The (il)Legality of Deposits
Question: I recently signed a one-year lease with a new landlord who also asked me to pay a damage deposit, a key deposit and a security deposit in order to rent the apartment. Because I desperately needed the apartment, I paid all of these deposits to my landlord. Were all of these deposits legal?
Answer: According to the Residential Tenancies Act, 2006 (the RTA), the only security deposit your landlord is allowed to collect from you is a rent deposit equal to one month’s rent. This rent deposit must be applied by your landlord to your last month’s rent. That’s why it is called a “last month’s rent” (LMR) deposit.
The RTA permits landlords to require tenants to pay a LMR deposit, but only if they do so on or before entering into the tenancy agreement with their tenants.
As long as the security deposit your landlord collected from you was a LMR deposit, there was nothing illegal about your landlord requiring you to pay this deposit when you signed your one-year lease.
However, the damage deposit your landlord required and collected from you was illegal. Under the RTA, landlords are not allowed from requiring their tenants to pay such a deposit, or from directly or indirectly collecting or attempting to collect such a deposit from their tenants.
The same is also true for non-refundable key deposits – these are illegal. However, if the key deposit your landlord required and collected from you was refundable (i.e. your landlord will refund the deposit when you return your key), this was legal under the RTA’s regulations.
Tenants who have paid their landlord one or more illegal deposits can retrieve their money by filing a T1: Tenant Application for a Rebate against their landlord with the Landlord and Tenant Board (the LTB). However, this application must be filed with the LTB no later than one year from the date the landlord collected or retained the illegal deposit(s) from the tenant, failing which the tenant will have forfeited their money.
The above is legal information and not legal advice. If you need further information or need legal advice, please call our Intake Line at 416-441-1764 ext. 1 or complete our online Intake Form.