On April 25, 2024, Governor Wes Moore signed into law House Bill 693, known as the Renters’ Rights Stabilization Act of 2024, to protect Maryland renters who are experiencing housing instability. While the Act aims to strengthen protections for Maryland tenants, it also comes with significant consequences for landlords and developers managing residential and commercial properties. Opponents have sparked criticism and concern that the Act will create an unfavorable market for landlords and developers, thereby hindering efforts to increase the supply of affordable housing for the intended renters.
The Act will undoubtedly have a lasting impact on both the residential and commercial rental industries. The key provisions and areas affected by the Act are as follows:
- Tenant’s Right of First Refusal (Residential)
- Surcharge for Landlord-Tenant Cases (Residential and Commercial)
- Security Deposits (Residential)
- Warrants of Restitution (Residential & Commercial)
- Office of Tenant and Landlord Affairs & Tenants’ Bill of Rights (Residential)
Tenant’s Right of First Refusal (Residential)
The Renters’ Rights and Stabilization Act grants tenants a right of first refusal for residential rental properties that contain three or fewer individual dwelling units. This means that owners of such property are now required to give tenants the opportunity to purchase the rental property before selling to outside parties.
The Act does not mandate a right of first refusal in all circumstances. Excluded are situations involving residential rental properties with 4 or more individual dwelling units, transfers of title to a business entity wholly owned by the owner, transfers by a fiduciary, transfers of title in lieu of foreclosure of a mortgage/deed of trust, and family transfers, among other cases. Nevertheless, the requirement will be detrimental to the value and marketability of residential property, as owners will only be able to negotiate with other buyers after each tenant declines to exercise his/her right.
Surcharge for Landlord-Tenant Cases (Residential and Commercial)
The Renters’ Rights and Stabilization Act significantly increases the maximum surcharge for certain landlord-tenant cases filed in District Court, as follows:
- The District Court will raise the surcharge from $8 to $43 per case for summary ejectment cases, which include failure to pay rent actions.
- For civil, non-summary ejectment cases, the District Court surcharge will rise from $18 to $28 per case.
- Summary ejectment, tenant holding over, breach of lease, and warrant of restitution cases filed in Baltimore City will incur an extra $10 surcharge, in addition to the foregoing amounts.
The Act also says that these surcharges can’t be charged as a fee or cost to residential tenants. In most cases, a landlord can only take these non-Baltimore City-specific surcharges out of a tenant’s security deposit if (1) a court rules in favor of the landlord and orders the tenant to vacate the property; (2) the tenant’s lease agreement allows for the surcharge to be charged; and (3) the deduction does not go over the amount of the initial security deposit.
The increase in costs associated with court filings will, among other things, greatly suppress the ability of commercial and residential landlords and property owners to effectively manage their properties, deter small landlords from entering the rental industry, and trigger an increase in rental amounts causing more harm to tenants.
Security Deposits (Residential)
The Renters’ Rights and Stabilization Act limits the maximum security deposit a residential landlord may impose to 1 month’s rent, except under specific circumstances. This 1-month time period is a change from previous law, which permitted a landlord to impose a security deposit of up to 2 months’ rent.
Warrants of Restitution (Residential & Commercial)
The Renters’ Rights and Stabilization Act increases the time period a landlord (residential or commercial) is required to wait between receiving a judgment of possession in its favor and executing a warrant of restitution against a tenant from 4 to 7 days.
The Act also now requires (rather than permits) administrative judges to stay the execution of warrants of restitution for residential properties in cases of extreme weather, including winter storms, hurricanes, and excessive cold and heat warnings.
Although seemingly minor, these changes will still hinder the ability of landlords and property owners to address problematic tenancies efficiently, carry out essential property maintenance and enhancements, and collect rental income and reimbursements.
Office of Tenant and Landlord Affairs & Tenants’ Bill of Rights (Residential)
The Renters’ Rights and Stabilization Act creates an Office of Tenant and Landlord Affairs within the Maryland Department of Housing and Community Development, which will develop a Maryland Tenants’ Bill of Rights. All residential leases must now include the most current copy of the Bill of Rights.
For more information on the Act and how it will impact your property, please contact Kenneth Powell at 240.237.7855.
Click here for the full text of the Renters’ Rights and Stabilization Act of 2024.