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 Ohio security deposit laws. 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 Ohio 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 Ohio landlords, there is no limit to how much security deposit you can charge tenants. You could even charge one million dollars if you wanted. That said, charging the right security deposit amount is key to keeping your rental unit desirable to prospective tenants.
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. You must then pay the tenant the accumulated deposit interest annually.
Furthermore, as per the 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. You 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 from.
What Deductions Can You Make On a Tenant’s Security Deposit?
Under Ohio’s security deposit laws, you 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, you can use all or part of their security deposits to clear them.
- Negligent or property damage: While normal wear and tear is to be expected on a property, negligent damage isn’t. Consequently, you 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 do make up unpaid rent, you can make appropriate deductions on their security deposits after providing written notice. If a landlord fails to provide 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 tenant 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 have a duty to maintain their rental in a clean and sanitary condition. If the tenant doesn’t and moves out, you 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 the Ohio law, if your lease 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 law doesn’t forbid tenants from doing so.
To be on the safe side, include a provision in the lease 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 law, 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.
You must keep in mind a few things in this regard for the purposes of avoiding potential security deposit conflict.
- You must provide the tenant with a written itemized list if you’ve made deductions. In the itemized list, you must state three important things. That is, each deduction you’ve taken from the security deposit, the specific reason for the security deposit deduction, and the amount of each security deposit deduction.
- You 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.
- You 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 reasonable attorney fees.
What Must a Landlord Do When Selling Their Property in Ohio?
While nothing stops you from selling your property in Ohio, you must do either of two things if holding a tenant’s security deposit to avoid small claims court and the Ohio law.
One of the first options you have is to return the Ohio security deposit to the tenant, less any allowable deductions. You must then notify the incoming landlord that you have transferred the security deposit to the tenant.
The other option you have is to transfer the Ohio security deposit to the incoming landlord. After doing so, you must then notify the tenant of the same. This must be in writing. You must also state how much exactly you 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 property. 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 property management professionals you can trust. Get in touch to learn more about everything from small claims court to cleaning fees and managing security deposits.
