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. These consequences have sparked criticism and concern, among opponents, that the Act will lead to an unfriendly market for landlords and developers, and thereby counter efforts to increase the supply of affordable housing for the renters it’s intended to serve.
The Act will undoubtedly have a lasting impact on both the residential and commercial rental industries. The key provisions and areas affected include:
- Tenant’s Right of First Refusal (Residential)
- Surcharge for Landlord-Tenant Cases (Residential & 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 a right of first refusal to tenants of residential rental properties that contain 3 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 & 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 surcharge for summary ejectment cases, which includes failure to pay rent actions, will be increased from $8 to $43 per case.
- The District Court surcharge for civil, non-summary ejectment cases will be increased 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 prevents these surcharges from being awarded or assigned as a fee or cost against residential tenants in most cases, as a landlord will only be permitted to deduct the above non-Baltimore City specific surcharges from a tenant’s security deposit if the following conditions are met: (1) a court enters a judgment for possession in the landlord’s favor; (2) the governing lease agreement provides that the surcharge may be assessed against the tenant; and (3) the deduction does not exceed the amount of the tenant’s 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. The most current copy of the Bill of Rights will now be required to be included as part of all residential leases.
