Leasing Out Your First Rental Unit in Maryland

So, you’ve become a landlord! Whether you stumbled into renting by wanting to make income off of property you no longer inhabit, or bought a home or apartment building with the specific intention of renting it out, you want to get the job done right, and avoid as much legal trouble as possible. Here are some guidelines and pitfalls you’ll want to keep in mind as you embark into the world of renting and leasing property.

The Lease

Put your lease in writing. While it is legal to have an oral lease if the term of the lease is under a year long, it’s a good idea to have all terms of the agreement in writing, so that both parties can rely on those terms. Leases must be in writing if you have five or more units for rent in the state of Maryland, or where the lease term is a year or more long. The lease should also note what utilities, if any, you’re planning to cover, and which ones should be covered by the tenant. While you may wish to reuse a lease for multiple tenants, it would be in your best interest to have an attorney experienced in landlord/tenant law draft your initial lease. Be prepared to give your tenant a final copy of the lease in advance of the tenant signing it to allow for a review of all terms.

Security Deposit

Under Maryland law, a security deposit cannot exceed two months’ rent. Charging more than this amount could lead to imposition of a high penalty. You are required to give the tenant a receipt upon payment of the deposit, which must detail the tenant’s entitlement to a list of the existing defects or damage to the rental unit, if the tenant requests it within 15 days of moving in. Failure to provide this list upon request could lead to another stiff penalty. Maryland requires that landlords place security deposits in an escrow account, and pay certain levels of interest on those deposits depending on when the unit was first rented. An attorney can help you determine what you would owe in interest on your tenant’s security deposit

Collecting Rent

Should your tenant pay rent in cash on a residential unit, be prepared to offer the tenant a receipt for payment, as the tenant is entitled to a receipt under the law. If the tenant fails to pay rent on time, you may impose a penalty. However, there are limits to the percentage of the monthly rent amount you can impose as a late payment penalty. There is also a bar to evicting a tenant with less than 30 days’ notice, even if you have included this as a term in the lease.

There are many other rules and guidelines which must be followed if you’re a Maryland landlord, including those regarding what may be deducted from a security deposit, rules regarding lead paint in older properties, and rules on eviction. Consult with an attorney who knows landlord/tenant law before you rent out your property. Contact the Annapolis Law offices of Matthew S. Evans III, LLC, at 410-626-6009.