Did you know that more than one-third of all households in the U.S. were rentals as of 2021? With a number like that, it's understandable why so many people want to own rental units. While the monetary upside is great, there are plenty of regulations and practices to be aware of.
Security deposits are an important step to securing a new tenant, but what do you need to know about them? Read on to learn more about security deposits specific to Columbia, Maryland.
What Are Security Deposits?
A security deposit is a payment that confirms the intent of an individual to rent. This is the final step in the application process. Before this, a prospective tenant must fill out an application and pass a background and credit check.
This payment is used to cover any excessive damage that occurs to the unit. A landlord may choose to make the security deposit refundable or non-refundable.
How Much is a Security Deposit in Maryland?
The standard security deposit amount is equal to one month's rent. Under Maryland state law, the maximum amount a landlord can charge is twice the monthly rent. Deciding whether or not to charge the maximum comes down to local vacancy rates.
What Other Specific Requirements Does Maryland Have?
Many of the security deposit laws specific to Maryland relate to how the money is stored. The financial institute must be located within the state. Additionally, the account the deposit is placed in must be designated for security deposits.
For bookkeeping regulations, landlords must provide a receipt for the security deposit or face a fine. There are also requirements that apply to interest rates paid on a deposit.
What Other Rules Should You Know?
There are federal rules that all landlords must follow. Perhaps the most important are the Fair Housing Laws. These laws ensure that a prospective tenant is not discriminated against based on gender, race, religion, or other identities. Maryland has additional protections that prohibit discrimination based on hair texture and style.
Find the Right Person for Your Rental Property
Before the security deposit, an essential step to effective property management is screening a prospective tenant. As mentioned earlier, this process typically includes an application and background check. The background check may include credit history and a search for any past criminal activity.
As part of the application, a landlord may request a rental history to check an individual's past as a tenant. If an applicant is a first-time renter, you may request personal references or check with employers.
Part of landing the right tenants is offering amenities to attract them. These aren't limited to items like a doorman or on-site gym. Items like allowing dogs make a property more attractive to many people.
Are You Ready to Find Your Perfect Tenant?
Now that you know more about security deposits, what are you waiting for? Knowing how much you can charge and how to store the deposit are essential to complying with state laws. You must also know the federal laws that relate to property management.
If you live in Maryland and are ready to get started, contact PMI Mason Dixon to get started.
