If the landlord, you make substantial investments and take financial risks in order to provide other people with housing and potentially generate a steady stream of income. There are laws that protect you as a landlord and other laws that protect the tenants who rent from you.
You will have to comply with tenant right laws while still acting in your own best interest as a landlord. Knowing what you have to do when requesting or returning a security deposit can help you avoid potentially expensive mistakes.
Ohio limits how much you can charge for a security deposit
Generally speaking, the amount you charge for security deposit cannot exceed one month’s rent. If it does and your tenant stays in the unit for six months or longer, you will have to begin paying them interest on the security deposit they paid.
While certain situations, such as a luxury facility or a very high-risk tenant, might justify charging a higher security deposit to protect yourself, most landlords will choose to collect the amount of a single month’s rent rather than trying to assess and pay interest on a higher deposit.
You must document everything if you intend to keep the security deposit
Landlords sometimes mistakenly presume that a security deposit belongs to them. However, it gets held in escrow because it belongs to a tenant unless the landlord can claim damages.
Situations in which you can keep a security deposit include when the tenants cause significant damage to the property beyond reasonable aging or wear and tear due to their occupancy. Additionally, if the leave prior to the end of their lease, you may be able to retain the security deposit to offset those lost months of rent.
In order to keep the security deposit, you must inform the tenant in writing of your intention to do so and give them an opportunity to respond. Following these best practices can help you avoid liability and claims from former tenants.