Maryland Security Deposit Laws for Landlords

Maryland generally limits required security deposits to one month's rent per unit, a limit that took effect October 1, 2024 (it was two months before). Within 45 days after the tenancy ends, you must return the deposit with simple interest, minus any damages you are entitled to keep, and mail an itemized list of those damages by first-class mail. If you keep any part of the deposit without a reasonable basis, the tenant can sue for up to three times the amount withheld plus attorney's fees.

How much can you collect?

Under Md. Code, Real Property section 8-203, the cap on required deposits is one month's rent per dwelling unit, no matter how many tenants sign the lease. The cap covers every payment held to protect you against unpaid rent or damage, whatever you call it:

• Last month's rent paid in advance counts as part of the deposit, so you cannot require first month's rent, last month's rent, and a separate deposit at move-in. The state housing department (DHCD) says a tenant cannot be required to pay more than the deposit plus the first month's rent to move in.
• A pet deposit may be required only if the pet deposit and the regular deposit together stay within one month's rent. Monthly pet rent or pet fees are not limited by the cap.
• Installments do not change the limit. You cannot require more than one month's rent over time either.

You may require up to two months' rent only when all three conditions are met: the tenant is eligible for and has qualified for utility assistance through the Maryland Department of Human Services, the lease requires the tenant to pay for utility service directly to you, and you and the tenant agree to the deposit amount in writing.

DHCD's 2026 Tenants' Bill of Rights also allows you to accept a larger deposit that a tenant offers voluntarily. You cannot ask for or suggest a larger deposit, change application requirements, or deny an application to induce that offer.

If you require more than the cap, the tenant can recover up to three times the extra amount plus reasonable attorney's fees, and can sue at any time during the tenancy or within 2 years after it ends. For example, on a $1,800 monthly rent, requiring a $1,800 deposit plus a $300 pet deposit is $300 over the cap, which exposes you to up to $900 plus the tenant's attorney's fees.

Can a tenant offer a surety bond instead?

Yes. A tenant may buy a surety bond to cover all or part of the deposit. You cannot require a bond, and you do not have to accept one. If you do accept one:

• The bond cannot exceed two months' rent, and a bond plus a cash deposit together cannot exceed two months' rent. Requiring more lets the tenant recover up to three times the extra amount plus attorney's fees.
• The bond must come from an insurer licensed by the Maryland Insurance Administration, and the surety must give the tenant written disclosures, including that the premium is nonrefundable and that the tenant may have to repay the surety.
• At least 10 days before you file a claim on the bond, mail the tenant (first-class, to the last known address) a written list of damages and an itemized statement of costs. The tenant may pay you directly or have you use any cash deposit first, and may dispute the claim with the surety within 10 days.
• If you sell the property, the new owner must accept the existing bond and cannot require an extra deposit during the current lease term.

If you do not follow these rules, you lose the right to make any claim on the bond.

What receipt and bank account rules apply?

You must give the tenant a written receipt for the deposit, and the receipt must be part of a written lease. Under Real Property section 8-203.1, the receipt must tell the tenant:

1. They can ask, by certified mail within 15 days after moving in, for an inspection in their presence to make a written list of damage that already exists.
2. They can be present at the move-out inspection if they notify you by certified mail at least 15 days before moving, giving the move date and a new address.
3. You must inspect within 5 days before or after the stated move date.
4. You must tell them the inspection date in writing.
5. They are entitled to a written list of charges against the deposit, with the actual costs, by first-class mail within 45 days after the tenancy ends.
6. You must return any unused part of the deposit by first-class mail within 45 days after the tenancy ends.
7. A landlord who does not comply with the deposit law can owe up to 3 times the amount withheld, plus reasonable attorney's fees.

Failing to give a receipt costs $25. Keep a copy for 2 years after the tenancy ends.

Within 30 days after you receive a deposit, put it in an interest-bearing account at a Maryland branch of a federally insured financial institution. The account may hold only security deposits. Instead of an account, you may use insured certificates of deposit at Maryland branches or securities issued by the federal government or the State of Maryland. Either way, the total held must equal all the deposits you owe. A lease clause cannot waive any of these rules.

How do the move-in and move-out inspections work?

Both inspections start with a certified-mail request from the tenant, and the move-out steps decide whether you can deduct for damage at all.

At move-in, a tenant who asks by certified mail within 15 days of occupancy is entitled to walk the unit with you and get a written list of existing damage. Even when no one asks, a dated list and photos are your best evidence later. Our guide on whether a move-in inspection is required covers how to run one.

At move-out, if the tenant sends the certified-mail notice at least 15 days before moving, you must reply by certified mail with the inspection date and time, and the inspection must fall within 5 days before or after the move date. If you skip these steps after a proper request, or did not give the tenant written notice of these rights when they paid the deposit, you forfeit the right to withhold any part of the deposit for damage.

How much interest do you owe?

Interest is simple (not compounded) and accrues monthly from the day the tenant paid the deposit. The rate is the greater of 1.5% a year or the one-year U.S. Treasury yield curve rate on the first business day of each year. That Treasury rate was 4.17% on January 2, 2025 and 3.47% on January 2, 2026. Both are above 1.5%, so the rate is 4.17% for 2025 and 3.47% for 2026.

Three limits apply:

• Interest is owed only on deposits of $50 or more.
• No interest is due unless you held the deposit for at least 6 months.
• No interest is owed for a partial month.

Example: a tenant pays a $1,600 deposit on March 1, 2026 and the tenancy ends September 30, 2026. The 6 completed monthly periods through September 1 total 184 days. Using DHCD's 365-day year, interest is about $1,600 x 3.47% x 184/365 = $27.99. DHCD's online calculator computes the exact figure for any dates, and the law lets you rely on it.

What must you send within 45 days?

Within 45 days after the tenancy ends, mail the refund plus interest. If you keep any part of the deposit, also mail, first-class to the tenant's last known address:

1. A written list of the damages you claim.
2. An itemized statement of the cost of each item.
3. Supporting documentation that identifies the materials or services, such as invoices or receipts.

You may support a charge with a repair estimate instead. If you do, notify the tenant in writing when the repairs are done and include a copy of the final invoice. If the work costs less than the estimate, refund the difference within 30 days after the repairs are finished.

You can deduct only unpaid rent, damage from a breach of the lease, and damage beyond ordinary wear and tear caused by the tenant, their family, or guests to the unit, common areas, major appliances, or furnishings you own. The deposit is not a penalty you keep automatically when a tenant breaks the lease. If you charge for lost future rent after an early departure, you must make reasonable efforts to limit rental losses, including seeking a replacement tenant, and subtract any rent you collect by re-renting the unit for the rest of the term. Our article on what security deposits are usually used for gives examples, and what to do when a tenant damages your property covers costs that exceed the deposit.

A different clock applies when a tenant is evicted for breaching the lease or abandons the unit before the tenancy ends. That tenant may demand the deposit by first-class mail within 45 days, giving a new address. You then have 45 days from receiving the demand to mail the damage list and the refund with interest. The Maryland eviction process covers the court steps before that point.

What happens if you break these rules?

If you sell the building, you stay liable for any deposit and interest you do not transfer to the buyer along with a record of each deposit's amount, date, interest rates, and the tenant's name and last known address. The buyer is also liable to the tenant for returning the deposit with interest.