Maryland Real Property Section 8-203

Article - Real Property

§ 8-203.

      (a)      (1)      In this section the following words have the meanings indicated.

            (2)      "Landlord" means a landlord or a prospective landlord.

            (3)      "Security deposit" means any payment of money, including payment of the last month's rent in advance of the time it is due, given to a landlord by a tenant in order to protect the landlord against nonpayment of rent, damage due to breach of lease, or damage to the leased premises, common areas, major appliances, and furnishings.

            (4)      "Tenant" means a tenant or a prospective tenant.

      (b)      (1)      A landlord may not impose a security deposit in excess of the equivalent of two months' rent per dwelling unit, regardless of the number of tenants.

            (2)      If a landlord charges more than the equivalent of two months' rent per dwelling unit as a security deposit, the tenant may recover up to threefold the extra amount charged, plus reasonable attorney's fees.

            (3)      An action under this section may be brought at any time during the tenancy or within two years after its termination.

      (c)      The landlord shall give the tenant a receipt for the security deposit as specified in § 8-203.1 of this subtitle. The receipt may be included in a written lease.

      (d)      (1)      (i)      The landlord shall maintain all security deposits in federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, which do business in the State.

                  (ii)      Security deposit accounts shall be maintained in branches of the financial institutions which are located within the State and the accounts shall be devoted exclusively to security deposits and bear interest.

                  (iii)      A security deposit shall be deposited in an account within 30 days after the landlord receives it.

                  (iv)      The aggregate amount of the accounts shall be sufficient in amount to equal all security deposits for which the landlord is liable.

            (2)      (i)      In lieu of the accounts described in paragraph (1) of this subsection, the landlord may hold the security deposits in insured certificates of deposit at branches of federally insured financial institutions, as defined in § 1-101 of the Financial Institutions Article, located in the State or in securities issued by the federal government or the State of Maryland.

                  (ii)      In the aggregate certificates of deposit or securities shall be sufficient in amount to equal all security deposits for which the landlord is liable.

            (3)      (i)      In the event of sale or transfer of the landlord's interest in the leased premises, including receivership or bankruptcy, the landlord or the landlord's estate, but not the managing agent or court appointed receiver, shall remain liable to the tenant and the transferee for maintenance of the security deposit as required by law, and the withholding and return of the security deposit plus interest as required by law, as to all or any portion of the security deposit that the landlord fails to deliver to the transferee together with an accounting showing the amount and date of the original deposit, the records of the interest rates applicable to the security deposit, if any, and the name and last known address of the tenant from whom, or on whose behalf, the deposit was received.

                  (ii)      A security deposit under this section may not be attached by creditors of the landlord or of the tenant.

            (4)      Any successor in interest is liable to the tenant for failure to return the security deposit, together with interest, as provided in this section.

      (e)      (1)      Within 45 days after the end of the tenancy, the landlord shall return the security deposit to the tenant together with simple interest which has accrued in the amount of 3 percent per annum, less any damages rightfully withheld.

            (2)      Interest shall accrue at six-month intervals from the day the tenant gives the landlord the security deposit. Interest is not compounded.

            (3)      Interest shall be payable only on security deposits of $50 or more.

            (4)      If the landlord, without a reasonable basis, fails to return any part of the security deposit, plus accrued interest, within 45 days after the termination of the tenancy, the tenant has an action of up to threefold of the withheld amount, plus reasonable attorney's fees.

      (f)      (1)      (i)      The security deposit, or any portion thereof, may be withheld for unpaid rent, damage due to breach of lease or for damage by the tenant or the tenant's family, agents, employees, guests or invitees in excess of ordinary wear and tear to the leased premises, common areas, major appliances, and furnishings owned by the landlord.

                  (ii)      The tenant has the right to be present when the landlord or the landlord's agent inspects the premises in order to determine if any damage was done to the premises, if the tenant notifies the landlord by certified mail of the tenant's intention to move, the date of moving, and the tenant's new address.

                  (iii)      The notice to be furnished by the tenant to the landlord shall be mailed at least 15 days prior to the date of moving.

                  (iv)      Upon receipt of the notice, the landlord shall notify the tenant by certified mail of the time and date when the premises are to be inspected.

                  (v)      The date of inspection shall occur within five days before or five days after the date of moving as designated in the tenant's notice.

                  (vi)      The tenant shall be advised of the tenant's rights under this subsection in writing at the time of the tenant's payment of the security deposit.

                  (vii)      Failure by the landlord to comply with this requirement forfeits the right of the landlord to withhold any part of the security deposit for damages.

            (2)      The security deposit is not liquidated damages and may not be forfeited to the landlord for breach of the rental agreement, except in the amount that the landlord is actually damaged by the breach.

            (3)      In calculating damages for lost future rents any amount of rents received by the landlord for the premises during the remainder if any, of the tenant's term, shall reduce the damages by a like amount.

      (g)      (1)      If any portion of the security deposit is withheld, the landlord shall present by first-class mail directed to the last known address of the tenant, within 45 days after the termination of the tenancy, a written list of the damages claimed under subsection (f)(1) of this section together with a statement of the cost actually incurred.

            (2)      If the landlord fails to comply with this requirement, the landlord forfeits the right to withhold any part of the security deposit for damages.

      (h)      (1)      The provisions of subsections (e)(1) and (4) and (g)(1) and (2) of this section are inapplicable to a tenant who has been evicted or ejected for breach of a condition or covenant of a lease prior to the termination of the tenancy or who has abandoned the premises prior to the termination of the tenancy.

            (2)      (i)      A tenant specified in paragraph (1) of this subsection may demand return of the security deposit by giving written notice by first-class mail to the landlord within 45 days of being evicted or ejected or of abandoning the premises.

                  (ii)      The notice shall specify the tenant's new address.

                  (iii)      The landlord, within 45 days of receipt of such notice, shall present, by first-class mail to the tenant, a written list of the damages claimed under subsection (f)(1) of this section together with a statement of the costs actually incurred and shall return to the tenant the security deposit together with simple interest which has accrued in the amount of 3 percent per annum, less any damages rightfully withheld.

            (3)      (i)      If a landlord fails to send the list of damages required by paragraph (2) of this subsection, the right to withhold any part of the security deposit for damages is forfeited.

                  (ii)      If a landlord fails to return the security deposit as required by paragraph (2) of this subsection, the tenant has an action of up to threefold of the withheld amount, plus reasonable attorney's fees.

            (4)      Except to the extent specified, this subsection may not be interpreted to alter the landlord's duties under subsections (e) and (g) of this section.

      (i)      No provision of this section may be waived in any lease.