Mastering Lease Types and Terms for the Maryland Real Estate Exam
Last updated: April 2026
Understanding lease types, terms, and landlord-tenant regulations is critical for passing the Maryland real estate licensing exam. Real estate professionals in Maryland must be intimately familiar with both general leasing principles and the specific statutory requirements outlined in the Maryland Real Property Article, Title 8. Whether you plan to specialize in commercial leasing or residential property management, demonstrating competence in this area is a core requirement of your licensure.
This mini-article breaks down the essential lease structures, statutory limits, and unique Maryland leasing quirks you will encounter on test day. For a broader overview of exam topics, be sure to review our Complete Maryland Exam Guide.
Foundational Lease Types
The Maryland real estate exam will test your ability to differentiate between various lease structures. The allocation of property expenses—such as taxes, insurance, and maintenance—determines the lease type.
Gross Lease
In a Gross Lease, the tenant pays a fixed monthly rent, and the landlord is responsible for paying all operating expenses associated with the property (taxes, insurance, maintenance, and sometimes utilities). This is the standard structure for most residential leases in Maryland, from Baltimore City apartments to single-family home rentals in Montgomery County.
Net Lease (Single, Double, and Triple)
Commonly used in commercial real estate, a Net Lease shifts the burden of property expenses from the landlord to the tenant. The most frequently tested variant is the Triple Net Lease (NNN), where the tenant pays the base rent plus their pro-rata share of:
- Property Taxes
- Property Insurance
- Common Area Maintenance (CAM)
Exam Tip: If a question asks which lease type provides the landlord with the most predictable, passive income stream, the answer is generally a Triple Net (NNN) lease.
Percentage Lease
A Percentage Lease is predominantly used in retail environments, such as shopping malls in Columbia or Annapolis. The tenant pays a base rent plus a percentage of their gross sales that exceed a certain threshold (known as the natural breakpoint).
Practical Formula & Example:
A retail tenant has a base rent of $3,000 per month and agrees to pay 5% of gross sales exceeding $50,000 monthly. If the tenant's gross sales in December reach $80,000, what is the total rent due?
1. Calculate overage: $80,000 (total sales) - $50,000 (breakpoint) = $30,000
2. Calculate percentage rent: $30,000 × 0.05 = $1,500
3. Total Rent: $3,000 (base) + $1,500 (percentage) = $4,500
Ground Lease (Maryland Specific)
A Ground Lease is a long-term lease of land where the tenant typically constructs a building on the property. Maryland has a highly unique and historically significant system known as Ground Rents (primarily found in Baltimore City and Baltimore County). Under a traditional Maryland ground rent system, the homeowner owns the physical house (leasehold estate) but leases the land beneath it for a term of 99 years, renewable forever. The exam frequently tests the fact that residential ground rents must be registered with the Maryland State Department of Assessments and Taxation (SDAT) and are generally redeemable by the tenant.
Essential Lease Terms & Maryland Regulations
Maryland law strictly regulates the relationship between landlords and residential tenants. You must know these specific statutory rules for the state portion of your exam.
Security Deposits
Maryland's security deposit laws are heavily tested. Under Maryland law:
- Maximum Amount: A landlord may not charge more than the equivalent of two months' rent for a security deposit. If a landlord overcharges, the tenant can sue for up to three times the excess amount, plus reasonable attorney's fees.
- Depository Requirements: Deposits must be placed in a federally insured Maryland financial institution within 30 days of receipt.
- Interest Requirements: If a deposit is $50 or more and held for at least 6 months, the landlord must pay simple interest upon returning the deposit. The interest rate is tied to the yield curve and published annually by the Maryland Department of Housing and Community Development (DHCD).
- Return Timeline: The landlord must return the deposit (minus any itemized damages) within 45 days of the end of the tenancy.
Notice Periods for Lease Termination
Unless a lease specifies otherwise, Maryland statutory law requires specific notice periods to terminate a tenancy. Recent legislative changes have updated these periods, so ensure you know the current rules:
- Month-to-Month Tenancy: Generally requires 60 days' written notice (Note: Montgomery County and Baltimore City have specific local variances, but 60 days is the standard state baseline for residential).
- Year-to-Year Tenancy: Requires 90 days' written notice prior to the anniversary date.
- Farm Tenancies: Often require 180 days' notice due to the seasonal nature of agriculture.
Average Lease Durations by Type
Understanding the standard duration of different lease types helps contextualize landlord-tenant commitments. Below is a visual representation of average lease durations in Maryland commercial and residential sectors.
Typical Lease Duration in Years (Maryland)
Statute of Frauds and Leases
The Maryland Statute of Frauds dictates which contracts must be in writing to be legally enforceable. For the exam, remember that oral leases are valid and enforceable in Maryland if the lease term is for one year or less. Any lease exceeding one year must be in writing and signed by the parties to be enforceable in court.
Further Reading & Related Concepts
Leasing connects to several other core real estate disciplines. To deepen your understanding of Maryland real estate practice, explore these related mini-articles:
- Maryland Real Estate Ethics and Standards - Learn how the Code of Ethics applies to property management and leasing practices.
- Maryland Advertising Regulations Compliance - Understand the legal requirements when advertising rental properties.
- Maryland Special Assessments Explained - Discover how special assessments impact NNN commercial leases and property expenses.
Frequently Asked Questions (Maryland Specific)
1. What is the maximum allowable security deposit for a residential lease in Maryland?
Under Maryland law, a landlord cannot charge more than the equivalent of two months' rent for a security deposit. This applies regardless of the tenant's credit score or whether they have pets.
2. How long does a Maryland landlord have to return a tenant's security deposit?
A landlord must return the security deposit, along with any required interest and an itemized list of any deductions for damages, within 45 days after the termination of the tenancy.
3. What happens if a Maryland landlord fails to return the security deposit within 45 days?
If the landlord fails to return the deposit within 45 days without a valid, itemized reason for withholding it, the tenant may sue for up to three times the withheld amount, plus reasonable attorney's fees.
4. Are ground rents unique to Maryland?
While not entirely exclusive to Maryland, the 99-year renewable ground rent system is highly characteristic of the Baltimore metropolitan area. The state requires residential ground rents to be registered with the SDAT, and most tenants have the statutory right to redeem (buy out) the ground rent.
5. Does a lease automatically terminate if the landlord sells the property in Maryland?
No. In Maryland, a lease is an encumbrance that "runs with the land." When a leased property is sold, the new owner takes the property subject to the existing lease terms. The new landlord must honor the lease until it expires.
6. Can a landlord use a security deposit to cover normal wear and tear?
No. Maryland law explicitly states that security deposits may only be withheld for unpaid rent, damage due to breach of lease, or physical damage to the property in excess of "ordinary wear and tear."
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