Interest Paid on Security Deposits?

Question

I'm studying for my license and ran into this paragraph on the study materials

"The landlord must return security deposits within 45 days of lease
termination; on security deposits of $50 or more, the landlord must also
pay the tenant simple interest on that deposit. The specific interest
rate varies, based on Maryland law."

Is this true? I've never heard about it before. Does anyone know how to find the appropriate interest rate is for a particular lease?

Jill F. · Answer

It varies from state to state. In Ohio, a landlord is required to pay interest on any funds exceeding one month's rent that are held for longer than 6 months. No interest is required  to be paid on funds up to one month's rent. Deposit funds due back to tenant must be returned with 30 days of move-out with a statement of deductions. HOWEVER, based on my experience buying properties, Many Ohio landlords routinely violate this provision and take more than one month for a deposit without paying interest-- tenant's rarely know the rules either. It's a pita when we take over newly purchased properties...

Joe Splitrock · Answer

This is required in certain states. It is spelled out in detail on every state website. Do a Google search and get the exact wording of the law for your state.

Joe Splitrock · Answer

I did a Google search and here is the top results for Maryland. First one is a calculator:

https://dhcd.maryland.gov/Pages/RSDCalculator/Default.aspxhttps://www.thebalancesmb.com/maryland-security-deposit-law-2125076

Huong T Nguyen · Answer

Did you find the answer? I found at least 2 MD websites that say you have to return the SD plus 3% simple interest per year.  I don't know the person who drafted that law was high or not, but which bank gives you 3% a year on a checking or savings account?

Peter Nikic · Answer

I'm not sure in MD, I'm guessing you'll know more secifically when you open the links provided by others above.

In NY you have to state that security is returned with interest.

But you can also keep upto 1% of that interest for managing the deposit. So if you deposit the security into an account and the interest rate is 1% or less, you're actually not returning any more than the security itself. However if you have collected say 2% interest rate over that time period, then you'll keep 1% and return the other 1% along with the original security.

Todd Dexheimer · Answer

Yes, in a lot of states this applies. MN pays 1%

Joe Kraft · Answer

Link to the MD Attorney General page pertaining to Landlord tenant issues.

Click on the security deposit tab.

http://www.marylandattorneygen...

Gaspare U. · Answer

I just deposit the SD in a bank’s escrow account that earns interest. I forget the form # but that fulfills my obligation in NJ.

Matt Moreland · Answer

Better off putting down a huge security deposit than putting it into a savings account these days LOL.

Shafi Noss · Answer

Gotcha, that makes sense. Thanks for the thoughts everyone.

Interest Paid on Security Deposits?

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