As a landlord in Ohio, you have a right to ask a tenant to put down a security deposit when they sign a rental agreement. This can go a long way in landlord cushioning against possible financial damage due to certain actions. Such as failing to pay rent on time, or causing negligent and rental unit damage beyond normal wear and tear.
On your part, though, you must carefully follow the security deposit laws in Ohio. Among other things, the landlord must store the security deposit properly, only make legitimate security deposit deductions, and return the security deposit on time.
The following is a basic overview of the security deposit laws that Ohio landlords must abide by.
Is There a Limit On How Much Security Deposit a Landlord Can Charge in Ohio?
Fortunately for landlords, there is no limit to how much security deposit they can charge tenants according to Ohio law. A landlord could even charge one million dollars if they wanted. That said, charging the right deposit amount is key to keeping their rental desirable to prospective renters.
Generally speaking, most Ohio landlords charge no more than 2X the monthly rent amount as a security deposit under Ohio’s security deposit laws.
How Must Landlords Store Their Tenants’ Security Deposits in Ohio?
As a landlord, Ohio landlord-tenant law requires that a landlord must store the tenant’s deposit in a separate, interest-bearing account. The interest earned on the security deposit must be at least 5 percent per annum. Landlords must then pay the tenant the accumulated deposit interest annually.
Furthermore, as per the Ohio security deposit laws, the landlord must keep detailed records of each tenant’s deposit. Including, when they received the security deposit, what security deposit amount they received, and any security deposit deductions the landlord made. Landlords must provide the tenant with a copy of these security deposit records when they move out and written notice that their deposit will be moved or deducted.
What Deductions Can A Landlord Make On a Tenant’s Security Deposit?
Under Ohio law, landlords may be able to keep part or all of the tenant’s security deposit for the following reasons.
- Moving out of the unit without clearing their utility bills: Some, if not all, of the utilities will usually be in the tenant’s name during a rental agreement period. It’ll be the responsibility of the tenant to pay them when due. If the tenant fails to do so and moves out, a landlord can use all or part of their security deposits to clear them.
- Negligent damage exceeding normal wear and tear: While normal wear and tear are to be expected on a rental, negligent damage isn’t. Consequently, a landlord can hold the tenant liable for damage exceeding normal wear and tear.
- Unpaid rent: A rental agreement is a contractual legal agreement that holds a tenant liable for certain responsibilities. Including, paying rent on time, every rent cycle. If the tenant fails to make up unpaid rent, landlords can make appropriate deductions on their security deposits after providing written notice. If a landlord fails to provide written notice about unpaid rent, eviction, or the deduction, it can cause trouble.
- Unit Abandonment. As a landlord, you have a right to receive proper written notice from your renters before they can move out. If the tenant breaks out early, you can penalize them by making deductions to their security deposits.
- End of tenancy cleaning: Tenants in Ohio must maintain their rental in a clean and sanitary condition. If the tenants don’t and move out, landlords can withhold part of their security deposits to cover the cost of a professional cleaning service and overall cleaning fees.
Can a Tenant in Ohio Use Their Security Deposit as Last Month’s Rent?
Yes! Under Ohio security deposit law, if the rental agreement doesn’t explicitly forbid tenants from using their security deposit as last month’s rent, the tenant may be able to do so. This is because the state and federal law doesn’t forbid tenants from doing so.
To be on the safe side, include a provision in the rental agreement prohibiting the use of the security deposits as last month’s rent. If a landlord fails to do this, the tenant is able to use their deposit for rent.
How Long Do Landlords Have After a Tenant Moves Out To Return Their Security Deposit in Ohio?
As a landlord, under Ohio security deposit laws, you must return the tenant’s security deposits within a certain timeline after they move out. Specifically, you must return the Ohio security deposit within 30 days after moving out.
A landlord must keep in mind a few things in this regard to avoid potential security deposit conflict.
- A landlord must provide the tenant with a written itemized list if they’ve made deductions. In the itemized list, a landlord must state three important things. That is, each deduction taken from the security deposit, the specific reason for the deduction, and the amount of each security deposit deduction. If a landlord fails to do so there may be legal and financial penalties.
- A landlord must send the deposit to the tenant within 30 days after they move out of the unit. In Ohio, it’s the tenant’s responsibility to provide the landlord with a forwarding address. If the tenant fails to do so, you’ll not be held liable for not returning the security deposit within 30 days.
- A landlord may be penalized for not returning the deposit on time. If the small claims court finds you intentionally withheld the security deposit, you may be liable to certain penalties. Including, double the wrongfully withheld amount, as well as any reasonable attorney’s fees.
What Must a Landlord Do When Selling Their Rental in Ohio?
While nothing stops a landlord from selling their real estate investment in Ohio, they must do either of two things if holding a tenant’s security deposit to avoid small claims court and Ohio law.
One of the first options a landlord has is to return the Ohio security deposit to the tenant, less any allowable deductions. The landlord must then notify the incoming landlord that they have transferred the security deposit to the tenant.
The other option a landlord has is to transfer the Ohio security deposit to the incoming landlord. After doing so, the landlord must then notify the tenant of the same. This must be in the form of a written notice. The landlord must also state how much exactly they have transferred to the new owner.
Bottom Line
Ohio security deposit laws are just among the many landlord-tenant laws that Ohio landlords must familiarize themselves with when renting out a dwelling. If you have a question or need help in the overall management of your rental unit or things like the Ohio landlord-tenant law, look no further than EquityTeam.
We are management professionals you can trust. Get in touch to learn more about everything from small claims court to cleaning fees and managing security deposits.
Disclaimer: This post is not a substitute for professional legal advice. Please consult a property management company and/ or licensed lawyer for help in legal matters.
