When you own a rental property in Cincinnati, it is important that you understand both the financial obligations you have to your tenants as well as your rights when it comes to collecting (and retaining) funds from them, as well. It goes without saying that you can collect rent (and rent arrears) as per the guidelines of your lease agreements. Yet what about security deposits?
There is no limit to the amount that you can set as a deposit; in many cases, others in your position often view an amount equal to the first and last months’ rent as sufficient to cover any expenses that a deposit might need to address. Yet no matter how much you collect as a deposit, an important question remains: in what circumstances might you keep it?
Keeping some (or all) of a security deposit
According to Section 5321.16 of Ohio’s Revised Code, you can deduct any liabilities accrued by a tenant during the course of their lease agreement from their security deposit upon the expiration or termination of their lease agreement. That can include any past due rent payments along with the costs needed to cover any damage that might have occurred on the property during the tenant’s residency. You may also be able to deduct routine cleaning and maintenance costs required to prepare a property for the next tenant.
Whatever amount you do retain, you must provide the tenant with an itemized breakdown of the costs the retained amount covers within 30 days of the tenant vacating the property.
Paying interest on a security deposit
The law also stipulates that if you do collect a deposit of more than $50, you need to pay any interest that amount would accrue while held in escrow to the tenant if the tenant remains in the property more than six months.