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Baltimore City Council passes bill offering renters security deposit alternatives over concerns from some members

The Baltimore City Council passed a bill Monday that would give renters additional options for paying security deposits over the concerns of several council members and advocacy groups who said tenants could still end up on the hook for damage to their homes.

The bill passed 12-2, with Democrats Zeke Cohen and Ryan Dorsey voting against it and Democrat Kristerfer Burnett abstaining. It now goes to the office of Democratic Mayor Brandon Scott for his consideration.

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Asked whether the mayor planned to sign the bill, Scott’s spokesman Cal Harris said Wednesday that the mayor still has time to consider the legislation.

“In accordance with the charter, the mayor has three City Council meetings to take action on a piece of legislation,” he said. “The mayor will use this time carefully to review the contents of the bill with his legislative team.”

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Under the bill, landlords with 10 or more units who charge a security deposit of more than 60% of a month’s rent would have to offer prospective tenants one of two alternatives: pay the deposit in three monthly installments or purchase “rental security insurance.”

Some members of council objected to the latter provision. They argued that “insurance” was a misleading term for this type of security deposit alternative, which is typically offered via a surety bond.

In such an arrangement, a tenant often pays a nonrefundable premium that is lower than a typical lump-sum security deposit. In exchange, the bond company pays damage claims made by the landlord. Then, the company bills the tenant for the damage costs. As a result, tenants could ultimately be on the hook for more than a regular security deposit would have cost.

In a letter to the City Council, Baltimore Renters United and Jews United for Justice said they objected to the bill because tenants are liable for any damage claim paid to a landlord.

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“The security deposit alternative scheme makes it very difficult for a tenant to successfully dispute a landlord’s claim, but seamless for a landlord to receive payment within days of a claim,” the letter states. “The language of the proposed bill does not include any guardrails to protect the tenant or prevent predatory practices by the bond company.”

An amendment Dorsey proposed would have removed the “security deposit insurance” provision from the bill. But it failed on a 12-2 vote, with one abstention, at a council meeting last month. The bill was amended at that time to exclude public housing from the legislation.

Several council members have complained about the final committee hearing on the bill, which Council Vice President Sharon Green Middleton chaired on March 16. There, Dorsey was barred from introducing his amendment (which he later introduced before the full council). Middleton, the bill’s primary sponsor, interrupted him as he attempted to speak against the legislation.

“I am appalled at how transparently this bill is being rushed through this committee today without further discussion,” Dorsey said at the meeting.

Middleton spoke at the committee hearing against “last-minute” amendments. The Democrat said the need for her legislation is urgent, as the coronavirus pandemic continues to affect the economy.

Middleton said Monday that the bill “has not been fast-tracked,” as it took several months to pass. She added that the Maryland Insurance Administration regulates the companies covered by the bill.

“We’re going to do what we do as council members: monitor this bill, and if there are problems, we’re going come back with legislation to correct it,” she said.

“I have experienced not being able to get in certain communities because of a security deposit,” Middleton said. “This is a very forward-thinking piece of legislation.”

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