Maryland Security Deposit Laws 2026: Cap, Deadline & Deductions

1. The deposit limit: one month's rent (with one narrow exception)

Maryland security deposit law is set almost entirely by one statute — Md. Code, Real Property § 8-203 — and it changed in a significant way on October 1, 2024. The Renters' Rights and Stabilization Act of 2024 cut the maximum deposit to a single month's rent for new leases, replacing the old two-month limit that many leases and online guides still repeat.

For most residential leases entered into on or after October 1, 2024, landlords may not charge a security deposit that exceeds one month's rent. A higher limit of up to two months' rent is permitted only in a narrow exception involving certain tenants who receive utility assistance and agree in writing to the higher amount. Leases signed before October 1, 2024 remain subject to the prior two-month maximum.

The maximum security deposit for leases signed on or after October 1, 2024, is one month's rent. There are circumstances where a landlord can impose two months' rent: the tenant is eligible and has qualified for utility assistance through the Department of Human Services; the lease requires the tenant to make utility payments directly to the landlord; and the tenant and landlord agree, in writing, to the amount of the security deposit — all three conditions must be satisfied simultaneously.

Pet deposits are treated as part of the total security deposit for purposes of the cap — you cannot collect one month's rent as a "security deposit" and then an additional pet deposit on top of it for new leases. The cap applies regardless of the number of tenants. If the landlord charges more than the legal maximum, the tenant may recover up to three times the extra amount charged, plus reasonable attorney's fees, and can sue at any time during the rental period or within two years after the tenancy ends.

2. Holding the deposit: escrow, receipts, and interest rules

Within 30 days of receiving a security deposit in Maryland, the landlord must store it in a federally insured account to be used solely for this purpose. Alternatively, landlords may hold the security deposit as an insured certificate of deposit under Md. Code, Real Property § 8-203(d)(1-2). The deposit cannot be commingled with other funds and must be held in trust for the tenant.

The landlord must give the tenant a written receipt for the security deposit. The landlord is liable for $25 if the landlord fails to do so. The receipt may be included in the written lease. The receipt must include information about the tenant's rights to have the deposit held in an escrow account, the bank's name and address, and the amount deposited.

Maryland landlords must store security deposits in an interest-bearing account. The interest rate must equal either the U.S. Treasury yield curve rate or 1.5% per year, whichever is greater. As long as the security deposit is more than $50, the tenant is entitled to receive that interest when the landlord returns the security deposit, under Md. Code, Real Property § 8-203(h)(2)(iii). The landlord does not have to return the deposit with interest if the landlord did not hold the security deposit for at least six months, or if the tenancy was less than a full month.

3. Allowed deductions: what you can and can't keep

Md. Code, Real Property § 8-203 limits what a Maryland landlord may deduct from a security deposit. The landlord bears the burden of proving each deduction is legitimate, so anything not clearly on the list is presumed to be the landlord's cost to absorb.

The landlord may keep any portion of the security deposit for unpaid rent, damage due to breach of lease or 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. Landlords may also deduct funds to cover the costs of smoking damages and unpaid utilities.

The following table shows what's deductible and what isn't under Maryland law:

If the tenant notifies the landlord by certified mail that the tenant intends to move out, including the date of moving and their new address, the tenant has the right to be present when the landlord inspects the premises to determine if any damage was done. The tenant must mail the notice at least 15 days prior to the date of moving.

4. The 45-day return deadline and itemization requirement

Maryland law gives landlords 45 days after the tenancy ends to return the security deposit. That 45-day window covers three things that must happen together: the deposit itself (minus any lawful deductions), accrued interest, and a written itemized list of deductions — all sent to the tenant's last known address.

The 45 days begin the day the lease ends. Landlords must use first-class mail to send the written notice with any deductions. A landlord who misses the 45-day deadline loses the right to retain any portion of the deposit — including deductions that would otherwise have been valid.

In cases where a tenant has been evicted or abandoned the unit before the lease ends, the procedure differs: the tenant must send the landlord a request for return of the security deposit by first-class mail within 45 days of leaving, including their new address; the landlord then has 45 days from receipt of that notice to return the deposit with simple interest and any documented deductions.

If no itemized list is provided within the deadline, the landlord must return the full amount of the security deposit, plus accrued interest. A landlord cannot make deductions from the deposit without specifying damages in writing within the 45-day period.

5. Penalties for getting it wrong

Withhold without a reasonable basis and a court can award the tenant up to three times the amount wrongfully withheld plus attorney's fees under Md. Code, Real Property § 8-203. The same 3× penalty applies if you collect more than the statutory cap. These aren't hypothetical exposure numbers — they're the actual damages courts award in Maryland District Court small-claims proceedings, where tenants can sue without a lawyer.

Even if a tenant signs a lease that waives their right to the return of a security deposit, the security deposit law in Maryland still applies. Any provision in a lease where a tenant waives their rights under statutory law regarding security deposits is considered void and unenforceable. Landlords cannot avoid their legal responsibilities for security deposits by having tenants sign a waiver.

6. Common landlord mistakes to avoid

Most deposit disputes in Maryland stem from a short list of procedural errors. Here are the mistakes that most frequently cost landlords their right to deductions:

• Still charging two months' rent on new leases. Many online resources still publish the old two-month figure. If you signed a new lease after October 1, 2024 and collected more than one month's rent as a deposit, you are not in compliance with current law.
• Skipping or losing the receipt. The landlord must give the tenant a written receipt for the security deposit, and is liable for $25 if the landlord fails to do so. That's a small penalty, but an absent receipt signals sloppy recordkeeping that can hurt you in court.
• Depositing funds late or in the wrong account. The landlord must keep all security deposits in federally insured financial institutions that do business in Maryland. The account must be exclusively for security deposits and bear interest. The landlord can also hold the security deposits as insured certificates of deposit. The landlord must deposit each security deposit in that account within 30 days after receiving it.
• Missing the 45-day deadline. If the landlord misses the 45-day deadline or fails to provide an itemized list, they lose the right to make any deductions at all.
• Deducting for wear and tear. Maryland law specifically prohibits deductions for ordinary deterioration from daily use, costs of routine maintenance — painting between tenancies, carpet steam cleaning as standard turnover practice, and similar expenses.
• Treating the deposit as liquidated damages. 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.

Maryland law strongly supports the use of written checklists documenting the condition of the property at both the beginning and end of the tenancy. While not strictly mandatory, landlords who use standardized inspection checklists are better positioned to support their deduction claims, and tenants who sign off on such checklists have a clear baseline for disputing later claims.

About LeaseHelper: LeaseHelper builds AI-powered lease, eviction, and rental document generators for small landlords and property managers, and publishes guides on landlord-tenant law, security deposits, and evictions.