Wrongfully Withholding Security Deposit By Residential Landlords Just Got More Expensive

As you may know, Ohio’s Landlord-Tenant Act (Ohio Revised Code Chapter 5321) governs the relationship between landlord and tenant for residential property. As you may also know, there are many more tenant protections and landlord obligations for residential property (because of such Act) than for commercial property. For example, while often not advisable, a Landlord in Ohio can utilize “self help” to evict a commercial tenant, provided there is no “breach of the peace” (See Northfield Park Associates v. Northeast Ohio Harness, 1987 Ohio App. LEXIS 10461 [8th Dist.]; Tie Bar v. Buffalo Mall, 1979 Ohio App. LEXIS 8786 [7th Dist.]; Carter v. Standard Oil Co. 1978 Ohio App. LEXIS 7861 [8th Dist.]). Pursuant to Ohio Revised Code Section 5321.15, however, a landlord of residential property may only use the court eviction process to recover possession from a defaulting tenant.

Landlords of residential (vs. commercial) property must also pay interest on their tenants’ security deposits greater than $50 (pursuant to Ohio Revised Code Section 5321.16(a)).

At the end of a lease, if the tenant owes the landlord rent (or has damaged the premises) the standard action of many landlords is to keep the deposit (sometimes “manufacturing” damage claims or other reasons to justify their actions). In such a case of “manufactured claims”, both the residential and commercial landlord would be liable for damages. The residential landlord, however, would also be responsible to pay the tenant’s reasonable attorneys’ fees pursuant to Ohio Revised Code Section 5321.16 (c).

Even reducing a tenant’s security deposit by “valid claims” at the end of a lease can run the residential landlord “afoul” of the Landlord -Tenant Act if the statutory procedure is not properly followed. The residential landlord must, within 30 days of deducting monies from the security deposit, provide the tenant with written notice and an itemization or the landlord will be held to have violated the statute and be liable for damages and tenant’s reasonable attorneys’ fees.

If the above-mentioned penalties for wrongfully withholding security deposit monies were not enough to dissuade residential landlords, the Supreme Court of Ohio, in Klein v. Moutz, 118 Ohio St. 3d 256 (2008), just made it more expensive. The bottom line of the Klein case is that attorneys’ fees at the trial court level, as well as at the appellate level are recoverable by a tenant against a landlord of residential property pursuant to Ohio Revised Code Section 5321.16 (c).

It is not much of a stretch to interpret this holding to mean that any violation by a landlord of any provision of the Ohio Landlord Tenant Act that specifically provides for attorneys fees would make Landlord responsible for same at the trial level as well as at the appellate level. The moral of this story for residential landlords? Play by the rules or you’re liable to get burned, on multiple levels.