Security Deposits in Residential Tenancies (19:VI): Difference between revisions

Latest revision as of 08:02, 30 August 2024

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by the Law Students' Legal Advice Program on August 15, 2024.

A. Definitions

A landlord may require a tenant to pay one security deposit as a condition of entering into a tenancy agreement (RTA, s 17). “Security deposit” is defined very broadly. It can include money, property, rights, or otherwise almost any other item of value to be held by a landlord for the purpose of securing the performance of a tenant’s obligations under the tenancy agreement and the RTA; however, a security deposit does not include a post-dated cheque for rent, a pet damage deposit, or a fee prescribed under RTR ss. 6 and 7 (RTA, s 1); for more information, see RTB PG 29: Security Deposits.

A pet damage deposit is similar to a security deposit, but is held by the landlord as security for damage to the rental property caused by a pet (RTA, s 1). Unlike a security deposit, the definition of a pet damage deposit does not exclude post-dated cheques for rent (RTA, s 1).

B. Payment of the Security Deposit and Pet Damage Deposit

1. Amount

A security deposit or a pet damage deposit must not exceed one half of the monthly rent (RTA, s 19(1)).

2. Number

A landlord is permitted to accept a maximum of one security deposit (RTA, s 20(b)) and one pet damage deposit (RTA, s 20(d)) within a tenancy agreement.

3. Timing

A landlord is not entitled to a security deposit from a tenant after the agreement has already been formed (RTA, s 20(a)).

A landlord is only permitted to require a pet damage deposit from a tenant when the tenant enters into the tenancy agreement, or the point at which the landlord agrees that the tenant may keep a pet they acquired during the tenancy on the residential property (RTA, s 20(c)).

4. Consequences of Non-Compliance

If a landlord accepts a security deposit or a pet damage deposit that is greater than 1/2 of one month's rent, the tenant may deduct the overpayment from rent or otherwise recover the overpayment (RTA, s 19(2)).

Failure to pay a lawful security deposit is a ground for ending the tenancy (RTA, s 47(1)(a)). The landlord may give a one-month eviction notice if the tenant fails to pay the security deposit within 30 days of the due date under the tenancy agreement.

C. Return of Security Deposit and Pet Damage Deposit

A tenant must provide their landlords with a forwarding address in writing within one year after the end of the tenancy (RTA, s 39). Once both the tenancy has ended and the landlord has received the tenant’s forwarding address in writing, the landlord has 15 days to do one of the following:

return the security deposit or pet damage deposit to the tenant, with interest (RTA, s 38(1)(c)); or
make an application for dispute resolution to retain the deposit (RTA, s 38(1)(d)).

If the landlord fails to complete either of those two options and the tenant still has a valid right to the deposit, the tenant may apply for dispute resolution (RTA, s 38.1(1)). After this, the landlord may not make a claim against the security deposit or any pet damage deposit and must pay the tenant double the amount of the security deposit, pet damage deposit, or both (RTA, ss 38(6)).

If a tenant fails to provide their forwarding address in writing within one year after the end of the tenancy, they lose the right to have their security deposit or pet deposit returned, and the landlord may keep them (RTA, s 39). A landlord may also keep a security deposit or pet damage deposit if the tenant agrees in writing or if ordered by the RTB (RTA, s 38(4)).

Leases may not include a term providing that the landlord automatically keeps all or part of the deposit at the end of a tenancy (RTA, s 20 (e)). The right of a landlord or tenant to respectively keep or retrieve the security deposit or pet deposit depends on their compliance with the requirements governing condition inspection reports.

1. Interest on Security Deposit

Interest on a security deposit or pet damage deposit is calculated from the date the tenant pays the deposit to the day before the security deposit is paid back to the tenant. If the deposit is disputed at dispute resolution, the interest is calculated from the date the tenant paid the deposit up until the date the Arbitrator orders its return (usually the date of the hearing).

Interest on a security deposit or pet damage deposit is calculated as follows: for each one-year period beginning on January 1, the rate will be 4.5% below the prime lending rate of the principal banker to the province on January 1st of that year, compounded annually (RTR, s 4). The interest payable on security and pet damage deposits for 2024 is 2.7%.

There is an online deposit interest calculator here.

2. Change of Landlord

Where a security or pet deposit is paid to a landlord, and the property is then subsequently sold, the obligations regarding the security deposit and pet damage deposit pass to the new property owner, meaning they become responsible for repaying the security deposit and pet damage deposit when the tenancy ends (RTA, s 93).

D. Non-Refundable Fees

The RTA allows landlords to charge some non-refundable fees to a tenant in accordance with section 7 of the RTR. They do not form part of the security deposit or pet deposit (RTA, s 1).

Some of these allowable non-refundable fees are:

direct cost of replacing keys or other access devices (RTR, s 7(1)(a));
direct cost of additional keys or other access devices requested by the tenant (RTR, s 7(1)(b));
a service fee charged by a financial institution to the landlord for the return of a tenant’s cheque (RTR, s 7(1)(c));
a move-in or move-out fee charged by a strata corporation to the landlord (RTR, s 7(1)(f));
a fee for services or facilities that are requested by the tenant and not required to be provided under the tenancy agreement (RTR, s 7(1)(g)).

The following fees must only be charged if laid out in the tenancy agreement (RTR, s 7(2)):

an administration fee for a tenant’s cheque returned by their financial institution or for late payment of rent, which must not exceed $25 (RTR, s 7(1)(d)); and
a fee for moving between rental units within the residential property if the move was requested by the tenant, which must not exceed the greater of $15 and 3% of the monthly rent (RTR, s 7(1)(e)).

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+{{REVIEWED LSLAP | date= August 15, 2024}}
 {{LSLAP Manual TOC|expanded = landlord}}
-== A. General ==
+== A. Definitions ==
-A requirement that a tenant pay a security deposit is an express term of the model agreement. Security deposit is defined in s 1 of the RTA very broadly. It can include money or property or almost any other item of value to be held by a landlord for the purpose of securing the performance of a tenant’s obligations under the agreement and the RTA (e.g. the payment of rent and the obligation to leave the rental unit in the same condition they were received). A security deposit is a deposit which may cover a variety of costs to the landlord: see ''Balfour v. Thomson'', Vancouver Registry F771652 (BC  Co Ct). A security deposit does not include: a post-dated cheque for rent, a pet damage deposit, or a fee prescribed under RTR ss 6 and 7. See RTB Policy Guideline 29: Security Deposits.
+A landlord may require a tenant to pay one security deposit as a condition of entering into a tenancy agreement (''RTA'', s 17). “Security deposit” is defined very broadly. It can include money, property, rights, or otherwise almost any other item of value to be held by a landlord for the purpose of securing the performance of a tenant’s obligations under the tenancy agreement and the ''RTA''; however, a security deposit does not include a post-dated cheque for rent, a pet damage deposit, or a fee prescribed under ''RTR'' ss. 6 and 7 (''RTA'', s 1); for more information, see RTB PG 29: Security Deposits.
-A landlord can only request a security deposit from a tenant as a condition of entering into a tenancy agreement, not after the agreement has been formed.  However, pursuant to s 20, if a landlord permits a tenant to keep a pet on the residential property the landlord may require the tenant to pay a pet damage deposit in accordance with s 19 at the time the tenant moves in with a pet, or at the time a tenant acquires a pet.
+A pet damage deposit is similar to a security deposit, but is held by the landlord as security for damage to the rental property caused by a pet (''RTA'', s 1). Unlike a security deposit, the definition of a pet damage deposit does not exclude post-dated cheques for rent (''RTA'', s 1).
-== B. Requirements Under the RTA ==
+== B. Payment of the Security Deposit and Pet Damage Deposit ==
 === 1. Amount ===
-A security deposit demanded or received must not exceed one half of the monthly rent (RTA, s 19(1)). Only one security deposit can be required for each rental unit (s 20(b)). A landlord can also ask for an additional ½ month rent as a pet damage deposit (s 19(2)). The tenant may, '''with the landlord’s permission''', set off all or part of a security deposit against the rent that is due from him or her (s 21). Any excess security deposit paid (more than ½ of the amount payable as rent at the beginning of the tenancy) to the landlord may be set off by the tenant, presumably without the landlord’s permission (s  19(2)). Failure to pay a lawful security deposit is a ground for ending the tenancy (s 47(1)(a)). The landlord may give a one-month end of tenancy notice if the tenant fails to pay the security deposit within 30 days.
+A security deposit or a pet damage deposit must not exceed one half of the monthly rent (''RTA'', s 19(1)).
-=== 2. Inspection Reports ===
+=== 2. Number ===
-The RTA requires landlords and tenants to do move-in (ss 23 and 24) and move-out (ss 35 and 36) condition inspection reports. The rights to the security  deposit of a landlord or tenant who does not participate in the condition inspection process may be extinguished.
+A landlord is permitted to accept a maximum of one security deposit (''RTA'', s 20(b)) and one pet damage deposit (''RTA'', s 20(d)) within a tenancy agreement.
+=== 3. Timing ===
+A landlord is not entitled to a security deposit from a tenant after the agreement has already been formed (''RTA'', s 20(a)).
+A landlord is only permitted to require a pet damage deposit from a tenant when the tenant enters into the tenancy agreement, or the point at which the landlord agrees that the tenant may keep a pet they acquired during the tenancy on the residential property (''RTA'', s 20(c)).
+=== 4. Consequences of Non-Compliance ===
+If a landlord accepts a security deposit or a pet damage deposit that is greater than 1/2 of one month's rent, the tenant may deduct the overpayment from rent or otherwise recover the overpayment (''RTA'', s 19(2)).
+Failure to pay a lawful security deposit is a ground for ending the tenancy (''RTA'', s 47(1)(a)). The landlord may give a one-month eviction notice if the tenant fails to pay the security deposit within 30 days of the due date under the tenancy agreement.
 == C. Return of Security Deposit and Pet Damage Deposit ==
-When a tenant moves out, he or she must provide his or her landlords with a forwarding address in writing. The security deposit must be returned to the tenant, '''with interest''', or the landlord must file for dispute resolution to retain the deposit, within 15 days after the date at which the tenancy ends, or the date the landlord receives the tenant’s forwarding address, which '''must be in writing, whichever is later'''.
+A tenant must provide their landlords with a forwarding address in writing within one year after the end of the tenancy (''RTA'', s 39). Once both the tenancy has ended and the landlord has received the tenant’s forwarding address in writing, the landlord has 15 days to do one of the following:
+*return the security deposit or pet damage deposit to the tenant, with interest (''RTA'', s 38(1)(c)); or
+*make an application for dispute resolution to retain the deposit (''RTA'', s 38(1)(d)).
+If the landlord fails to complete either of those two options and the tenant still has a valid right to the deposit, the tenant may apply for dispute resolution (''RTA'', s 38.1(1)). After this, the landlord may not make a claim against the security deposit or any pet damage deposit and must pay the tenant double the amount of the security deposit, pet damage deposit, or both (''RTA'', ss 38(6)).
+If a tenant fails to provide their forwarding address in writing within one year after the end of the tenancy, they lose the right to have their security deposit or pet deposit returned, and the landlord may keep them (''RTA'', s 39). A landlord may also keep a security deposit or pet damage deposit if the tenant agrees in writing or if ordered by the RTB (''RTA'', s 38(4)).
+Leases may not include a term providing that the landlord automatically keeps all or part of the deposit at the end of a tenancy (''RTA'', s 20 (e)). The right of a landlord or tenant to respectively keep or retrieve the security deposit or pet deposit depends on their compliance with the requirements governing condition inspection reports.
+=== 1. Interest on Security Deposit ===
+Interest on a security deposit or pet damage deposit is calculated from the date the tenant pays the deposit to the day before the security deposit is paid back to the tenant. If the deposit is disputed at dispute resolution, the interest is calculated from the date the tenant paid the deposit up until the date the Arbitrator orders its return (usually the date of the hearing).
+Interest on a security deposit or pet damage deposit is calculated as follows: for each one-year period beginning on January 1, the rate will be 4.5% below the prime lending rate of the principal banker to the province on January 1st of that year, compounded annually (''RTR'', s 4). The interest payable on security and pet damage deposits for 2024 is 2.7%.
+There is an online deposit interest calculator [https://www.housing.gov.bc.ca/rtb/WebTools/InterestOnDepositCalculator.html here].
+=== 2. Change of Landlord ===
+Where a security or pet deposit is paid to a landlord, and the property is then subsequently sold, the obligations regarding the security deposit and pet damage deposit pass to the new property owner, meaning they become responsible for repaying the security deposit and pet damage deposit when the tenancy ends (''RTA'', s 93).
+== D. Non-Refundable Fees ==
+The ''RTA'' allows landlords to charge some non-refundable fees to a tenant in accordance with section 7 of the ''RTR''. They do not form part of the security deposit or pet deposit (''RTA'', s 1).
+Some of these allowable non-refundable fees are:
+*direct cost of replacing keys or other access devices (''RTR'', s 7(1)(a));
+*direct cost of additional keys or other access devices requested by the tenant (''RTR'', s 7(1)(b));
+*a service fee charged by a financial institution to the landlord for the return of a tenant’s cheque (''RTR'', s 7(1)(c));
+*a move-in or move-out fee charged by a strata corporation to the landlord (''RTR'', s 7(1)(f));
+*a fee for services or facilities that are requested by the tenant and not required to be provided under the tenancy agreement (''RTR'', s 7(1)(g)).
-If a landlord does not comply with s 38(1) of the RTA (fails to return deposits within 15 days, and fails to file for dispute resolution) and the tenant still has a valid right to the deposit, (the tenant may apply for dispute resolution) the landlord may not make a claim against the security deposit or any pet damage deposit, '''and must pay the tenant double the amount of the security deposit, pet damage deposit''', or both (s 38(6)).
+The following fees must only be charged if laid out in the tenancy agreement (''RTR'', s 7(2)):
+*an administration fee for a tenant’s cheque returned by their financial institution or for late payment of rent, which must not exceed $25 (''RTR'', s 7(1)(d)); and
+*a fee for moving between rental units within the residential property if the move was requested by the tenant, which must not exceed the greater of $15 and 3% of the monthly rent (''RTR'', s 7(1)(e)).
-Interest on a security deposit is calculated from the date the tenant pays the deposit to the day before the  security  deposit  is  paid  back  to  the  tenant.  If  the  deposit  is  disputed  at  dispute  resolution,  the interest is calculated from the date the tenant paid the deposit up until the date the  Arbitrator orders its return (usually the date of the hearing). Interest on a security deposit is calculated as follows. For each one-year period beginning on January 1,  the  rate  will  be  4.5%  below  the  prime  lending  rate  of  the  principal  banker  to  the  province  on January 1st of that year, compounded annually. The current and past rates are: Jan 1/2009 - Dec 31/2013 - 0.00% compounded annually Jan 1/2008 - Dec 31/2008 - 1.50% compounded annually Jan 1/2006 - Dec 31/2007 - 0.50% compounded annually Jan 1/2002 - Dec 31/2005 - 0.00% compounded annually Jan 1/2001 - Dec 31/2001 - 3.00% compounded annually Jan 1/2000 - Dec 31/2000 - 2.00% compounded annually Jan 1/99 - Dec 31/99 - 2.25% compounded annually Jan 1/98 - Dec 31/98 - 1.50% compounded annually Jan 1/97 - Dec 31/97 - 0.25% compounded annually Jan 1/96 - Dec 31/96 - 3.00% compounded annually Jan 1/95 - Dec 31/95 - 3.50% compounded annually Jan 1/94 - Dec 31/94 - 1.00% compounded annually Jan 1/93 - Dec 31/93 - 2.75% compounded annually Jan 1/92 - Dec 31/92 - 3.50% compounded annually Jan 1/91 - Dec 31/91 - 8.25% compounded annually Jan 1/90 - Dec 31/90 - 9.00% compounded annually Jan 1/89 - Dec 31/89 - 7.75% compounded annually Jan 1/88 - Dec 31/88 - 5.25 % compounded annually Feb 1/87 - Dec 31/87 - 5.25% compounded the last day of that period July 1/84 - Jan 31/87 - 8.00% per annum April 1/83 - June 30/84 - 8.00% compounded annually June 1/80 - March 31/83 - 12.00% compounded annually Dec 1/74 - May 31/80 - 8.00% compounded annually NOTE:                A tenant has only one year from the time the tenancy ends to supply the landlord with his  or  her forwarding  address.  If  the  tenant fails  to forward  the  address within  the  one year limit the landlord may retain the security or pet damage deposit or both. The  RTB  website  provides  a  Deposit  Interest  Calculator  which  calculates  the  interest payable on a security deposit during any specific time period: www.rto.gov.bc.ca/content/calculator/calculator.aspx. NOTE:                A  landlord  does  not  have  to  return  a  deposit  within  15  days if  the  tenant’ s  right  to  the return of the deposit (pet or security) has been extinguished for failing to  participate in the condition inspection procedures. NOTE:                A  pet  damage  deposit  may  be  used  only  for  damage  caused  by  a  pet  to  the  residential property, unless the tenant agrees otherwise. D.Extra Deposits and Non-Refundable Fees The  RTA  allows landlords  to  charge  a deposit for  additional access  devices  (a  device  so  long  as  it  is not a tenant’ s only means of entry to one’ s building).
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