Maryland's 45 day security deposit return rule, explained

The 45 day clock and what starts it

Under Md. Real Property § 8-203, the clock starts when the tenancy ends, meaning the lease is over and the tenant has moved out. From that day the landlord has 45 days to send the deposit back, plus accrued interest, minus any deductions that are properly documented. The payment goes to the tenant's last known address, which is why smart tenants hand the landlord a forwarding address in writing before they turn in keys.

Forty five days sounds generous until a turnover is in full swing. Between the make-ready walkthrough, contractor invoices, and getting the unit relisted, the deadline sneaks up on self-managing owners more than any other date in the Maryland landlord calendar. Put it on a calendar the day the tenant gives notice, not the day they leave.

The interest most landlords forget

Any deposit of $50 or more earns simple interest from the day the landlord receives it, accruing at six month intervals. The rate resets every January: it's the greater of 1.5% per year or the U.S. Treasury one year yield curve rate on the first business day of the year. The state publishes the current figure, and the amount owed depends on how long the deposit was held, so a three year tenancy earns noticeably more than a one year lease.

You don't have to do the math by hand. Our security deposit interest calculator (linked below) runs the Maryland formula for any deposit amount and date range. Landlords should run it before cutting the refund check; tenants should run it before cashing one that looks light.

One more holding rule that trips up new owners: the deposit must go into an account at a Maryland banking institution within 30 days of receipt. It's the tenant's money held in trust, not working capital for the next renovation.

Withholding anything? The itemized list is mandatory

A landlord can deduct unpaid rent, damage beyond ordinary wear and tear, and actual losses caused by a breach of the lease. Ordinary wear and tear itself, faded paint, worn carpet in traffic paths, small nail holes, is never deductible no matter how fresh the unit looked at move-in.

Here's the part that catches people: deducting anything requires a written, itemized statement of the damages and the actual costs, sent by first class mail to the tenant's last known address within the same 45 days. A landlord who skips the list forfeits the right to withhold any of the deposit, even when the damage is real and the receipts exist. The list is not a courtesy. It's the legal switch that makes the deduction valid.

If the withholding happens without reasonable justification, or the deadline passes with no refund and no list, the tenant can sue in District Court for up to three times the amount wrongfully withheld plus reasonable attorney's fees. On a $2,400 deposit that's a potential $7,200 judgment over paperwork that takes an evening to do right.

The move-out inspection tenants can attend

Maryland gives tenants the right to be present when the landlord inspects for damage. To use it, the tenant sends the landlord a request by certified mail at least 15 days before moving, including the move-out date and the new address. The landlord then has to hold the inspection within five days before or after that move-out date and notify the tenant of the time by certified mail.

Few tenants invoke the formal process, but good operators run a documented walkthrough anyway. Date stamped photos at move-in and the same angles at move-out settle almost every deposit dispute before it starts, in either direction. When we manage a property, that photo record is standard on every turnover, and it's the reason our deposit disputes almost never reach a courtroom.

What changed recently and what to do now

Since October 1, 2024, Maryland caps security deposits at one month's rent. The old two month ceiling is gone, so a lease renewing in 2026 can't carry a grandfathered oversized deposit forward without addressing the difference. If you're still holding more than one month from an older lease, talk to your attorney or manager about how to true it up at renewal.

The practical playbook for a Howard County or Baltimore area owner: photograph the unit at move-in, put the deposit in a Maryland bank within 30 days, calendar the 45 day deadline the moment notice arrives, inspect with photos at move-out, and either refund with interest or mail the itemized list well before day 45. That routine costs almost nothing and removes the single most common way small landlords end up on the wrong side of a judge.