Planning to Be a Landlord? Understand Your Responsibilities Around Security Deposits

May 26, 2021 3:20 AM ET

Planning to become a landlord? If so, one aspect of your new role that often leads to bitter landlord-tenant litigation is Security Deposits. Most rental property owners choose providers of elite property management in Baltimore to handle the day-to-day management of their properties. However, if you are a DIY landlord, here’s what you should be aware of if you plan on managing your own rental properties.


Under Maryland landlord-tenant laws landlords don’t necessarily require a tenant to provide a security deposit. However, more for the sake of protection of the landlord, such deposits are often requested, and premier property management in Baltimore company in Baltimore would likely insist that their clients request it of their renters. Why is that advisable? Well, most tenants abide by the letter and spirit of a lease. They care for the leased space, pay their dues on time, and refrain from violating any of the rules set out in their lease agreements.

But, sometimes, you may encounter a tenant who may (willingly or unwillingly) fall short of the lease terms. This might result from property damage, unpaid rent or ignoring property by-laws (smoking, loud noise, storing dangerous goods on premises, etc.). As a landlord, it is your responsibility to enforce the terms of your lease, as well as all rental property laws of the state of Maryland. The security deposit may go some way in doing so!


While you may have the option to insist on a security deposit, your responsibilities in regards to such deposits go beyond simply asking and collecting them. Service providers of elite property management in Baltimore highlight the following responsibilities that landlords should be aware of:

1. As a landlord, you must hold all security deposits in an interest-bearing bank account

2. The institution that holds the account must reside in Maryland, and should not be an out-of-State bank

3. Such accounts must be held solely for the purpose of Security deposits, and not co-mingled with funds for other purposes

4. Landlords must deposit the monies collected within 30-days of receiving the amounts from the tenant

5. At no time can the total balance of the account exceed the amounts collected from each tenant. So, for instance, if you collect $1,500 each from three tenants, the total balance in your security deposit account cannot exceed $4,500 – plus interest

As a landlord, it is your responsibility to monitor and manage the money handed to you by your renters. As such, it is incumbent upon you to maintain meticulous records of the amounts collected and banked for every tenant.


A service provider of premier property management in Baltimore may also advise their clients on their responsibilities around refunding Security deposits. All security deposits, plus accrued interest, must be returned no later than 45-days of the tenant move-out date. As a landlord, it falls within your responsibility to deduct any legitimate costs (e.g., for damages or penalties) from the money you hold, before delivering the refund. It is also your responsibility to itemize all such deductions/withholdings in the form of a formal receipt to the tenant.

Prior to charging/deducting the cost of damages from the security deposit, it is best practice to inspect the unit (if possible) in the presence of the tenant. This avoids subsequent disagreements on the type of damages claimed, and the amount deducted/withheld.

Landlords are also required to pay interest on security deposits at the time of returning the amounts. Such interest may only be paid if the amounts held exceed $50, and if the deposits are held for a period of at least 6-months. You may use this Maryland Department of Housing and Community Development (DHCD) calculator to calculate the interest owed.

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