Understanding Maine Security Deposit Law
Key Takeaways
- Deposit Limit: Maine landlords may charge up to two months’ rent as a security deposit for both fixed-term and at-will tenancies—no exceptions for furnished units.
- Storage & Interest: Deposits must be kept in a separate account, not mixed with personal funds. Interest payment is only required if the landlord owns five or more units.
- Refund Rules: Landlords must return the deposit—plus any interest due—within 21 days for at-will or 30 days for fixed-term leases, along with an itemized statement for any deductions.
Security deposits play an important role in rental property management. For landlords in Maine, collecting a security deposit from tenants offers protection and financial security throughout the tenancy. It serves as a safeguard for unexpected costs or damages that may occur once the property is occupied.
For a landlord, collecting a security deposit from your tenant offers many benefits. They include:
- Protecting against unpaid rent.
- Covering repair costs for tenant-caused damages.
- Ensuring lease compliance.
- Providing funds for cleaning after move-out.
- Encouraging responsible tenant behavior.
Security deposits are a standard part of renting out a property, but how they are handled is strictly regulated under Maine law.
Understanding these laws helps landlords avoid disputes and comply with state requirements. Spectrum Property Management put together this article to explain how Maine’s security deposit laws work and what every landlord should know.
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Understanding Maine Security Deposit Law
Maine Security Deposit Limit
Most states limit how much a landlord can charge a tenant for a security deposit. In Maine, the limit depends on the type of rental agreement. For all forms of tenancies, month-to-month or at will, landlords can only charge up to two months’ rent as a security deposit.
Landlords who rent furnished units are not given special exceptions to increase this limit. Charging more than the legal maximum can result in penalties or forfeiture of the right to retain the deposit.
Nonrefundable Fees
In Maine, landlords cannot charge nonrefundable security deposit fees. Any money collected at the beginning of a tenancy as a “security deposit” must be treated as refundable unless it is clearly designated for a separate, specific purpose such as a pet fee or application fee.
Those separate charges must be agreed upon in writing and cannot be deducted from the tenant’s refundable deposit.
Storing a Tenant’s Deposit in Maine
Maine law requires landlords to keep tenant security deposits in a separate, interest-bearing account at a financial institution located in Maine. The funds cannot be mixed with the landlord’s personal money or business operating accounts.
The account must earn interest at the same rate as the institution pays on regular savings accounts. Interest accrues for the duration of the tenancy, and landlords must pay this interest to the tenant when returning the deposit.
This rule applies to landlords who own five or more rental units. Those who own fewer than five units are exempt from the interest requirement but must still store the deposit securely and separately from personal funds.
Written Notice After Security Deposit Receipt
Landlords in Maine are required to give tenants a written notice when they receive a security deposit, and if the tenant asks. This notice must include:
- The name of the financial institution where the deposit is held.
- The account number or information identifying the account.
- A statement of whether the account is interest-bearing.
Providing written notice ensures transparency and helps both parties track the deposit throughout the tenancy.
Reasons to Withhold a Tenant’s Security Deposit in Maine
Under certain conditions, landlords can keep all or part of a tenant’s security deposit. In the state of Maine, common reasons include:
- Unpaid rent or other charges due under the lease.
- Cost of damages beyond normal wear and tear.
- Unpaid utility bills the tenant was responsible for.
- Cleaning expenses necessary to restore the property to its original condition.
Although, in accordance with Maine’s renter protection laws, landlords cannot keep the deposit to cover issues that existed before the tenant moved in or for ordinary wear and tear. Any deductions must be reasonable, documented, and supported by evidence such as receipts or photos.
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A Walk-Through Inspection
Maine law does not require landlords to conduct a move-out inspection with tenants, but it is highly recommended. A walk-through inspection helps verify the condition of the property and prevents disputes over deductions.
Landlords who choose to conduct one should provide tenants with at least 48 hours’ written notice before the inspection. During this process, both parties can review any damages and agree on what repairs, if any, are necessary.
Security Deposit Refund in Maine
Once the tenant vacates the property, the landlord must return the security deposit within a specific timeframe. For at-will tenancies, landlords have 21 days to return all or part of the tenant’s deposit. For fixed-term leases, the timeframe is 30 days.
If any deductions are made, landlords must provide an itemized list of deductions along with receipts or documentation explaining each charge. This list must be sent to the tenant’s last known address.
Failing to return the deposit or to provide the itemized statement within the required timeframe can make the landlord liable for double the amount wrongfully withheld, plus court and attorney fees.
Change in Property Ownership
When ownership of a rental property changes hands, the outgoing landlord has two options:
- Return the deposit (minus lawful deductions) to the tenant and notify the incoming landlord in writing that the deposit has been settled.
- Transfer the deposit to the new owner, who then becomes responsible for returning it at the end of the tenancy.
If the deposit is transferred, the outgoing landlord must notify the tenant in writing, providing the new owner’s name and contact address. This ensures tenants know who holds their deposit and maintains transparency between all parties.
Conclusion
Understanding Maine’s security deposit laws is essential for landlords who want to stay compliant and avoid disputes with tenants.
The rules govern how much can be charged, how deposits must be stored, and how quickly they must be returned. Landlords should always provide written notice, document the property’s condition, and return deposits promptly to protect both their investment and their reputation.
If you have specific questions about security deposit laws or face a dispute, it is best to consult a qualified Maine attorney. You can also seek help from a knowledgeable property management company that understands state regulations and best practices.
Spectrum Property Management helps Maine landlords manage their properties efficiently and legally. From deposit collection and accounting to tenant screening and maintenance, our team ensures your rental operations comply with Maine law.
Contact Spectrum Property Management today to learn how we can simplify your property management experience.
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NEXT BLOG POST: Are you a new landlord learning about legal compliance? Check out our guide to Maine’s landlord-tenant laws.
Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws frequently change, and this post might not be updated at the time of your reading. Please contact us for any questions regarding this content or any other aspect of your property management needs.
