If you last read up on Maryland deposits before late 2024, what you know is wrong. The Renters' Rights and Stabilization Act cut the security deposit cap from two months' rent to one month, effective October 1, 2024 — and much of the internet, and most old lease templates, still say two. The rest of Md. Code, Real Prop. § 8-203 was already one of the most procedural deposit statutes in the country: a dedicated escrow account, an interest formula pegged to Treasury yields, certified-mail inspection rights, and up to treble damages plus attorney's fees when a landlord gets the endgame wrong.
Here's the whole machine as it stands in 2026.
The cap: one month, no matter how many tenants
§ 8-203(b) now caps the deposit at one month's rent per dwelling unit, regardless of the number of tenants. The single carve-out allows up to two months when the tenant qualifies for utility assistance, the lease has the tenant paying utilities through the landlord, and both sides agree in writing — a narrow arrangement most landlords will never use.
Overcharge and the statute bites immediately: the tenant may recover up to three times the extra amount charged, plus reasonable attorney's fees. A two-month deposit collected on a post-2024 lease isn't a paperwork foot-fault; it's a treble-damages claim sitting in your files.
Where the money lives: the escrow account
Under § 8-203(d), the deposit must be placed, within 30 days of receipt, in a federally insured financial institution doing business in Maryland, in an account devoted exclusively to security deposits and bearing interest. The statute allows an alternative — insured certificates of deposit, or securities issued by the federal government or the State of Maryland, in amounts covering all deposits held — but the operating-account shortcut is simply illegal, the same commingling trap that powers Massachusetts's separate-account regime.
The interest formula nobody else has
Maryland is the only state we cover with a formulaic interest rate. Under § 8-203(e), deposits of $50 or more held at least six months earn simple interest at the greater of 1.5% a year or the daily U.S. Treasury yield curve rate for one year, as of the first business day of each year. Interest accrues in monthly intervals from the date you received the deposit — not compounded, and no interest for any period shorter than a full month.
In practice: check the one-year Treasury rate each January, apply whichever number is higher, and remember the state maintains an official calculator. Our Maryland lease bakes the formula language into the deposit clause so the obligation is at least disclosed correctly.
Move-out: 45 days, first-class mail, forfeit if late
Two duties run on the same 45-day clock after the tenancy ends:
- The refund (§ 8-203(e)): return the deposit plus accrued interest, less lawful deductions, within 45 days.
- The damage list (§ 8-203(g)): if you're deducting, send — by first-class mail to the tenant's last known address — a written list of the damages claimed with an itemized statement of costs actually incurred, also within 45 days. Miss it and you forfeit the right to withhold any part of the deposit for damages.
And the wrongful-withholding penalty (§ 8-203(e)(4)): hold back any part of the deposit without a reasonable basis past 45 days and the tenant may sue for up to threefold the withheld amount, plus reasonable attorney's fees. Compare Pennsylvania's 30-day, double-damages regime — Maryland gives you more time and a bigger downside.
The certified-mail inspection dance
§ 8-203(f) gives the tenant the right to be present at the move-out inspection, and it runs on certified mail in both directions. The tenant must notify you by certified mail at least 15 days before moving, stating the moving date and new address. You must then notify them — also by certified mail — of the inspection's time and date, which must fall within five days before or after the moving date. A landlord who fails to follow the procedure forfeits the right to withhold any part of the deposit for damages.
There's a bookend at move-in: the deposit receipt required by § 8-203.1 must advise the tenant of seven things — the right to a move-in inspection (requestable by certified mail within 15 days of occupancy), the right to be present at the move-out inspection and how to invoke it, the five-day inspection window, the written inspection notice, the 45-day itemized statement, the 45-day refund, and the treble-damages penalty for non-compliance. Skipping the receipt costs a flat $25 — but the receipt's real job is proving the tenant was told about the inspection rights whose violation forfeits your deductions.
Common mistakes
Charging two months on autopilot. The one-month cap has applied since October 1, 2024; every renewal signed on an old template is an overcharge with 3× exposure.
Parking the deposit in the operating account. § 8-203(d) demands a dedicated, interest-bearing Maryland escrow account within 30 days — or the securities alternative, properly funded.
Paying no interest because "it's small." The formula applies from $50 up; only deposits held under six months escape it.
Blowing the 45-day damage list. The refund and the itemized list are separate duties on the same clock, and the list travels by first-class mail. Late list, forfeited deductions.
Ignoring a certified-mail move-out notice. Once the tenant invokes § 8-203(f), the inspection scheduling duties are yours — and non-compliance forfeits every damage deduction. You can see how Maryland's timeline compares with the other nineteen states we cover on our security deposit laws by state page.
Build a compliant Maryland lease — $29 one-time, generated in minutes, with the post-2024 deposit cap, the § 8-203.1 receipt advisements, and the escrow and interest language built in. New to deposits? Start with the security deposit glossary entry.
Statutory references
- Md. Code, Real Prop. § 8-203(b) — one-month cap per dwelling unit (eff. Oct. 1, 2024, Renters' Rights and Stabilization Act); utility-assistance carve-out; up to 3× the overcharge + fees. Official text
- § 8-203(d) — deposit escrowed within 30 days in a federally insured Maryland institution, account exclusive to deposits; CD/government-securities alternative.
- § 8-203(e) — 45-day return with accrued interest; interest at the greater of 1.5%/yr or the one-year Treasury yield (deposits ≥ $50 held ≥ 6 months, simple, monthly accrual); up to 3× the wrongfully withheld amount + attorney's fees at (e)(4).
- § 8-203(f) — tenant's certified-mail right (15 days' notice) to attend the move-out inspection within ±5 days of moving; landlord non-compliance forfeits damage deductions.
- § 8-203(g) — 45-day itemized damage list by first-class mail; failure forfeits the right to withhold for damages.
- Md. Code, Real Prop. § 8-203.1 — deposit receipt with the seven required advisements; $25 penalty for omitting it. Official text