Security Deposit Bank Account for Tenants

[Connor Corkrin]

Hey again all,

So I'm just finding out that there is a law requiring tenant's security deposits to be held in a separate account at 3% annual interest. Is this true?

If so, are these types of accounts common with local/national banks? Any recommendations or insight is much appreciated! 

[Lynn McGeein]

Here is the actual requirement from MD Attorney General website:

When returning security deposits of $50 or more, the landlord must include simple interest of 3 percent per year, accrued at monthly intervals from the date the security deposit was paid for all tenancies that were initiated prior to January 1, 2015. For tenancies that began on or after January 1, 2015, the interest rate is payable at 1.5 percent a year OR the simple interest rate accrued at the daily U.S. Treasury yield curve rate for one year, as of the first business day of each year, whichever is greater. The Maryland Department of Housing and Community Development has a Rental Security Deposit Calculator on its website at http://www.dhcd.maryland.gov to help you calculate this interest rate. A landlord must pay 4 percent on deposits held before Oct. 1, 2004.

In addition, make sure you give a receipt for the deposit (may be written received in lease, or it's an additional $25 penalty).  The bank doesn't have  to pay you the 3%, but you still have to pay the tenant 3%.  We were making 0% interest in that account in 2014-2015, but still had to pay 3% interest when we returned their deposit.  It was a cost of doing business in Annapolis.