Difference between revisions of "Security Deposits in Residential Tenancies (19:IV)"

== '''A. General''' ==

A requirement that a tenant pay a security deposit is an express term of the standard 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. 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 '''Policy Guideline 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.

== '''B. Requirements Under the ''RTA''''' ==

=== 1. Amount ===

A security deposit demanded or received must not exceed one half of the monthly rent (''RTA'', s 19(2)). 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(1)). The tenant may, '''with the landlord’s written permission''', set off all or part of a security deposit against the rent that is due from them (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 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.

=== 2. Inspection Reports ===

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.  It is extremely important that tenants take part in inspections for their own protection. It is very useful to take dated photographs during both move-out and move-in inspections.

If the landlord abides by all the regulations concerning the condition inspections but the tenant did not participate in the condition inspection on both opportunities, then the tenant loses their right to claim their deposit back.

== '''C. Return of Security Deposit and Pet Damage Deposit''' ==

When a tenant moves out, they must provide their 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 of the later of the following two: the date at which the tenancy ends, or the date the landlord receives the tenant’s forwarding address, which '''must be in writing.'''

Leases may not include a term providing that the landlord automatically keeps all or part of the deposit at the end of a tenancy (s 20 (e)).

According to ''RTA'' s 38(8), the landlord can repay security deposits by cheque, personal service methods, or electronic fund transfers.

=== 1. Interest on Security Deposit ===

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).

* Bank service fees for NSF cheques plus a maximum late fee of $25; and

* Parking fees.

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