All property rentals are subject to Ohio landlord-tenant law. The rules for collecting and returning security deposits in Ohio can be found in Ohio Revised Code § 5321.16.
The code stipulates the terms for requesting, collecting, storing, and returning a residential security deposit.
At DoorLoop, we understand how confusing legal jargon can be, which is why we have written this article to provide more insight on security deposits to ensure that you are always complying with Ohio law.
But, before we dive into what those are…
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Now, let’s dive in.
Landlords in Ohio are permitted to demand whatever amount they see fit as a security deposit. Despite the absence of a statutory ceiling on security deposits in the state, it is important to keep in mind that city and county legislation may impose a predetermined limit on security deposit amounts for residential housing properties.
Ohio landlord-tenant laws permit the addition of a pet deposit. This is a type of security deposit that is meant to cover the costs that Ohio landlords may incur because of an animal belonging to the tenant.
However, if a renter has a disability and relies on their service dog or emotional support animal, then they are exempt from paying this additional security deposit. Should the animal cause damage to the property, however, then it is the tenant's duty to repair the damage at their own expense.
Keep in mind that federal law prohibits discrimination against those with disabilities. Moreover, if the animal is found to be aggressive or the tenant cannot provide adequate proof of their disability, they may be charged a pet deposit.
Once the lease term has ended, or the agreement has been terminated, only then can the security deposit be used. Additionally, the tenant's security deposit may only be applied to the following:
- Unpaid rent
- The cost to repair damage brought on by the tenant's breach of the conditions of the rental agreement
It is important to remember that you may not charge for losses or damages if they are caused by normal wear and tear. You may only deduct expenses for repairs if the tenant is found to be in violation of Ohio security deposit laws.
Normal Wear & Tear
This refers to the degradation of the rental unit that occurs when it is utilized as specified in the rental agreement and only when it does so without error, negligence, or misuse by the renter or their guests.
Suppose a fixture is too old and it has broken after years of being exposed to the elements. In that case, this counts as normal wear and tear and may not be deducted from the tenant's security deposit.
In Ohio, landlords have 30 days from the termination of the lease or the vacation of the property to refund the security deposit.
Moreover, in cases where the tenant's security deposit has been used for any purpose, the landlord is required to give the renter written notice and an itemized record of all the charges. The landlord must mail all of the aforementioned items and paperwork to the forwarding address that the renter has provided.
If the tenant fails to provide the landlord with a forwarding address, then he or she will no longer have legal grounds to file a lawsuit against them.
The state of Ohio does not usually compel landlords to pay any interest on security deposits. However, Ohio landlords must pay interest on security deposits for renters who reside on a rental property for at least six months if they demand security deposits that are larger than $50 or a single month's rent (whichever one is greater).
When necessary, landlords are compelled to pay five percent interest paid annually on any security deposit sums that are in excess of a month's rent or $50, according to Ohio landlord-tenant law.
When the landlord collects security deposits, they are not immediately regarded as revenue. These deposits may still be subject to refund by the landlord. Therefore, the IRS advises against counting them as income. They only become into taxable revenue once the landlord is no longer required to return them.
Understanding Ohio security deposit laws is important for running a successful rental business. The amount that may be collected, the conditions for deductions, and more must be considered to ensure that you do not run into any legal complications.
If you would like help running your business, you can try DoorLoop. Our intuitive software can help take care of some of your duties, freeing time to focus on the things that matter!
Are pet deposits legal in Ohio?
Yes, you are permitted to request an extra deposit for a particular purpose, such as a pet deposit, under Ohio's landlord-tenant law. You can utilize a pet deposit, which is a one-time, recoverable fee, to pay for losses and damage to your premises that renters' pets may cause.
Is there a limit on how much may be charged as a security deposit in Ohio?
There isn't a legal restriction placed on security deposits in Ohio. However, city or federal restrictions may apply, so we recommend checking your local city and county regulations to determine whether your city has imposed one.
What if a landlord fails to return a security deposit within the allotted time frame?
A security deposit can be collected, but a fine equivalent to the amount retained plus reasonable attorney's costs may apply if the landlord fails to refund the security deposit or the remaining portion after giving the requisite written notice.
In Ohio's Small Claims Court, renters have a $3,000 maximum claim limit.
Keep in mind that if a tenant remains without providing a forwarding address, they will terminate a tenant's right to pursue legal action, according to Ohio landlord-tenant law.
Is there any more information that landlords are required to give renters regarding security deposits?
Yes. In addition to being notified about the amount that they will be required to pay, tenants must be informed of the following:
- Their right to receive five percent annual interest on their security deposit
- The obligation they have to provide the landlord with a valid forwarding address
Can landlords deduct past-due rent from the security deposit?
Absolutely! Ohio security deposit law permits the deduction of this expense.