The Deposit/Last Month's Rent

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At Lerners LLP, we often encounter landlords and tenants alike who do not understand their rights and obligations with respect to deposits. To ensure you are in compliance with the Residential Tenancies Act, we are happy to assist you. This blog will provide you with a brief overview of the types of deposits a landlord is allowed and not allowed to charge a tenant.

If you are a tenant, it is possible that your landlord will charge you a rent deposit. It can only be charged if it is requested on or before the day the landlord and tenant enter into the tenancy agreement. The deposit cannot be more than one month’s rent, or the rent for one rental period, whichever is less.

If your rent increases after you have paid the rent deposit, your landlord is entitled to ask you to pay an additional amount towards the deposit so that it is the same as the new rent.

The landlord is required to pay the tenant interest on the rent deposit every 12 months. The amount the landlord must pay is the same as the rent increase guideline that is in effect when the interest payment is due. If your landlord does not pay you the interest owed when it becomes due, then you may deduct the interest from a future rent payment, or file a T1 form, found on the Landlord and Tenant Board website.

Some landlords try and use the rent deposit to pay for other things, such as damages. This is improper. The rent deposit is only allowed to be used for the last month’s rent and nothing else. In addition, the landlord is not able to charge you a “damage deposit”. The only option the landlord has if they believe you have damaged the rental unit is to give you a notice for the Board to determine the issue, or ask you to pay for the damages.