What to Know Before You Create Your Montgomery County Lease

Do you own a rental property in Montgomery County? If so, you need to pay extra attention to the language in your lease. Montgomery County is one of the most tenant-friendly counties in the United States – as such, you need to have a few key components in each lease to satisfy county standards. Since a lease agreement is a legal document, not having the correct information could land you and your property in hot water with the court systems.

Thankfully, you can find most standard Maryland lease templates online to help you satisfy state requirements. However, Montgomery County does require a few more elements for a rental lease to be in good standing. Here are a few key components for creating Montgomery County leases:

Check Your Licenses

Before you can generate a Montgomery County lease, you need to ensure that you have the appropriate rental licenses and registration. There are multiple licensing options in Montgomery County, and you must apply for and obtain these licenses before you allow a tenant to move into your property. If you do not obtain the appropriate rental licenses, you could face serious penalties.

Montgomery County Single Family and Condo License Requirements

According to the Montgomery County Department of Housing and Community Affairs (DHCA), you must obtain a rental housing license before you rent or advertise your property. These licenses are valid for one year, effective from July 1st through June 30th. You must re-apply for your license each year.

To receive a rental housing license from Montgomery County, you must follow these steps:

• First, you must complete a Rental Housing License Application online. You can also fill out the PDF version of the application. However, the county prefers that you complete the application through its online portal.
• You need to obtain a Maryland Lead Poisoning Compliance if your property was built before January 1st, 1978. You will need to schedule an inspection and complete prevention and education requirements set by the county.
• If you recently purchased your property, you must include your Settlement Sheet or your HUD-1 form with your name clearly displayed with your license application.
• Finally, you will need to pay the annual license fee for each year you rent out your property. You can pay your fees online with a credit card or eCheck. You can also pay your fees by mail with a check or money order.

In addition, you must have a history of on-time payments with your homeowners or condominium association fees. If you are more than 30 days past due on your current payment, you will not be eligible for the license.

If you do not apply for a Rental Housing License, you could be subject to legal action from the county. The DHCA will charge you with a class A violation and you could pay $500 in fines.

City of Rockville License Requirements

If you own a rental property in the City of Rockville, you will not need to apply for the Montgomery County rental property license. Instead, you will need to apply for a City of Rockville license.

You will need to fill out and print the City of Rockville Application for License of Rental Property. The application includes the following requirements:

• A complete application mailed to the City of Rockville Police Department.
• A $200 fee payable to the City of Rockville.
• Registration with the Maryland Department of the Environment to indicate lead poisoning compliance.
• Working smoke alarms in compliance with Maryland’s Smoke Alarm Law.
• Compliance with all city code requirements, listed in detail on the second page of the application.

City of Gaithersburg License Requirements

If you own a rental property in the City of Gaithersburg, you will need to apply for a city license instead of a county license. Gaithersburg requires owners of multi-family properties and single-family properties to apply for different licenses. You must apply for the license every two years.

To apply for a Rental Housing License Application in Gaithersburg, you will need to:

• Complete, print, and mail the license application. You will need to fill out the Single-Family Dwelling or Condominium application or the Multi-Family application.
• Pay the appropriate fees.
• Receive the Maryland Department of the Environment lead compliance if your property was built before January 1st, 1978.
• Complete a home inspection to ensure the property is safe and in compliance with city codes. You can view the list of code requirements here.

City of Takoma Park License Requirements

In Takoma Park, you will need to apply for a city license rather than a county one. The city offers three types of licenses: annual, biennial, and temporary. The annual one-year license runs from January 1st through December 31st.

You will need to complete the following requirements to obtain a City of Takoma Park rental housing license:

• Complete, print, and mail an Application for New Rental License.
• Pay appropriate license and transfer fees.
• Complete the Maryland Department of the Environment lead poisoning compliance requirements and registration.
• Undergo a property inspection to ensure compliance with Takoma Park’s Property Maintenance Code. You can review the inspection checklist here.
• Take the Takoma Park Landlord Certification Exam. This is an open-book test required for the management, operation, sale, and maintenance of Takoma Park rental properties. You will need to retake the exam every three years.

Add These Required Statements

In addition to licensing requirements, there are two items that you must add to every Montgomery County lease you issue.

• 10-Day Grace Period for Late Rents: Maryland law states that you cannot consider a rent payment late until after the 5th of the month. Montgomery County takes this requirement a step further – under county law, you must allow your tenants to pay up until the 10th of the month. You cannot start the eviction process for “failure to pay rent” until the 11th of the month. You must include language explaining the 10-day grace period in all Montgomery County leases.
• 2-Year Lease Option Offered: In Montgomery County, you must offer your tenants a 2-year lease option, not the standard 1-year lease. Your tenants will need to sign an agreement that you offered them a 2-year lease. You must include language explaining this option in your lease. This rule is unique to Montgomery County – no other area of Maryland offers this option. While this can pose an issue for property owners looking to rent a property for 1-year terms, this option is an important part of county property law.

Creating a Montgomery County rental lease agreement can be difficult to accomplish alone. Having an experienced property manager on your team can help make this process easier and helps to ensure that you satisfy all state and county requirements.

You should also retain the services of an attorney experienced in property law to review your lease for any legal issues. If you do plan on writing your property’s lease yourself, make sure to use a Montgomery County-specific template to avoid additional headaches.

Hire a Property Management Company

Do you need trusted property management for your Montgomery County rental property? Bay Property Management Group can help. We provide trained, qualified property managers to handle all your property needs, including:

• Tenant screening and applications
• Property inspections
• Tax form assistance
• Property marketing
• Legal issue assistance
• Property maintenance

Are you ready to make the investment for a stress-free property? Contact Bay Property Management Group in Montgomery County to start maximizing your rental ROI today.