Maryland Security Deposit Law: What Landlords Must Do in 2026

How much can I charge for a security deposit in Maryland?

You may charge up to the equivalent of 1 month’s rent per dwelling unit. Real Property 8-203(b)(1) sets this cap “regardless of the number of tenants.” The Renters’ Rights and Stabilization Act of 2024 (House Bill 693) lowered the cap to this level.

The statute has one narrow exception. You may charge up to 2 months’ rent if all three of these are true:

1. The tenant is eligible and has qualified for utility assistance through the Department of Human Services.
2. The lease requires the tenant to pay for utility services directly to you.
3. You and the tenant agree in writing to the amount.

If you charge too much, the tenant may recover up to three times the extra amount plus reasonable attorney’s fees. The tenant may sue at any time during the tenancy or within 2 years after it ends. No part of the deposit section can be waived in a lease, so a clause that says otherwise does not protect you.

Our tenant fee disclosure lists a security deposit of one month’s rent. The security deposit glossary entry gives a short definition.

What counts as a security deposit?

The definition is broad. Section 8-203(a)(3) says a security deposit is any payment of money given to a landlord to protect the landlord against nonpayment of rent, damage due to breach of lease, or damage to the premises, common areas, major appliances, and furnishings. The definition includes payment of the last month’s rent in advance.

Because of that wording, plan for any refundable payment meant to cover damage or unpaid rent to count toward the cap. Ask your attorney before you add a separate refundable “pet deposit” on top of 1 month’s rent. Our pet screening page explains how pet terms work on homes we manage.

A tenant may also buy a surety bond instead of paying all or part of a deposit. You cannot require a bond, and you do not have to accept one. If you do consent, the bond cannot exceed 2 months’ rent, and a bond plus a deposit together cannot exceed 2 months’ rent either. Only an admitted carrier licensed by the Maryland Insurance Administration may issue the bond.

What must the security deposit receipt say?

You must give the tenant a receipt, and the receipt must be part of the written lease. Real Property 8-203.1 lists seven items the receipt must tell the tenant:

1. The right to a move-in inspection with the landlord present, to make a written list of existing damage, if the tenant asks by certified mail within 15 days of occupancy
2. The right to be present at the end-of-tenancy inspection, if the tenant sends certified mail at least 15 days before moving with the move date and new address
3. The landlord’s duty to inspect within 5 days before or after the stated moving date
4. The landlord’s duty to tell the tenant the inspection date in writing
5. The tenant’s right to a written list of charges and actual costs by first-class mail within 45 days after the tenancy ends
6. The landlord’s duty to return any unused part of the deposit by first-class mail within 45 days
7. A statement that breaking the deposit law may make the landlord liable for up to 3 times the deposit withheld, plus reasonable attorney’s fees

Also attach the current Maryland Tenants’ Bill of Rights to the lease. DHCD says a landlord may not change it. See Maryland landlord-tenant law for the full lease checklist and the Tenants’ Bill of Rights definition.

Where must I keep the deposit?

Keep it in a federally insured financial institution that does business in Maryland, in an account used only for security deposits. Section 8-203(d) adds these rules:

• The account must be at a branch located in Maryland, and it must bear interest.
• Deposit the money in that account within 30 days after you receive it.
• The total in your deposit accounts must equal all the deposits you owe.
• You may instead hold deposits in insured certificates of deposit at Maryland branches, or in federal or Maryland securities.
• Creditors of the landlord or the tenant cannot attach the deposit.

If you sell the home, you stay liable for the deposit, plus interest, unless you hand it over to the buyer with an accounting. The accounting must show the original amount and date, the interest records, and the tenant’s name and last known address. A managing agent or court-appointed receiver does not take on that liability, but a successor owner is liable to the tenant for failing to return the deposit.

How much interest do I owe?

Pay simple interest at the greater of two rates: the daily U.S. Treasury 1-year yield curve rate on the first business day of each year, or 1.5 percent a year. Interest is not compounded.

Four limits apply:

DHCD must keep a list of yield rates or a calculator on its website, and you may rely on either one. Use the DHCD Rental Security Deposit Calculator with the start date, end date, and deposit amount. Our glossary has a short entry on security deposit interest.

When must I return the deposit?

Within 45 days after the tenancy ends. Return the deposit with interest, less any damages you are entitled to withhold. If you withhold anything, mail the tenant a written list of the damages you claim, with an itemized statement of costs, by first-class mail to the tenant’s last known address. The same 45-day deadline applies.

This table shows the full timeline.

A tenant who was evicted for breach of the lease, or who abandoned the home, follows a different path. That tenant may demand the deposit by first-class mail within 45 days and give a new address. You then have 45 days from that notice to send the damage list and return what is owed.

What can I deduct from a security deposit?

You may withhold for three things. Section 8-203(f)(1) allows deductions for unpaid rent, damage due to breach of lease, and damage by the tenant or the tenant’s family, agents, employees, guests, or invitees beyond ordinary wear and tear. The damage must be to the leased premises, common areas, major appliances, or furnishings you own.

Normal use is not damage. Read our guide on wear and tear versus tenant damage and the normal wear and tear definition before you write a deduction.

Two more limits apply:

• The deposit is not liquidated damages. You may keep only the amount you are actually damaged by a breach.
• If you claim lost future rent, you must reduce the claim by any rent you receive for the home during the rest of the tenant’s term.

What documents do I need to support a deduction?

Include supporting documentation that identifies the materials or services. Section 8-203(j) requires the itemized statement to show them. Receipts and invoices work. So do photos with dates and a move-in condition report.

You may support the statement with an estimate rather than a final invoice. Some older owner articles say an estimate is not allowed. The current statute says it is, with these follow-up steps:

1. Tell the tenant in writing when the repairs are complete.
2. Include a copy of the final invoice with that notice.
3. If the actual cost is less than the estimate, return the difference within 30 days after you finish the repairs.

A thorough move-in inspection and a dated move-out report are the best evidence you can have. For homes we manage, move-in and move-out recording is part of the Silver, Gold, and Platinum plans. See property management fees.

What happens if I miss a deadline or keep too much?

You can lose the right to deduct anything. If you fail to send the required damage list within 45 days, you forfeit the right to withhold any part of the deposit for damages. You also forfeit that right if the tenant gave proper notice of the move and you did not follow the inspection steps in 8-203(f)(1).

If you fail without a reasonable basis to return any part of the deposit plus interest within 45 days, the tenant may sue for up to three times the amount withheld, plus reasonable attorney’s fees. A claim under the 1 month cap can bring up to three times the extra amount charged.

Many disputes come from missing paperwork, not from the damage itself. Keep your receipt, inspection reports, photos, invoices, and mailing records for at least as long as a tenant can sue.

How do we handle deposits on homes we manage?

On homes we manage, the lease and deposit follow the same Maryland rules. Our tenant fee disclosure lists a deposit of one month’s rent, returned within 45 days.

Screening, the lease, and the move-in inspection all work together to protect the deposit. Read our tenant screening guide for the application steps that come before the deposit.

Next step

Handling deposits by the book takes records and good timing. To have a management team run this for your home, request a free assessment at /contact-us or call (301) 392-2172. Learn what is included in our property management services.

This page is general information, not legal advice. Laws change; check the linked official source or talk to a Maryland attorney.