Ohio Security Deposit Law

Maximum Security Deposit Amount

Maximum amount: Ohio does not set a maximum limit for security deposits. This applies to all leases, no matter the length, regardless of how many properties a landlord might own. Additionally, while there is no requirement for a landlord to charge a higher security deposit for renting out a furnished unit, some landlords choose to do so to protect those features.

Pet deposits: Ohio security deposit law allows landlords to collect a pet deposit without limit. However, landlords cannot charge a security deposit for service animals or emotional support animals (ESAs).

Penalties: Since there is no cap on the amount landlords can charge for an Ohio security deposit, there is no penalty for charging an excessively high or low amount.

Handling Damage Deposits

Just as each state maintains its own landlord-tenant law, Ohio security deposit law outlines how each landlord should handle the funds.

Security deposit storage: No law in Ohio explicitly states that landlords must store security deposits in a specific account or place.

Interest-bearing account: Ohio landlords must pay interest on the security deposit if the tenancy lasts more than 6 months and the deposit exceeds $50 or 1 month’s rent, whichever is greater. In that case, the landlord must pay the tenant 5% annual interest, which can be from a bank account or their own pocket.

Receipt: Ohio security deposit law does not require the landlord to provide the tenant with a receipt when the deposit is collected. However, it is good practice to establish a trackable paper trail in case a dispute arises.

Documentation: Though not required when collecting a security deposit, Ohio landlords are encouraged to give tenants a move-in checklist form when moving into a new unit. A move-in checklist documents the condition of a property at move-in, including any furnishings, if included. This documentation can then be compared to the property’s condition at move-out to charge for any damages.

Ownership transfer: If the property owner sells the property during a tenancy, they must transfer the funds to the new owner and inform the tenant in writing of the change. The new owner then assumes all responsibilities for that deposit, including proper handling, interest payments, and legally returning the funds.

Deductions

Ohio law for security deposits explains that landlords are allowed to deduct funds from the deposit to cover specific financial losses, but not all, after a tenancy ends. For example, while deducting funds to cover significant damage caused by a tenant is allowed, using those funds to cover normal wear-and-tear is not.

It’s essential to follow the proper process when deducting any funds, including notifying the tenant of the intent to do so in the correct time frame. Failure to do so could open landlords to financial penalties — more on that in the next section.

Landlords are allowed to deduct for:

Damage to the property beyond normal “wear-and-tear”: Damage that meets this criteria includes broken windows, significant damage to flooring, holes in the walls bigger than nail holes, or broken appliances.

Excessive cleaning needs: Ohio security deposit law allows landlords to use security deposit funds for cleanup if the unit has a large amount of trash left behind, biohazard concerns, or excessive filth.

Unpaid rent: If the tenant still owes a balance at the end of their lease term, landlords can use funds from the security deposit to cover as much of the debt as possible. If you use TurboTenant to collect rent online from your tenants, it’s easy to stay up-to-date on any unpaid rent.

Unpaid utilities: If the lease agreement requires tenants to pay for utilities and there is a balance at the end of their tenancy, landlords can use security deposit funds to make up the missing amount.

Property abandonment: If a tenant leaves the property before their lease is up without a legally valid reason, they could be responsible for rent payments until a new tenant is found. Landlords can use funds from the security deposit to cover these payments and pursue additional collections if the funds don’t cover the full amount owed.

Smoking-related damage: Any damage related to smoking, including stained walls, burns, or lingering odor, can be a valid reason for withholding security deposit funds.

Landlords are not allowed to deduct for:

Normal wear-and-tear: A property will inevitably show signs of wear after a tenancy, and the landlord will likely need to remedy it before they get a new tenant. Ohio law prohibits landlords from using security deposit funds to cover normal wear and tear. Examples of normal wear-and-tear include:

• Minor carpet wear
• Light scuff marks on walls or baseboards
• Faded paint
• Loose door handles, hinges, or hardware

Routine maintenance or property improvements: While it’s common to improve a rental unit between tenants, routine maintenance projects or improvements to the property do not qualify under Ohio security deposit law as a deductible expense.

Damage caused by weather or natural disasters: Leaks from excessive rain, wind damage, or other natural phenomena cannot be repaired with security deposit funds.

Find additional information regarding tenant and landlord maintenance expectations in ORC § 5321.05.

Return Timeline

Once a lease agreement ends and the tenant has moved out, what’s next? When returning the security deposit, Ohio landlords should follow the law exactly to avoid any confusion, complications, or conflict with the tenant.

Timeframe: Ohio landlords have 30 days after the tenant has moved out to return the security deposit, even if the landlord intends to withhold funds to cover legal repairs (ORC § 5321.16B).

Deduction tracking: When withholding funds from the security deposit, landlords must provide the tenant an itemized list that includes:

• Each damage charge or a line item for each withholding (for things like unpaid rent or utilities)
• An explanation of each deduction and the amount deducted
• Copies of receipts for the work, repair estimates, or invoices

Itemized deduction notification: While Ohio landlords are not required to deliver the itemized list of deductions to the tenant via Certified Mail, it’s not a bad idea as a way to track the notice and to receive confirmation of delivery.

The landlord must deliver security deposit funds within the initial 30-day timeframe. Landlords can send them via mailed check or direct deposit. Returning the security deposit as a cash payment is legal, but that’s generally not recommended since it’s harder to track in case of dispute.

Penalties: If the landlord does not return the deposit within 30 days, fails to provide the tenant with a proper itemized receipt for any deductions, or withholds funds for improper reasons, the tenant may be able to sue for damages. Damages could include the amount wrongfully withheld, court costs, and attorney fees.

Handling Disputes

It’s never fun to deal with conflict, but following best practices and keeping detailed documentation at every stage of a tenancy is a surefire way to protect yourself and property if a dispute arises.

Move-in/move-out checklist: As outlined above, starting a new tenancy by agreeing on the physical condition of the property is a great way to maintain consistency and even act as evidence when comparing the unit’s condition at the end of the tenancy.

Besides a detailed, written explanation of the property’s condition, many landlords also include photos to help establish a clear before-and-after view of the unit.

Tenant challenge: If the tenant believes the deductions are unfair and challenges them, remain professional and objective, reviewing their claims honestly. You can provide your documentation, including the move-in checklist and photographic evidence to support your side of the story in court, if necessary. If it comes down to it, you could opt to compromise and offer a partial refund to avoid additional escalation, though that comes down to a situation-by-situation basis.