Q: Dear Sir/Madam, regarding to returning deposit to tenant + interest in Maryland
it says: " Within 45 days after the end of the tenancy, the landlord shall return the security deposit to the tenant together with simple interest which has accrued at the daily U.S. Treasury yield curve rate for 1 year, as of the first business day of each year, or 1.5% a year, whichever is greater. " but no bank in the US would give that kind of rate in checking or saving, even market account. So, how can a landlord accomplished that in MD ? thank you !
A: For many years the statute required that landlords return at 3% interest, even if they were earning 1/10th of 1%. This law was changed in recent years to be somewhat more reflective of current interest rates and more favorable to landlords because it cut the minimum interest in 1/2.
Taking a historical view, one suspects that long-time landlords most likely had years of earning 5% or 8% interest and only paying 3% on security deposits.
Like many pieces of legislation, this particular statute involved the state balancing the interests (if you'll pardon the pun) of both landlords and tenants. It is the law and must be followed, whether a landlord actually earns more or less on security deposits than the stated rate of return. Presumably it costs a landlord less to carry a mortgage when interest rates are down.
Also, one supposes that most landlords wouldn't have margins so incredibly thin that the modest 1.5% on a security deposit (only $15/year for $1,000.) will break them financially.
While not legal advice I hope this general information helps.
A: The commercial practice of the banking community is often out of step with what the Legislature has ordered by statute. The Maryland landlord must abide the written statute. Every once in awhile, the tenants catch a break.
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