have to use them. They must send a list of damages, and the tenant has ten days to fight the claim.
Returning or Withholding the Deposit
Landlords need to return the security deposit, minus any money they can rightfully keep, within 45 days after the rental period. This includes interest on deposits of $50 or more or tenants that stayed for over six months.
Landlords must provide the tenant with an itemized statement of any portion withheld due to damage. The rest must be returned to them within 30 days.
Taxes on Security Deposits
A property manager can provide useful landlord tips at tax time for security deposits. They're not considered income if you plan to return the entire amount.
They need to be reported as income if it was used to cover expenses. These include unpaid rent, lease breaches, repairs, or the final month's rent.
Get Property Management
Landlords need to store, return, or withhold security deposits correctly to avoid legal issues. They also make filing taxes even harder.
Get a free rental analysis from PMI Experience to see how our property management services can maximize your rental income today.
