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Security Deposits Revisited

In an earlier post, we discussed one aspect of the Maryland law concerning the amount residential landlords may charge tenants to ensure the good and faithful performance of their lease obligations. We said that if a landlord charges more than the equivalent of two months’ rent as a security deposit, no matter what these monies are called in the lease (i.e. a “pet deposit”, last month’s rent”, etc.), the landlord could be found liable for up to three times the wrongfully withheld amount plus reasonable attorney’s fees. This is but one example of how even the most well-meaning landlords can get into trouble during the course of their business. Another pitfall that snags many an unwary landlord is the law governing when and how security deposits must be returned to tenants after they vacate the leased premises.

Again using Maryland law as an example (Landlord-Tenant procedure is one of many areas of the law which are up to each individual state to regulate),Section 8-203(e)(1), Real Property Article, Annotated Code of Maryland, requires a landlord to return a tenant's security deposit within 45 days after the end of the tenancy, together with interest set at three percent per year, less any damages rightfully withheld. If a landlord fails to comply with Section (e)(1), Section 8-203(e)(4) provides that the tenant may sue to recover up to three times the withheld amount, plus reasonable attorney’s fees. Other provisions of this law require that security deposits be held in federally insured institutions which do business in Maryland. Still other provisions of the security deposit law give tenants additional rights in the event they request to be present for any inspection by the landlord at the termination of the tenancy. There are exceptions to these rules, but the point is clear: landlords and tenants need to take steps to educate themselves on the requirements of the law in order to “know their rights” when it comes to the treatment of security deposits.

The attorneys at P.K. Hammar Legal advise landlords and tenants every day on issues such as the proper way to charge, retain and return security deposits. As you can see, the consequences of failing to follow the law in this regard can lead to an award of damages far in excess of the original security deposit. When expert legal help is a phone call away, it makes no sense to try to navigate a regulatory scheme that is fraught with perils for the unwary. Call P.K. Hammar Legal today so that we can guide you through the thicket of laws and regulations applicable to your business and help ensure that you don’t make preventable and costly mistakes.

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