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Contents
This article provides general information and is not legal advice. For accuracy and specific guidance on landlord-tenant laws, consult an attorney before making any decisions or taking action.
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No one wants to have to go through an eviction process, but sometimes it’s the only viable way to end a landlord-tenant dispute. When a renter fails to fulfil their lease obligation, damage the property, or break a lease agreement, it usually affects landlords the most and can lead to financial loss.
With security deposits, landlords can rely on these charges as a safety net when the above scenarios occur. However, it’s important to note that there are several laws that govern the collection, use, and return of security deposits in Ohio
This article will cover everything landlords need to know about security deposit Ohio, from the maximum allowable amounts to security deposit return. Additionally, we will address common questions about Ohio security deposit law at the end of this article.
Security deposit laws in Ohio are detailed in ORC Section 5321.16.
In Ohio, landlords have the flexibility to set their own security deposit amounts, as there is no state-mandated limit. However, it's essential to recognize that local city and county regulations may impose specific caps on security deposits for residential properties.
Ohio's landlord-tenant laws allow for the inclusion of a pet deposit, which serves as an additional security measure to cover potential damages caused by a tenant's pet. Notably, tenants who have disabilities and rely on service dogs or emotional support animals are exempt from this extra charge.
Nevertheless, if such an animal causes damage to the property, the tenant is responsible for repairing it at their own expense.
In Ohio, landlords have the right to request a security deposit from tenants at the start of a lease. When it comes to payment methods, landlords can choose the option that works best for both parties involved.
While managing security deposit collections manually is certainly an option, automating this process can significantly save time and minimize errors. If you want to increase the efficiency of your security deposit collection, consider using an electronic transfer system like Landlord Studios' online rent collection and payments system.
Landlord Studio simplifies online deposit collection, keeps transaction records well organized, and securely stores important documents such as receipts and inspection reports.
Important Tip for Landlords: Before collecting security deposits from tenants, it's crucial to conduct a move-in inspection of the rental property alongside the tenant. This step allows both parties to evaluate and document the property's condition at the beginning of the lease, helping to prevent potential disputes over damages later on.
Under ORC Section 5321.16, landlords have the right to retain part or all of a tenant's security deposit for several specific reasons:
In Ohio, landlords are required to return a security deposit within 30 days after the lease ends or the tenant vacates the property. If any portion of the deposit has been withheld for repairs or other charges, the landlord must provide the tenant with written notice and an itemized list of those deductions.
All relevant documents and notifications should be sent to the forwarding address specified by the tenant. If the tenant does not supply a forwarding address, they may lose their right to pursue legal action regarding the deposit.
In Ohio, landlords are required by law to hold a tenant's security deposit in a separate, interest-bearing account. The interest accrued on the security deposit must be a minimum of 5 percent per annum, and landlords are obligated to pay the tenant the accrued interest annually.
Additionally, Ohio law mandates that landlords maintain comprehensive records for each tenant's deposit. This includes documentation of when the security deposit was received, the specific amount, and any deductions made from it.
Upon a tenant's departure, landlords must provide a copy of these records along with written notification regarding any transfers or deductions from the deposit.
It's important for tenants to understand their rights regarding security deposits, including their entitlement to interest on deposits exceeding $50 or one month's rent—whichever is greater—if they have occupied the property for over six months.
When it comes to taxes, the IRS generally does not classify security deposits as taxable income (like rent). This is primarily because landlords are typically required to return these deposits to tenants at the end of a lease.
However, there are specific circumstances under which security deposits may become taxable for landlords. These situations include:
To comply with IRS regulations, landlords must report any of these scenarios as rental income in the year they occur.
It’s important to note that you can simplify your security deposit management and tax filing process by using Landlord Studio. This property management software provides tools to help you effectively manage security deposits while ensuring compliance with tax laws.
Create your free Landlord Studio account today. Streamline your rental property management, from finding new tenants and collecting deposits, to tracking income and filing taxes.
Some key points in this article include the flexibility in determining deposit amounts, the necessity of conducting move-in inspections, and the obligation to return deposits within 30 days. It is essential for landlords to understand these regulations to ensure compliance, protect their rights, and uphold tenant protections.
For effective management of security deposits and adherence to tax laws, landlords can utilize property management tools like Landlord Studio. Additionally, for further information and legal forms regarding security deposits in Ohio, landlords should consult local housing authorities or legal professionals.
Ohio's security deposit regulations are detailed in the Ohio Revised Code Section 5321.16, which outlines the responsibilities of landlords regarding security deposits for rental properties in the state.
There is no state-mandated maximum for security deposits in Ohio; instead, the amount is determined by the lease agreement between the landlord and tenant. Generally, security deposits are equivalent to one or two months' rent.
Normal wear and tear refers to the natural deterioration that occurs with regular use of a rental property. Examples include minor scuffs on walls, small nail holes, faded paint, and worn carpets, all of which are considered typical wear and tear in Ohio.
According to Ohio law, landlords must return any remaining security deposit to tenants within 30 days following the end of the lease.
In Ohio, landlords cannot use the security deposit to cover unpaid rent without the tenant's consent. Instead, they must follow the appropriate eviction process to recover unpaid rent.
If a landlord improperly withholds a security deposit in violation of Ohio law, tenants have the right to file a lawsuit against them in small claims court.
