So your tenant is moving out and wants to know when they will get their security deposit back. The security deposit is typically one month’s rent; however, in Maryland, a landlord can charge as much as two months’ worth of rent for the deposit. 

If your tenant has paid their rent every month, abided by the lease terms, and left the property as you initially rented it out to them, tenants will expect to receive their security deposit back in full. However, this isn’t always the case.

Here are some common reasons you may need to keep part or all of the security deposit when your renters leave.

Significant Damage to the Property

Normal wear-and-tear is to be expected at your income property, especially if your renters have been there for a year or longer.

Dirty tile grout, minor scratches on the floors or stains on the carpet, and marks on the walls are all common when tenants move out. Therefore, these minor issues are usually not reasons to keep the security deposit.

However, if the property has sustained significant damage, such as significantly stained or scratched flooring, large holes in the walls, cracked tile, broken appliances, or chewed furniture from pets, these are items that you can use the security deposit to repair.

While you shouldn’t expect tenants to leave the unit sparkly clean, it should be neat and free from major damage before you return their security deposit.

Breaking the Lease or Not Paying Rent

If your tenants have broken the lease early without a valid reason or have neglected to pay their rent, these are two common reasons landlords may be able to keep the security deposit. 

Keep in mind that there are situations in which renters can legally break the lease without consequences. These include circumstances such as:

• A military member being relocated or starting active duty
• A tenant has been the victim of domestic violence or sexual assault
• The rental unit violates housing code for being habitable
• Being harassed by a landlord

In all these situations, tenants must still give notice of their intent to vacate the unit, and they should still be current on their rent until they leave. Unless the renters have left the unit in disarray with significant damage, you will be obligated to return their security deposit to them.

However, if your tenants have stopped paying rent or have broken the lease outside of these reasons, you may still keep part or all of their security deposit, depending on your state’s laws.

Not Paying Utilities

If your tenants are responsible for paying utilities and don’t pay them before they move out or have not paid them for a while, you may keep some of the security deposit to cover the costs.

However, if you, as a landlord, are responsible for paying the utilities, you can’t keep some of the security deposit to pay these expenses. It’s also important to remember that these laws vary by state.

For example, in Washington, DC, you may be able to keep the security deposit for unpaid utility bills if your tenants were responsible for the payments. But in Maryland, a landlord cannot keep the security deposit for unpaid utility bills. Instead, they would need to take the tenant to court and ask for additional rent.

Your Responsibilities As a Landlord

Even if you are entitled to keep part or all of the security deposit as a landlord, you still have responsibilities when keeping or using this money.

For example, in DC, you must notify tenants in writing if you intend to hold the security deposit and what it will be used for. Otherwise, you must return the deposit within 45 days of their moving out.

Should you need to use the security deposit to pay for unpaid rent, utilities, or damage to the property, you must also provide an itemized list of what you used the money for and give a copy to your tenants.

To protect yourself as a landlord and ensure there’s no miscommunication between you and your renters, this information must be listed in the lease. Your lease agreement should contain reasons why you may keep the deposit and when tenants can expect their deposit back or a notification of an intent to keep the deposit once they move out.

Have Questions? We’re Here for You

FAS Management is here to assist you with your income properties in Washington, DC and Maryland. Have questions about when it’s appropriate to keep the security deposit and when you are obligated to return it? Reach out to us today at (202) 337-5080.