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  1. #1
    Join Date
    Sep 2009
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    1

    Default Rental Deposit Return when Landlord Files Bankruptcy

    My question involves bankruptcy in the state of: Ohio.
    Hi, I moved out of my apartment and received no deposit back from my landlord. When I contacted him he refused to answer my calls. I filed for my deposit in the small claims court. I have now received a letter from the landlords attorney stating my deposit as a debt. From what I understand deposits cannot be listed as a debt but I cannot find the actual law which states this. Please can someone advise me and tell me where I can find the law so I can use it.
    Many Thanks

  2. #2
    Join Date
    Jul 2009
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    Cinnaminson, New Jersey, United States
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    Default Re: Rental Deposit Return when Landlord Files Bankruptcy

    You will want to contact the www.hud.gov for Ohio and ask them. They will be able to tell you what you need to know.

  3. #3
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    Default Re: Rental Deposit Return when Landlord Files Bankruptcy

    Make a claim for the deposit through the bankruptcy court. Unfortunately, Ohio doesn't seem to have a law giving additional protection to tenants when their landlords go bankrupt, but I believe you'll have priority over other unsecured creditors. If your landlord followed the practice of escrowing security deposits in a special account, it's possible that you'll be able to recover your deposit as traceable to the funds in that account; although I'm not optimistic that your landlord would have voluntarily taken such a step.
    Quote Quoting ORC 5321.16 Procedures for security deposits.
    (A) Any security deposit in excess of fifty dollars or one month’s periodic rent, whichever is greater, shall bear interest on the excess at the rate of five per cent per annum if the tenant remains in possession of the premises for six months or more, and shall be computed and paid annually by the landlord to the tenant.

    (B) Upon termination of the rental agreement any property or money held by the landlord as a security deposit may be applied to the payment of past due rent and to the payment of the amount of damages that the landlord has suffered by reason of the tenant’s noncompliance with section 5321.05 of the Revised Code or the rental agreement. Any deduction from the security deposit shall be itemized and identified by the landlord in a written notice delivered to the tenant together with the amount due, within thirty days after termination of the rental agreement and delivery of possession. The tenant shall provide the landlord in writing with a forwarding address or new address to which the written notice and amount due from the landlord may be sent. If the tenant fails to provide the landlord with the forwarding or new address as required, the tenant shall not be entitled to damages or attorneys fees under division (C) of this section.

    (C) If the landlord fails to comply with division (B) of this section, the tenant may recover the property and money due him, together with damages in an amount equal to the amount wrongfully withheld, and reasonable attorneys fees.

  4. #4
    Join Date
    Jan 2008
    Location
    Toledo, OH
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    16,307

    Default Re: Rental Deposit Return when Landlord Files Bankruptcy

    In the state of Ohio, when a landlord receives a security deposit, he is required to put it into a bank account and LEAVE IT THERE until such time as the tenant moves out, at which point he may deduct damages or keep the entire deposit to cover unpaid rent.

    This is not a debt, but rather, money held essentially in trust.

    You'll want to file a Proof of Claim with the bankruptcy trustee and ask him/her to release your money.

    You might also consider contacting the Ohio Attorney General's office.

  5. #5
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    Default Re: Rental Deposit Return when Landlord Files Bankruptcy

    As I read the statute, it requires the landlord to pay interest on a security deposit, but doesn't actually require that it be escrowed or held in a dedicated account. Admittedly, I haven't checked to see how courts interpret it. If your interpretation is correct, the claim in bankruptcy court would be much stronger.

  6. #6
    Join Date
    Jan 2008
    Location
    Toledo, OH
    Posts
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    Default Re: Rental Deposit Return when Landlord Files Bankruptcy

    I managed to retrieve my security deposit from my last landlord through the courts, and in the process got to listen to the judge give my (crappy) ex-landlord a sound schooling in how one is to handle security deposits - they're not to be commingled with other monies, but rather held in an account solely for security deposits.

    US Bankruptcy Court may interpret it more in line with your reading of the statute, but I am cautiously optimistic that our poster will prevail.

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