Well, we know to put it in a bank account only for security deposits, if you are in Maryland, you might want to read over COMAR section 1-101 of the Maryland Financial Institution Article.
The security deposit funds must be deposited into this account within 30 days of accepting it. On a bright spot, if the landlord has done things correctly, this money cannot be attacked or taken by his creditors, should he fall on hard-times.
The receipt that is given to the tenant for the security deposit or the lease must contain language informing the tenant of their ability to get a written list of ALL the existing damage to the unit from the landlord, within the first 15 days of moving in.
Most tenants do not seem to know this, and many landlords literally bank on this. However, if the landlord requires the security deposit and receives a written request, the landlord MUST provide this list of current conditions. It the landlord does not provide the list for the tenant, he could be found liable to the tenant for THREE TIMES the amount of the security deposit!! Not to mention, he may not be able to collect any of his claimed damages to the unit.
Documenting conditions and damage is not has costly as it used to be. Now with most people having digital camera, and camera on their cell phones, you or the tenant, can very efficiently take photos for this documentation. I would check with your local Clerk of the Court, if email lists and photos would be acceptable proof. Before you begin a lease with a new tenant.
As for returning the deposit there are certain deadline that need to be meet, but in the end, within 45 days after the tenant has left the premises, the security deposit must be returned to the tenant, minus any amounts withheld.
But there are rules for that as well; you just cannot say I kept all but one dollar…. You are going to have to prove what you kept the money for. That is what I will cover in my next post.