Pre-paid rent in Ohio

[Robert Calabro]

I’ve got a tenant who would like to pre-pay rent for the winter months. I am happy to accept this, because I know his income fluctuates in the winter.

My questions are:

1) This is a month to month lease, does accepting the pre-payment lock him in for those months or can I just refund the money if I need him to move out?

2) Are there any Ohio specific regulations I need to be aware of? (I’ve heard about escrow accounts being required for certain states)

[Nathan Gesner]

I don't believe Ohio has any law regarding prepaid rent.

However, if a tenant terminates a lease early, you are obligated to try and find a replacement tenant as quickly as possible and then release the first tenant from any remaining obligation. If the tenant pays you six months of rent, but then decides to leave after two months, you have to look for a new renter. If you found a new renter to move in a month later, you would still have three months of rent remaining that should be refunded to the departing tenant. In other words, don't spend it until you've earned it! Hold the funds in the account and apply them one month at a time as rent charges are posted.

If you are accepting X months of rent in advance, you should have a written lease agreement for that amount of time and I recommend some financial penalty if they elect to leave early.