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Quoted from http://www.oag.state.md.us/Consumer/landlords.htm#deposits, here is the way to calculate the interest on security deposit a landlord in Maryland pays to his tenant:

The landlord must put the security deposit in an escrow account. When returning security deposits of $50 or more, the landlord must include simple interest of 3 percent per year, accrued at six-month intervals from the date the security deposit was paid (1.5 percent every six-month period).

I don't quite understand the meaning of the last part in bold.

In my case , I rent a room for $437.5/month for the first 3 months, and then switched to another room under another lease for $350/month for the next 5 years and 2 months (actually it is the next 5 years and 3 months, but at the beginning of the last month, the landlord agreed to use my security deposit as my rent). My security deposit has been the same as one month rent, and there was $437.5-350 refund to me at the time of room switch.

If the quote doesn't have the part in bold, I think the interest in my security deposit is:

$437.5*0.03*3/12 + 350*0.03*(5+2/12) = 57.53

I wonder if my calculation is correct?

How the calculation be changed when considering the part in bold?

Thanks!

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You didn't actually say how much the security deposit was. Can we assume it's one month's rent for the first apartment? i.e. $437.5? –  DJClayworth Aug 16 '12 at 19:24
    
@DJClayworth: My security deposit has been the same as one month rent, and there was $437.5-350 refund to me at the time of room switch. –  Tim Aug 16 '12 at 19:38

1 Answer 1

Since you received a refund on your deposit most likely the landlord refunded the deposit then made a new deposit into an account for the new appartment. So since you were not there for 6 months you accrued no interest for the time in the first apartment.

Then for the next 62 months you accrued interest 10 times (once every 6 months). So based off of the formula for calculation of the interest owed is :

(deposit amount)(1+ ((interest rate per 6 months)/100))^(whole number of 6 month periods at deposit was held)

So for your case

350(1.015)^10 = 406.19

In theory you should probably get back 56.19 after your final months rent. However you agreed to use your deposit for your final month rent. This meant you did not have to pay rent that month but it may also have meant you surrendered your right to that interest. On the other had your landlord does not have that security deposit to cover damages. Though I would not expect that would keep him from persuing you in court if there are any significant costs due to damage(so do not trash it now).

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I personally would never do that(sneak your interest) with out putting it in writing that it was happening and that you were aware. But there are many landlords that do not have that same sense of honor. During my experience renting the exact opposite was true... which is probably why I work so hard not to be that guy. –  user4127 Aug 16 '12 at 19:23
    
Thanks! (1) What do you mean by "so do not trash it now"? (2) In your comment, are you saying from the point of view as being a landlord? In "During my experience renting the exact opposite was true... which is probably why I work so hard not to be that guy", what do you mean by "the exact opposite" and "that guy"? –  Tim Aug 16 '12 at 19:44
    
@Tim - Some people in a similar situation decided they would just throw a wild party and basically destroy their apartment. In the end they owed over 20k to the landlord and the judgment was it was willful and intentional so not dischargeable in bankrupty. When i was renting years ago as a student and shortly after the landlords were jerks and seemed(from my biased opinion) to delight in screwing their tenants. When I have had the opportunity I have tried to go out of my way to make sure every fee and action was disclosed and upfront. –  user4127 Aug 16 '12 at 20:09
    
Thanks! I have moved out and there was no party or trashing it. I wonder how "the landlords were jerks and seemed(from my biased opinion) to delight in screwing their tenants" specifically? –  Tim Aug 16 '12 at 20:43
1  
@Tim - Almost always money but sometimes just general crap like not fixing AC or heater etc –  user4127 Aug 16 '12 at 20:45

protected by John Bensin Aug 31 '13 at 0:58

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