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Security Deposits

What Is a defense Deposit

A defense deposit is any money, including a pet deposit or payment the the last month’s rent, take away by a landlord in development of when it is due. A security deposit protects the landlord against damage beyond ordinary wear and also tear caused by tenants, guests or invitees, pets, non-payment the rent and also damages incurred by the landlord if the tenant breaches the lease. The Maryland protection deposit legislation (located in the Landlord-Tenant Handbook at Appendix vi Maryland protection Deposit Law)provides very specific requirements for:

The preferably amount the a landlord might collect because that a security deposit.The required disclosures that must be in the defense deposit receipt.How a landlord must preserve the security deposit.Surety bonds.Returning the protection deposit plus interest.Determining damages against the defense deposit.

You are watching: Which type of deposit is paid in advance to protect landlords against nonpayment?

Maximum amount of a security Deposit

The complete amount that a defense deposit (including a pets deposit, if any) can not exceed 2 months’ rent. If a landlord charges more than this amount, the tenant might recover increase to three times the excess quantity charged, plus reasonable attorney’s fees by submit a complaint v the Office of Landlord-Tenant affairs (OLTA) or pursuing a situation in the Maryland district Court.

Written Receipt and Disclosures Required

A landlord must give the tenant a created receipt for payment the a defense deposit or be subject to a $25.00 fine. The receipt, which might be included in the created lease agreement, must encompass the complying with information:

The tenant’s appropriate to participate, subject to a inquiry by the tenant, in an investigate of the building at move-in and also move-out, in order to recognize the existence of damages.The tenant’s right, within a stated timeframe, to obtain a refund the the protection deposit plus attention or, if the landlord intends come withhold any section of the protection deposit, a composed list the charges versus the protection deposit claimed in addition to documentation the the actual prices incurred come repairing damages.A statement the the landlord’s’ failure to comply v the security deposit regulation may an outcome in the landlord’s being liable to the tenant for a punish of increase to three times the lot withheld plus reasonable attorney’s fees.

Maintaining the protection Deposit

Within 30 days of receipt the a defense deposit, a landlord must ar the protection deposit in an interest-bearing account of a Maryland branch that a federally-insured gaue won institution. Alternatively, a landlord may hold the security deposit in insured certificate of deposit or in securities issued by the federal federal government or the State that Maryland. For more information around maintaining a security deposit, check out Landlord-Tenant Handbook.

Returning the defense Deposit to add Interest

If, at the end of a tenancy, a landlord does no claim any kind of damages to be assessed versus the protection deposit plus interest, the landlord need to return the full security deposit plus attention within 45 job after the end of the tenancy. The interest went back is based on an attention rate set by the state of Maryland; that is no the actual amount of interest the security deposit accrued in the bank. The Maryland room of Housing and Community advancement maintains top top its website a Rental protection Deposit Calculator to aid in this process. The user beginning the beginning and also end dates of the tenancy and the amount of the protection deposit. The Calculator determines the lot of attention accrued, making use of the rates created by the State which have actually varied end time.

If, in ~ the end of a tenancy, a landlord claims damages to it is in assessed against the security deposit and also interest, the landlord must carry out a composed list of together damages and also the actual prices incurred come repair any kind of damages. The written list and also any remaining section of the defense deposit add to interest should be sent out by first class mail to the tenant, at their last known address, within 45 work after the end of the tenancy.

If a landlord fails to comply with these requirements, the landlord forfeits the ideal to withhold any portion of the security deposit add to interest. If a tenant breaches the lease by vacating early, the tenant should write come the landlord and also request the return of the protection deposit plus attention in order to maintain the tenant’s civil liberties under the protection deposit law.

For more information about requirements because that returning the defense deposit to add interest, see Landlord-Tenant Handbook.

Determining Damages versus the security Deposit

The defense deposit is supplied to protect a landlord native financial loss at the end of a tenancy, due to non-payment that rent, damages because of breach of lease, or physical damages to the rental building in overfill of simple wear and tear. It is no permissible because that a landlord to usage the defense deposit to gain back a rental building to its problem at the beginning of the tenancy if damages are minimal to simple wear and also tear. Nor is that permissible for a landlord to use a protection deposit to make renovations to improve the value of the property or come prepare it because that sale.

Ordinary wear and tear is destruction that wake up without negligence, carelessness or abuse of the premises, equipment, furnishings or appliances through the tenant, a member the the household or other persons top top the premises through the tenant’s consent. For example, faded, cracked or chipped paint is ordinary wear and also tear. A painted surface ar that requires much more than one coat of primer and also one coat of repaint to cover has sustained damages beyond ordinary wear and tear.

When a fixture or appliance requirements replacing due to the tenant’s abuse or neglect, the landlord will need to recognize several worths in bespeak to calculation the tenant’s part of the replacement cost of the item:

Actual current cost to replace the item.The life expectations of the item.The present age the the item.The remaining valuable life.The remaining beneficial like expressed together a percentage.

For more detailed information, instances of damages past ordinary wear and tear, and detailed instructions on calculating and also assessing the replacement expense of fixtures and appliances, see simple Wear and Tear Booklet.

Security/Surety Bonds

As an alternate to a protection deposit, a tenant may pick to purchase a surety bond at the beginning of a tenancy. Generally, surety bonds allow a tenant to salary a lesser lot than would be forced for a protection deposit; however, unlike a defense deposit, a surety link is not refundable. A landlord may not need a tenant to acquisition a surety bond and does not need to accept a surety bond indigenous a tenant. Even after a tenant purchase a surety bond, the tenant is responsible for payment of:

All unpaid rent.Damages as result of breach that lease.Damages by the tenant, tenant’s family, guests, agents, employees, or invitees in excess of plain wear and tear to the leased premises, typical areas, major appliances, or furnishings owned by the landlord.

At the end of the tenancy, if a landlord fees the surety link for damages by the tenant, the bond will certainly pay the debt as much as the ceiling developed when it was purchased. The bond firm will go after the tenant because that reimbursement of that debt. If the tenant leaves the residential or commercial property in good shape v no damage in excess of ordinary wear and tear, the tenant will not receive a refund.

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For much more information around the use of surety bonds and tenant’s rights regarding these bonds, see Landlord-Tenant Handbook and Security deposit law (located in theLandlord-Tenant Handbookat Appendix using Maryland protection Deposit Law).