Processing your tenant’s security deposit requires you to know the law and the timelines that are involved. This can be a difficult area for southern Maryland owners who are managing their properties. If you’re not sure about what you’re doing, get help from a southern Maryland property manager.
Holding a Security Deposit
When you receive the deposit at the beginning of the lease, it’s technically and legally still the tenant’s money. It must be deposited in a separate bank account. Per Maryland state law, you have to let the tenant know where that bank account is located.
Charging the Security Deposit
At the end of the lease, you can go through your southern Maryland rental property and make a list of damages you think the tenant is responsible for. Check out our blog on the differences between damage and wear and tear. Go through that list and have the work completed. You must have the work done before you can withhold money from the security deposit. You cannot go off an estimate, and you must save all the receipts.
Security Deposit Timeframe
You have 45 days from the date of move out to provide the receipts and a disposition letter to your tenants notifying them of what you’re withholding and the basis for your decision. If your tenants do not agree, they can take you to court. You’ll go to a district court in Maryland, where they can get up to three times the amount of what you withheld if the court rules in their favor. Be very careful.
Security Deposit Interest
You also need to pay your tenant interest on their security deposit, per state law. On the Maryland state website, there’s a calculator to determine interest amounts. Use that calculator so you’re sure you giving them their proper interest back. It has to come out of your pocket.
Never take a discounted rate for the security deposit. A lot of people offer discounted deposits to get people into the house. Your deposit is most of the collateral you have, and you’ll need to have enough of it. Write into the lease that the tenant cannot use the security deposit as their last month’s rent. If you do that, you won’t have any money to use for damages after they move out.
If you have any questions for a southern Maryland property management, company, we’d be happy to answer them. Please contact us at Real Property Management Gold.