Maine Security Deposit Laws for 2024 | Deductions, Returns, & Rights

The Maine Landlord-Tenant Law has rules in place for the return and collection of the security deposit under 14 ME Rev Stat 6033. They are there to protect property managers, landlords, and tenants. It's wise to draw up a sublease or lease agreement and include the security deposit information within.

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Maximum Deposit

In Maine, a landlord can charge two months' rent as a security deposit, but this is raised to three months' rent in a mobile home park. Under state law, landlords may also ask for a pet deposit on top of everything else. However, those with disabilities and service animals cannot be subjected to the extra fees.

The security deposit law, including returns, deduction requirements, and limits, does not apply to a landlord-occupied building with five units or fewer.

Surety Bond

Landlords can choose not to collect a traditional security deposit, offering tenants the ability to purchase a surety bond for the entire security deposit or parts of it. However, landlords cannot require this, according to Landlord-Tenant laws.

If the tenant wants to purchase a surety bond for the deposit, the amount of both cannot exceed that two month's rent amount, or the landlord will forfeit their right to retain the funds once the tenancy or rental agreement ends.

Holding

Maine landlords have obligations when they hold a security deposit, such as:

• Receipt Requirements - Landlords don't have to give receipts for the security deposit unless the tenant wants one.
• Security Deposit Holdings - Security deposits should be put into a bank or financial institution and cannot co-mingle with other funds. The tenant can get the name and account number if requested in writing.

No state law requires landlords to give tenants the interest held on the security deposits.

Allowable Deductions

Landlords can use the security deposit for deductions once the tenant has vacated the property. It can be used to cover these things:

1. Cost of disposing of or storing unclaimed property
2. Utility charges directly owed to the landlord
3. Costs of damage caused when the tenant failed to comply with their obligations (that aren't standard wear and tear)
4. Unpaid rent (only if the lease or rental agreement states this in writing)

Normal Wear & Tear

Damage relates to the destruction of residential rental units that happens because of negligence and abuse from the tenant or their guests during the tenancy. This affects the value, normal function, and usefulness of the property and includes:

• Missing fixtures
• Broken windows
• Broken heater
• Holes in the wall
• Broken tiles
• Heavily ripped or stained carpet
• More

Normal wear and tear relates to the deterioration that happens without abuse, accident, carelessness, or negligence of the premises by the tenant and guests. Traditionally, normal wear and tear doesn't include labor or money spent by the landlord to remove trash and abandoned articles.

If the rental unit is leased to the tenant in habitable conditions or was put into that condition later, normal wear and tear doesn't include the money necessary to return it to livable conditions. This includes cleaning costs. However, if the money spent happened because of the landlord's actions, events beyond the tenant's control, and more, this might not apply.

Returning Deposit

Landlord-Tenant laws state that the Maine landlord should return the deposit balance and a list of itemized deductions within 30 days. That period starts on the lease agreement's date of termination.

However, if the agreement is "at will" or the tenant surrenders the premises, whichever occurs last, the full security deposit (minus deductions) should be returned within 21 days.

The landlord has to give a written statement itemizing the list of reasons they are keeping the security deposit. This should be mailed to the last known address of the tenant, along with the funds. If landlords don't provide a written statement for deductions, they forfeit the right to keep any portion of the deposit.

If the landlord fails to return the security deposit during the 30-day limit, the tenant can take legal action against them to recover their deposit. However, the tenant must wait until the landlord fails, give a seven-day notice before taking legal action, and ensure that the landlord won't respond.

Tax Filing Rules

The Maine Landlord-Tenant Law says that security deposits aren't automatically considered income until the landlord no longer has to refund them, and then they can be used as a tax write-off.

In fact, the IRS has rules in place to help Maine landlords understand what they must do. Typically, the security deposit is taxable income in these cases:

• The tenant breached the lease or had unpaid rent (the kept amount must be declared as income when it was applied/forfeited)
• The landlord uses the security deposit to cover expenses allowed
• The landlord/tenant has an agreement to use the deposit for the final month's rent

Additional Regulations

A rental property could change ownership through assignment, sale, appointment, or death. Whoever holds the security deposit during the tenancy period must do the following once the transfer of ownership occurs:

1. Give the new owner the amount paid by each tenant
2. Transfer those security deposits to the new owner after deductions are made
3. Mail tenants a notice of the transfer, including the person's name and address
4. Return the security deposit when deductions are made

Conclusion

Landlords want each Maine tenant to be respectful of the property, but that doesn't always happen. It's wise to have a lease in place explaining how to pay rent and the amount. However, Maine Landlord-Tenant law also focuses on security deposits.

You've learned about the rules now. If there are disputes or you must file for eviction, it's wise to contact a qualified attorney who can provide legal advice. Landlords can do their own legal research to determine how to draft documents and handle various situations, as well.