Imagine listing a beautiful, newly renovated property for rent. However, a month later, that new kitchen had broken cupboards, the bathroom door was off the hinges, and the neighbors were complaining to you about a broken fence.
That's a lot of potential expenses. That's why a security deposit is an essential step in protecting your finances when a new tenant signs a lease. Read on to learn about security deposits in Rockville, MD.
How Much Is a Security Deposit?
When you set a security deposit for a property, you can't make it any number you want.
State laws protect tenant rights, and that includes laws on security deposits. In Maryland, you can demand a maximum of two months' rent. So keep this in mind. Tenant screening is vital to ensure you aren't too exposed financially.
You Must Consider Interest Earned
As a landlord, you may keep that money in a bank account that earns interest when you receive a deposit. But if you do, you must understand Maryland's law about earned interest.
You must return an interest payment alongside the deposit. That will be either 1.5% or match the US Treasury yield curve rate if the latter is higher.
Landlord Responsibilities: Inspecting Properties
Part of the laws on security deposits involve property inspections. Landlords must inspect properties at the start and end of a tenancy if they want to manage a security deposit.
This ensures tenants are treated fairly and that landlords don't withhold money owed for a property issue that existed before their tenancy began.
When conducting inspections, you must document and photograph any problems and keep the tenant informed throughout.
You Have Time Limits for Returning a Deposit
When a lease ends, you have 45 days to return the deposit with any relevant deductions.
If you miss this deadline, you could face a legal claim from the tenant for all monies owed, irrespective of whether you intended to make any deductions.
This law protects tenants' funds by ensuring they are not withheld for an unreasonable amount of time after moving out of a rental.
You Must Itemise Any Deductions
You can deduct unpaid rent or property damage, but you can't deduct normal property wear and tear. Always provide a written, itemized statement that outlines any deductions.
Potential Legal Disputes
Tenants can legally challenge what they deem as an unfair deduction. If the issue goes to courts and the tenant wins, you will need to pay the amount owed plus a penalty.
The penalty may be three times the deposit plus any legal fees. That's why having proof of damage or missed payments is so important.
Security Deposits: Protecting Your Property
Real estate might offer great financial returns.
However, that profit can soon disappear if you face expensive repairs or a tenant behind on rent payments. So, always go for the maximum security deposit before securing a new tenant in Rockville.
PMI Potomac has a streamlined process for screening new tenants and setting security deposits, which means we can help remove your worry and risk. Find out more about our services here.
