Maryland Security Deposit Law: Limits, Interest and the Return Clock

Maryland gives you one month of rent as a security deposit and 45 days after the tenancy ends to return it with interest. Those two numbers are the whole shape of the risk, and both changed character recently: the cap fell from two months to one on October 1, 2024, which means half the cushion you had before now has to be replaced by better screening. A Maryland security deposit is not a cushion, it is a regulated escrow balance with a statutory clock attached. Want a Maryland team running that clock for you? Get a free rental analysis.

The Short Answer

Maryland security deposit law lives in Md. Code, Real Property § 8-203, with the receipt requirements in § 8-203.1. The rules an owner has to run: cap of 1 month’s rent per dwelling unit; a written receipt with seven specific disclosures; the money held in a Maryland branch of a federally insured institution in an account devoted exclusively to deposits, funded within 30 days; simple interest at the greater of the 1-year U.S. Treasury yield curve rate on the first business day of the year or 1.5%; return within 45 days of the end of the tenancy; and, if you withhold anything, a written list of damages plus an itemized statement of costs with supporting documentation, mailed inside the same 45 days.

Maryland deposit law, key numbers: cap 1 month’s rent (§ 8-203(b)(1)) · utility-assistance exception up to 2 months (§ 8-203(b)(2)) · account funded within 30 days (§ 8-203(d)(1)(iii)) · interest on deposits of $50 or more held at least 6 months (§ 8-203(e)(2)–(3)) · 2026 rate 3.47% (1-year Treasury, first business day of 2026) · return and itemization within 45 days (§ 8-203(e)(1), (g)(1)) · penalty up to three times the amount withheld plus attorney’s fees (§ 8-203(e)(4)) · forfeiture of all deductions for a missing itemization (§ 8-203(g)(2)) · claims may be brought during the tenancy or within 2 years after it ends (§ 8-203(b)(4)) · no provision waivable in any lease (§ 8-203(l)).

How Much Can a Maryland Landlord Charge?

One month’s rent, per dwelling unit, regardless of how many tenants sign. That is the language of § 8-203(b)(1), and the “regardless of the number of tenants” clause matters in College Park and Towson, where a four-bedroom house rented to four roommates is still one dwelling unit with one one-month cap, not four deposits.

The cap came down from two months to one under the Renters’ Rights and Stabilization Act of 2024, House Bill 693, Chapter 124, effective October 1, 2024. There is exactly one exception in the statute, in § 8-203(b)(2), and all three of its conditions must be true at once: the tenant is eligible and has qualified for utility assistance through the Department of Human Services, the lease requires the tenant to make payments for utility services directly to the landlord, and the tenant and landlord agree in writing to the amount of the deposit. Meet all three and you may take up to two months. Miss one and you may not.

Charging over the cap is not a technical foul. Under § 8-203(b)(3), a tenant may recover up to three times the extra amount charged, plus reasonable attorney’s fees, and § 8-203(b)(4) lets that action be brought at any time during the tenancy or within two years after its termination. A lease template last touched in 2023 that still says “two months” is a live exposure on every unit it was used for, for two years past move-out.

What Counts as a Security Deposit

More than the thing you labeled “security deposit.” Section 8-203(a)(3) defines a security deposit as 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.

Read that clause about last month’s rent twice, because it is the most common way a well-intentioned Maryland owner blows the cap. First month, last month and a one-month deposit was a standard ask for decades. Since October 2024, the prepaid last month plus the deposit is two months of deposit money, and the treble-damages provision attaches to the excess. The safe structure is one month of deposit and rent paid as it comes due.

What you collect at signing	Counts toward the deposit cap?	Authority
Money labeled “security deposit”	Yes	§ 8-203(a)(3)
Last month’s rent collected in advance	Yes	§ 8-203(a)(3)
First month’s rent, due at the start of the term	No, it is rent when due	§ 8-203(a)(3)
A second deposit because a second tenant signed	No, the cap is per dwelling unit	§ 8-203(b)(1)
A tenant-purchased surety bond	Separate track, aggregate capped at 2 months	§ 8-203(i)(3)

The Receipt Is a Legal Document, Not a Courtesy

Maryland tells you what the receipt has to say. Section 8-203(c)(1) requires the landlord to give the tenant a receipt for the deposit “as specified in § 8-203.1,” and § 8-203(c)(2) requires the receipt to be included in a written lease. Section 8-203.1(a) then lists seven things the receipt must notify the tenant of:

• The right to have the unit inspected by the landlord in the tenant’s presence to make a written list of damages existing at the start of the tenancy, if requested by certified mail within 15 days of occupancy.
• The right to be present when the landlord inspects at the end of the tenancy, if the tenant gives certified-mail notice at least 15 days before the intended move date, stating the intention to move, the moving date, and the new address.
• The landlord’s obligation to conduct that inspection within 5 days before or after the stated moving date.
• The landlord’s obligation to notify the tenant in writing of the date of the inspection.
• The tenant’s right to receive, by first-class mail to their last known address, a written list of the charges claimed against the deposit and the actual costs, within 45 days after termination.
• The landlord’s obligation to return any unused portion by first-class mail to the last known address within 45 days after termination.
• A statement that failure to comply with the security deposit law may make the landlord liable for a penalty of up to 3 times the deposit withheld, plus reasonable attorney’s fees.

Two more obligations sit in the same section. Under § 8-203.1(b) you must retain a copy of the receipt for two years after termination, abandonment or eviction. Under § 8-203.1(c), a landlord who fails to provide a written receipt is liable to the tenant for $25. Twenty-five dollars is not the real cost. The real cost is that the same failure to advise the tenant of inspection rights, this time under § 8-203(f)(1)(vi) and (vii), forfeits your right to withhold any part of the deposit for damages.

Where the Deposit Has to Sit

In an interest-bearing account at a Maryland branch, used for nothing but deposits, within 30 days. Section 8-203(d)(1) is specific on all four points: deposits must be maintained in federally insured financial institutions that do business in the State; the accounts must be maintained in branches located within the State and be devoted exclusively to security deposits and bear interest; a deposit must be placed in the account within 30 days after the landlord receives it; and the aggregate of the accounts must be sufficient to equal all deposits for which the landlord is liable.

Section 8-203(d)(2) offers one alternative: insured certificates of deposit at in-State branches of federally insured institutions, or securities issued by the federal government or the State of Maryland, again sufficient in aggregate.

Three consequences owners rarely plan for. First, under § 8-203(d)(3)(ii) a deposit may not be attached by creditors of either the landlord or the tenant, which is the clearest statement that this is not your working capital. Second, when you sell, § 8-203(d)(3)(i) keeps the selling landlord or the landlord’s estate, but not the managing agent or a court-appointed receiver, liable for maintaining and returning the deposit as to any portion not delivered to the buyer together with an accounting showing the amount and date of the original deposit, the records of applicable interest rates, and the name and last known address of the tenant. Third, § 8-203(d)(4) makes any successor in interest liable for failure to return the deposit with interest. Deposit ledgers are a closing item in Maryland, not an afterthought.

How Much Interest Do You Owe on a Maryland Deposit?

Simple interest at the greater of the 1-year U.S. Treasury yield curve rate on the first business day of the year or 1.5% a year. That is the formula in § 8-203(e)(1). Mechanically, § 8-203(e)(2)(i) accrues it at monthly intervals from the day the tenant gives you the deposit and states plainly that interest is not compounded. Section 8-203(e)(2)(ii) says no interest is due or payable unless you have held the deposit for at least six months, or for any period less than a full month. Section 8-203(e)(3) limits interest to deposits of $50 or more.

Because the rate is pegged to a market rate, it moves every January. Here are the 1-year Treasury yield curve rates on the first business day of the last three years, read from the Treasury’s own published daily yield curve:

Year	First business day	1-year Treasury yield curve rate	Rate that governs under § 8-203(e)(1)
2024	January 2, 2024	4.33%	4.33% (Treasury rate exceeds the 1.5% floor)
2025	January 2, 2025	4.17%	4.17% (Treasury rate exceeds the 1.5% floor)
2026	January 2, 2026	3.47%	3.47% (Treasury rate exceeds the 1.5% floor)

The practical point: 1.5% is a floor, not the rate. An owner who pays 1.5% in 2026 because a checklist from 2015 said 1.5% is underpaying by more than half. On a $2,400 deposit held a full twelve months at 3.47%, simple interest is roughly $83; at 1.5% it would be $36. Multiply that gap across a portfolio and across a two-year claim window and it stops being rounding.

Maryland also built you a safe harbor. Section 8-203(m) requires the Department of Housing and Community Development to maintain on its website either the list of applicable yield curve rates or a customized calculator that computes the interest due from the deposit date, the tenancy end date and the deposit amount. Section 8-203(n) then says a landlord is entitled to rely on that list or calculator when calculating the interest. Run your number through the Department’s Rental Security Deposit Calculator and keep the output in the file. It is the cheapest legal protection in this entire statute.

The 45-Day Return Clock

Within 45 days after the end of the tenancy, the deposit plus accrued interest goes back, less any damages rightfully withheld. That is § 8-203(e)(1). If you keep any of it, a second obligation runs on the same clock: § 8-203(g)(1) requires you to present, by first-class mail directed to the tenant’s last known address, within 45 days after termination of the tenancy, a written list of the damages claimed together with an itemized statement of the cost incurred.

Maryland has since tightened what “itemized statement” means. Under § 8-203(j)(1), an itemized statement of costs must include supporting documentation that identifies the materials or services provided. Section 8-203(j)(2) lets you satisfy that with an estimate of the costs to be incurred, which is the realistic path when a repair is not finished inside 45 days. But estimates come with a follow-through duty in § 8-203(k): you must notify the tenant in writing when the repairs are completed, include a copy of the final invoice, and if the actual costs come in below the estimate, return the excess withheld amount within 30 days after completing the repairs. An estimate is a bridge, not an ending.

Obligation	Deadline	Authority	Cost of missing it
Place the deposit in a compliant account	30 days after receipt	§ 8-203(d)(1)(iii)	Statutory violation; account rules are not waivable
Return the deposit plus interest	45 days after end of tenancy	§ 8-203(e)(1)	Up to 3x the withheld amount plus attorney’s fees (§ 8-203(e)(4))
Mail the damages list and itemized statement	45 days after termination	§ 8-203(g)(1)	Forfeit the right to withhold anything (§ 8-203(g)(2))
Send the final invoice after an estimate	When repairs are complete	§ 8-203(k)(2)	Documentation fails to support the deduction
Refund the excess over an estimate	30 days after completing repairs	§ 8-203(k)(3)	Amount remains owed to the tenant

Note the asymmetry between the two 45-day duties, because it is the single most expensive thing in Maryland deposit practice. The return penalty in § 8-203(e)(4) applies where the landlord acted without a reasonable basis. The forfeiture in § 8-203(g)(2) has no such qualifier: fail to send the list and itemization and you forfeit the right to withhold any part of the deposit for damages, however real the damage was. Good deductions die of bad mail.

What Happens If You Skip the Move-Out Inspection?

You can lose every deduction, even ones you could prove. Section 8-203(f)(1)(ii) gives the tenant the right to be present when the landlord or the landlord’s agent inspects the premises to determine whether damage was done, provided the tenant notifies the landlord by certified mail of the intention to move, the date of moving and the new address. Under (iii), that notice must be mailed at least 15 days before the moving date. Under (iv), upon receiving it you must notify the tenant by certified mail of the time and date of the inspection. Under (v), the inspection must occur within five days before or five days after the moving date the tenant designated.

Then the two provisions that decide the money. Under (vi), the tenant must be advised of these rights in writing at the time the tenant pays the security deposit — which is why the receipt in § 8-203.1 and the inspection right are really one system. Under (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.

In practice that means three operational habits, none of them optional: put the inspection-rights language in the lease and the receipt at signing; treat any certified-mail move-out notice as a calendar event the day it arrives; and respond by certified mail, not text, not email. A Silver Spring owner who inspects on the wrong day, or replies to a certified-mail notice with a text message, has given up the deduction before anyone argues about the carpet.

What You Can Actually Deduct

Unpaid rent, damage due to breach of lease, and tenant-caused damage in excess of ordinary wear and tear. Section 8-203(f)(1)(i) allows the deposit to be withheld 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.

Two limits sit right next to that grant. Section 8-203(f)(2) says the deposit is not liquidated damages and may not be forfeited to the landlord for breach of the rental agreement except in the amount the landlord is actually damaged by the breach, or the amount of a surcharge authorized under § 7-301(c)(5)(ii) of the Courts Article. A lease clause declaring the deposit forfeit on early termination does not survive that sentence — and § 8-203(l) bars waiving any provision of the section in a lease, so the clause cannot be bargained back in. Section 8-203(f)(3) then requires that in calculating damages for lost future rents, any rent you received for the premises during the remainder of the tenant’s term reduces the damages by a like amount. Re-rent the Rockville townhouse three weeks after a mid-term break and your lost-rent claim shrinks by what the new tenant paid.

“Ordinary wear and tear” is the line every dispute eventually reaches, and the statute does not define it. That is exactly why documentation carries the weight: a dated move-in condition list made in the tenant’s presence under § 8-203.1(a)(1), photographs at both ends, and invoices that identify materials and services as § 8-203(j)(1) requires. Where the record is clean, the wear-and-tear argument usually never starts.

Evicted Tenants and Abandoned Units

A different clock, and it starts when the tenant asks. Section 8-203(h)(1) makes § 8-203(e)(1) and (4) and (g)(1) and (2) inapplicable to a tenant who has been evicted or ejected for breach of a condition or covenant of a lease before the termination of the tenancy, or who abandoned the premises before termination.

What replaces them: under § 8-203(h)(2)(i)–(ii), that tenant may demand return of the deposit by giving written notice by first-class mail within 45 days of being evicted, ejected or abandoning, specifying a new address. Under (h)(2)(iii), you then have 45 days from receipt of that notice to mail the written list of damages and itemized statement of costs and to return the deposit with interest at the same Treasury-or-1.5% rate, less damages rightfully withheld. The penalties mirror the standard track: § 8-203(h)(3)(i) forfeits your right to withhold if you fail to send the list, and (h)(3)(ii) exposes you to up to threefold the withheld amount plus attorney’s fees if you fail to return it. Section 8-203(h)(4) adds that, except as specified, none of this alters your duties under subsections (e) and (g).

The operational trap is assuming an eviction ends the deposit obligation. It does not. It converts your deadline into a reactive one that can land months later, when a tenant you last saw in a District Court hallway mails a demand. Keep the ledger and the documentation for anyone you removed. For how removal itself works in this state, see our guides to squatters’ rights in Maryland and Maryland’s new rental laws for 2026.

Surety Bonds Instead of a Deposit

A tenant may buy a surety bond in place of all or part of the deposit, and you cannot require it. Section 8-203(i)(1) is symmetrical: a landlord may not require the tenant to purchase a surety bond, and is not required to consent to the tenant’s purchase of one. Section 8-203(i)(2)(i) lets the tenant buy a bond protecting against nonpayment of rent, damage due to breach of lease, or tenant-caused damage beyond ordinary wear and tear.

The sizing rules in § 8-203(i)(3) are where owners get tripped: a bond bought instead of a deposit may not exceed two months’ rent per dwelling unit, and if the tenant provides both a bond and a deposit, the aggregate may not exceed two months’ rent. Require more than that in either configuration and § 8-203(i)(3)(iii) gives the tenant up to three times the extra amount charged plus attorney’s fees.

If you do accept a bond, two duties are easy to miss. Section 8-203(i)(7) requires you to mail the tenant a written list of the damages to be claimed and an itemized statement of costs at least 10 days before you make a claim against the bond. And § 8-203(i)(8) gives the tenant the right to pay damages directly or require you to use their deposit first; if that payment fully satisfies the claim, you forfeit the right to claim it from the surety. Section 8-203(i)(12)(i) is blunt about the stakes: a landlord who fails to comply with the subsection forfeits the right to make any claim against the surety bond. Note also § 8-203(i)(14): a bond under this subsection may only be issued by an admitted carrier licensed by the Maryland Insurance Administration.

The Penalty Stack: What Each Mistake Costs

Maryland does not hand out one generic penalty. Each duty has its own consequence, and they stack.

Mistake	Consequence	Authority
Charging more than one month’s rent	Up to 3x the extra amount charged, plus attorney’s fees	§ 8-203(b)(3)
No written receipt for the deposit	$25 liability to the tenant	§ 8-203.1(c)
Not advising the tenant of inspection rights at payment	Forfeit the right to withhold anything for damages	§ 8-203(f)(1)(vi)–(vii)
Keeping funds without a reasonable basis past 45 days	Up to 3x the withheld amount, plus attorney’s fees	§ 8-203(e)(4)
No damages list and itemized statement inside 45 days	Forfeit the right to withhold anything for damages	§ 8-203(g)(2)
Requiring a surety bond over the aggregate cap	Up to 3x the extra amount charged, plus attorney’s fees	§ 8-203(i)(3)(iii)
Non-compliance on a bonded tenancy	Forfeit any claim against the surety bond	§ 8-203(i)(12)(i)
A lease clause waiving any of it	Unenforceable; no provision may be waived in a lease	§ 8-203(l)

The claim window under § 8-203(b)(4) runs during the tenancy or within two years after it terminates. That is the number that turns a paperwork habit into a portfolio question: whatever your process was two years ago is still reviewable today.

Montgomery, Prince George’s and the Rest of Maryland

Section 8-203 is statewide. The cap, the interest formula, the 45-day clock and the forfeiture rules read the same in Bethesda, Bowie and Frederick. What changes county to county is everything wrapped around the deposit: rental licensing, inspection regimes, and in Montgomery County a rent-stabilization framework that governs increases but does not alter deposit math.

Where we see deposit disputes actually originate in this market:

• Montgomery County — Bethesda, Silver Spring, Rockville, Gaithersburg, Chevy Chase and Potomac. High rents mean high deposits, so a single forfeiture under § 8-203(g)(2) on a $3,800 unit is a four-figure write-off. The county’s separate notice rules also invite conflation, which we untangle in our Montgomery County rent stabilization guide.
• Prince George’s County — Bowie, Hyattsville, College Park, Laurel and Upper Marlboro. Student and roommate tenancies concentrate here, and the “regardless of the number of tenants” language in § 8-203(b)(1) is where multi-signer leases go wrong.
• Howard, Anne Arundel, Baltimore and Frederick counties — Columbia, Annapolis, Towson and Frederick. Same statute, different licensing and inspection calendars.

Cross-border owners should note that the DMV does not share a rulebook here. Virginia allows a deposit of up to two months’ rent with a 45-day return under Va. Code § 55.1-1226, and the District caps residential deposits at one month. If you hold in more than one jurisdiction, our DC vs. Maryland vs. Virginia landlord law comparison lays the three side by side. Setting the rent itself is a separate exercise, covered in how much rent you can charge in Maryland.

Where Flat Fee Landlord Fits

You own the asset and the decisions are yours. Our job is to make sure the deposit never becomes the reason a good tenancy ends badly: a compliant Maryland lease with the § 8-203.1 receipt language in it, the deposit placed in a compliant Maryland account inside 30 days, interest tracked at the rate the statute actually names rather than the 1.5% floor, a move-in condition list made with the tenant, certified-mail handling of move-out notices, and an itemized statement with real invoices out the door well inside 45 days.

With the cap at one month, screening does the work the second month of deposit used to do. Ours runs through the Perfect 10ant System, a 10-point verification behind an under-1% eviction rate across 2,000+ placements. We do all of it on a flat monthly fee — your management cost should not rise just because rent did. Plans start at $139/mo on annual billing, and our Maryland property management team covers Montgomery, Prince George’s, Howard, Anne Arundel, Baltimore and Frederick counties.

Get your free rental analysis and we will tell you what your Maryland property should rent for, and how we keep the deposit side clean.

This post is general information for property owners, not legal advice. Security deposit outcomes turn on the specific facts of your lease and tenancy. Consult a Maryland attorney before withholding funds or relying on any deadline here.

Sources

• Md. Code, Real Prop. § 8-203 (security deposits: cap, account, interest, 45-day return, inspections, surety bonds, documentation) — mgaleg.maryland.gov
• Md. Code, Real Prop. § 8-203.1 (required receipt disclosures; $25 liability; 2-year retention) — mgaleg.maryland.gov
• House Bill 693, 2024 Regular Session — Renters’ Rights and Stabilization Act of 2024, Chapter 124 (one-month deposit cap, effective October 1, 2024) — mgaleg.maryland.gov
• Maryland Department of Housing and Community Development, Rental Security Deposit Calculator (the § 8-203(m) resource a landlord may rely on under § 8-203(n)) — dhcd.maryland.gov
• U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates (1-year rates on the first business day of 2024, 2025 and 2026) — home.treasury.gov
• Va. Code § 55.1-1226 (Virginia two-month cap and 45-day return, for the cross-border comparison) — law.lis.virginia.gov

Statutory text verified September 16, 2026 against the Maryland General Assembly’s published text of § 8-203 and § 8-203.1 as compiled for the 2026 session. Treasury rates read from the Treasury’s published daily yield curve for January 2, 2024, January 2, 2025 and January 2, 2026.