What Happens to a Lease When a Maryland Rental Property Is Sold?

You own a rental in Maryland, a tenant lives there, and you want to sell. Does the lease end? Does the tenant have to move? What happens to the deposit you are holding? In short, the lease goes with the house, and the deposit has to go with it too.

The lease survives the sale

As the People’s Law Library puts it, if a landlord sells the property, the buyer has to honor any existing leases. The buyer steps into the landlord’s position. A tenant with a fixed-term lease can stay until it ends, on the same rent and terms. A month-to-month tenancy also continues until the new owner or the tenant ends it with proper notice. Notice periods depend on the lease and, in some places, local law, so check before promising a buyer a vacant house.

Before listing: the tenant’s right of first refusal

For many residential rentals with three or fewer units, Real Property §8-119 requires the owner to offer the tenant a chance to buy before the property is offered for sale to the public or a third party, including through a listing. Under the statute:

• The notice goes by first-class mail with a certificate of mailing or by a tracked delivery service, with a copy to the state Office of Tenant and Landlord Affairs.
• It states the material terms the owner would accept, such as price, settlement date and contingencies, and says clearly that it is a request for an offer, not a binding contract.
• The tenant has 30 days to make an offer. The owner has 5 days to respond, and the tenant has 5 days to answer a counteroffer.
• Violations can bring a fine of up to $1,000 each.

Some sales are exempt, such as sales to family members, estate sales and court-ordered sales. DHCD’s right of first refusal page explains the process and the online portal.

Transferring the security deposit

Real Property §8-203 covers what happens to the deposit when the property changes hands:

• The selling landlord stays liable to the tenant and the buyer for any part of the deposit not delivered to the buyer with an accounting showing the amount and date of the deposit and the tenant’s name and last known address.
• The buyer, as successor, becomes liable to the tenant for returning the deposit with interest.

The simplest approach is to hand over the deposit and the accounting at settlement, with both sides keeping a copy. For leases since October 1, 2024, a Maryland deposit generally may not exceed one month’s rent.

A checklist for selling with a tenant in place

1. Pull the lease and note the end date, renewal terms and any purchase option.
2. Check whether the right of first refusal applies, and send the notice before listing if it does.
3. Prepare a rent roll and deposit accounting for the buyer.
4. Ask the county or city rental licensing office what the buyer must do to license the rental in their name.
5. After settlement, give the tenant the new owner’s name, address and phone number. Real Property §8-210 requires a landlord to disclose that contact information in the lease or a posted notice.

Some cities license rentals themselves. Hyattsville, for example, runs its own rental license program, covered on the Hyattsville home-selling page. If the rental also needs significant work, the guide to selling a house that needs major repairs covers your options, and the guide for Maryland landlords ready to sell covers the rest of the process.