Ohio Security Deposit Basics for Landlords

What does an Ohio landlord need to know about security deposits?

Ohio's security deposit rules live in one short statute, Ohio Revised Code 5321.16. It has three rules that matter most:

1. Return it on time. Within 30 days after the lease ends and the tenant gives back possession, return the deposit or send an itemized written list of deductions with any balance.
2. Pay interest on large deposits. If a deposit is more than one month's rent (or $50, whichever is greater), the excess earns 5% a year once the tenant has stayed 6 months or more.
3. Mistakes are expensive. A landlord who wrongfully withholds can owe the amount withheld, an equal amount again in damages, and the tenant's reasonable attorney fees.

In Columbus, landlords with 5 or more rental units must also offer tenants the option to pay the deposit in installments.

How much can I charge for a security deposit in Ohio?

Ohio state law sets no maximum security deposit. The amount is whatever the lease states, but deposits above one month's rent trigger the interest rule below, so most Ohio landlords charge one month's rent or less.

Columbus adds a payment-option rule. Under Columbus City Code Chapter 4551 (Ordinance 0495-2021, effective July 1, 2021), an operator with 5 or more rental units who requires a deposit must give tenants written notice of three options:

• Pay the full deposit before the lease begins.
• Pay it in at least 3 monthly installments.
• Pay it in at least 6 monthly installments.

Installments are due with the monthly rent. The rule does not apply to leases signed or renewed before July 1, 2021. A landlord may still waive a deposit or agree with the tenant to another lawful alternative.

Other cities and villages can adopt their own rental rules. Check the ordinances where the property sits.

Do I owe the tenant interest on a security deposit?

Sometimes. Interest is owed only when both conditions are true, and only on part of the deposit:

1. The deposit is more than $50 or one month's rent, whichever is greater.
2. The tenant stays in possession for 6 months or more.

When both are true, the excess over that threshold earns 5% per year, computed and paid to the tenant annually.

Worked example. Rent is $1,500 a month and the deposit is $2,000. The excess over one month's rent is $500. At 5% a year, the landlord owes the tenant $25 for each year of the tenancy.

The simplest way to avoid the interest rule is to keep the deposit at or below one month's rent.

What can I deduct from a security deposit?

At the end of the tenancy, a landlord may apply the deposit to two things: past-due rent, and damages caused by the tenant's failure to meet their duties under ORC 5321.05 or the lease. Those duties include keeping the unit safe and sanitary, using fixtures and appliances reasonably, and not damaging the property.

Normal wear and tear from ordinary living is not the tenant's damage and generally should not be charged.

Price each deduction at a reasonable, documented cost. Invoices, receipts and dated photos are the best support.

How and when do I return a security deposit in Ohio?

Within 30 days after the lease ends and the tenant delivers possession, the landlord must deliver a written notice that itemizes and identifies every deduction, together with any balance owed to the tenant.

• The clock starts when both events have happened: the rental agreement has ended and the tenant has given back possession, for example keys returned or the unit clearly vacated.
• Itemize every deduction. Name the item, the problem and the amount. A single lump sum is not an itemization.
• Use the tenant's forwarding address. The statute requires the tenant to give the landlord a forwarding or new address in writing. A tenant who does not give one loses the right to the extra damages and attorney fees described below.
• Keep proof of delivery. Send by a trackable method, and keep a copy of the notice, the check and the mailing record.

If the deductions exceed the deposit, the notice should say so. The landlord can pursue the remaining balance separately.

What happens if a landlord gets it wrong?

Under ORC 5321.16(C), if a landlord does not follow the return rules, the tenant may recover:

1. The money or property due to them.
2. Damages equal to the amount wrongfully withheld, which in practice doubles what the landlord keeps improperly.
3. Reasonable attorney fees.

For example, a landlord who keeps a $1,200 deposit with no valid basis can owe the $1,200, another $1,200 in damages, and the tenant's legal fees. Missing the 30-day deadline, or sending a vague lump-sum deduction, is how many landlords end up here.

What should a landlord do from move-in to move-out?

• Put the deposit amount, what it may be used for, and the forwarding-address requirement in the lease.
• In Columbus, if you operate 5 or more units, give written notice of the full, 3-installment and 6-installment options before the lease is signed.
• Complete a move-in condition report with dated photos, and have the tenant sign it.
• If the deposit exceeds one month's rent, calendar the annual 5% interest payment.
• At move-out, record the date possession was returned and complete a move-out report with dated photos.
• Ask for the tenant's forwarding address in writing.
• Within 30 days, send the itemized notice and any balance by a trackable method.
• Keep the reports, photos, invoices, notice and proof of delivery with the lease file.

Sources

• Ohio Revised Code 5321.16, Security deposits: https://codes.ohio.gov/ohio-revised-code/section-5321.16
• Ohio Revised Code 5321.05, Tenant obligations: https://codes.ohio.gov/ohio-revised-code/section-5321.05
• City of Columbus, Renter's Choice (Ordinance 0495-2021, Columbus City Code Chapter 4551): https://www.housingforallcbus.com/renters-choice