Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
Hi fellow Ohio landlords, The law in ohio requires that landlords pay (5% per annum) interest on security deposits over one month's rent that are held longer than 6 months.
Will the courts view the collection of the last month's rent as an additional security deposit that requires the payment of interest? What about funds for utility deposits for water/sewer/trash? If I collect last month's rent and then a tenant becomes delinquent in payments, must the last month's rent be used before an eviction can be filed? Thanks for any help. -J
Rental Property Investor · Massillon, OH · Member since 2017 · 215 posts · 168 votes
6y
"If I collect last month's rent and then a tenant becomes delinquent in payments..."
If you've collected the 'last month's rent' then how can they become delinquent in further rent payments? Isn't that the last month of their tenancy?
"...must the last month's rent be used before an eviction can be filed?"
The security deposit is not considered rent unless they don't pay the last month's rent. If they haven't moved from the property after their last month of tenancy, whether they paid the last month's rent or not, then then they are squatting and you should evict. It's not uncommon for some tenants to sacrifice their security deposit by not paying their last month so they may use their money for the next property's security deposit. They figure we evil landlords will screw them out of it anyways and we won't bother with coming after them for only one month's rent if they've already moved out.
Property Manager · Cleveland, OH · Member since 2016 · 260 posts · 162 votes
6y
Disclaimer, I am not an attorney, you should seek qualified legal advice... We do not require last month rent at our firm because it is not the norm for our market but we inherited a lease that had that provision. As I read the statute, I do not interpret pre-paid rent (ie last month's rent) to be the same as a security deposit. Pre-paid rent and security deposits have very different rules and handling so it would be our position that we do not need to pay interest. In the case of deposits on utilities/trash I would think you are much closer to and probably are holding a security deposit and you should pay interest if they put you over 1 month of rent. Regardless of our interpretation, we actually decided to pay interest in the above situation to avoid the potential for legal costs (1 hour with an attorney exceeded the interest), BBB complaint, hours of staff time arguing about it, bad online reviews or any of the other various things that happen when a resident doesn't like your answer.
I will be interested to hear other people's take on the last month being used before eviction.