June 22, 2026
Security deposits can help protect property owners from financial losses, but they also come with important responsibilities. Understanding how security deposits are typically handled and what Ohio law requires can help property owners protect themselves and their investment.
Understanding Allowable Deductions
Security deposits are often associated with property damage, but Ohio law limits when deductions can be made and what expenses may be charged against a deposit.
Ohio law generally allows security deposits to be applied toward unpaid rent, tenant-caused damage beyond normal wear and tear, and certain costs that may be outlined within the lease agreement.
Conditions can vary from property to property, so any charges or responsibilities beyond standard obligations should be clearly addressed within the lease agreement.
When evaluating deductions, property owners should ensure that charges are tied to actual damages, unpaid obligations, or other allowable expenses rather than routine maintenance or normal property aging.
Evaluating Property Condition
One of the most important factors when handling a security deposit is distinguishing between normal wear and tear and tenant-caused damage. Normal wear and tear refers to the natural deterioration that occurs through ordinary use of a property over time, while tenant-caused damage involves damage beyond normal use resulting from negligence, misuse, unauthorized alterations, or other avoidable actions.
When evaluating property condition, it is important to consider how long a tenant has occupied the property. A rental that has been occupied for several years will naturally show more signs of use than one occupied for only a short period of time. Because every situation is unique, deductions should be based on the specific circumstances rather than a one-size-fits-all approach.
Timeline for Returning Security Deposits
Under Ohio law, property owners have 30 days after the end of the lease and delivery of possession of the property to return any remaining security deposit or provide an itemized list of deductions.
If any portion of the deposit is withheld, Ohio law requires a written itemization explaining the deductions that were made.
Maintaining records such as move-in inspections, photographs, invoices, and written communication can help support deductions if questions arise later. Tenants should also provide a forwarding address in writing, as this information is often necessary when returning a deposit or providing required documentation.
Interest Requirements Property Owners Should Know
Ohio law contains specific requirements regarding interest on certain security deposits.
Under Ohio Revised Code Section 5321.16, property owners may be required to pay 5% annual interest on the portion of a security deposit that exceeds $50 or one month’s rent, whichever amount is greater. This requirement generally applies when a tenant occupies the property for six months or longer. (For example, if the monthly rent is $900 and a security deposit is collected in the amount of $1,300, interest would only be calculated on the portion of the deposit that exceeds one month’s rent rather than the full deposit amount.)
Because these rules can be highly specific, property owners should familiarize themselves with the applicable provisions of Ohio law when collecting larger security deposits or managing long-term tenancies.
Protecting Yourself and Your Investment
Security deposits are designed to help protect property owners, but deductions should be supported by documentation, property condition, and applicable lease terms. Maintaining clear records throughout a tenancy can help create a stronger foundation for decisions made at move-out.
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Disclaimer: The information provided in this article is intended for general educational purposes only and should not be considered legal, tax, financial, or property management advice. Laws, regulations, and local requirements may change over time, and individual situations can vary. This information was accurate to the best of our knowledge at the time of publication. Property owners should consult qualified legal, tax, insurance, or other appropriate professionals regarding their specific circumstances and obligations.
At Buckeye Northwest Realty, we strive to provide helpful resources for both property owners and tenants throughout Northwest Ohio.
