Understanding Security Deposits in Ontario

Security deposits often create confusion between landlords and tenants. Many people are unaware of what the law allows, what can be collected, or how refunds must be handled. Understanding the security deposit Ontario rules helps prevent disputes and protects both sides.

The rental deposit laws under the Residential Tenancies Act (RTA) clearly outline what landlords can and cannot collect as a rental deposit. When disagreements happen, many tenants and landlords rely on paralegal tenant landlord support to resolve issues quickly and legally.

Below is a clear breakdown of how deposits work in Ontario, outlining your rights and obligations.

What Landlords Can Legally Collect

Ontario has strict rules about deposits. Landlords cannot collect “security deposits” for damage or cleaning. The only deposit generally allowed is a rent deposit, also known as “last month’s rent.”

Under Section 105 of the Residential Tenancies Act, landlords may collect:

• A rent deposit equal to one month’s rent, or the rent of one rental period
• A key deposit, but only if refundable and equal to the cost of replacement

Landlords cannot collect:

• Damage deposits
• Pet deposits
• Cleaning deposits
• Extra deposits of any kind

This is why understanding the security deposit Ontario rules matters. Taking an improper deposit can lead to LTB penalties.

Many landlords seek guidance from landlord paralegals to avoid breaching rental deposit laws.

Rules About Rent Deposits

Rent deposits must always be applied to the final rental period of the tenancy. They cannot be used for damage or unpaid rent during the tenancy.

Key rules include:

• It can only be requested on or before the day the tenancy starts
• Interest must be paid annually
• The deposit amount must be adjusted when the rent increases
• It must be returned if the landlord refuses occupancy

These rules are part of rental deposit laws designed to protect tenants from overpaying for deposits.

Improper handling of deposits can result in LTB orders requiring landlords to pay back the deposit plus administrative penalties.

For tenants and landlords unsure how to calculate interest or handle refunds, paralegal tenant landlord support often helps prevent mistakes.

Tenant Rights for Refunds

Tenants have clear rights regarding refunds. A landlord must return the rent deposit if:

• The tenant gives proper notice to move out
• The tenant assigns the unit to someone else
• The landlord refuses to allow the tenant to move in
• A key deposit is no longer required

Under Section 106 of the RTA, the landlord must also:

• Pay interest every 12 months
• Top up the deposit when the rent increases
• Provide the full deposit at the end of tenancy unless it is applied correctly to last month’s rent

If the landlord fails to return the deposit or interest, the tenant can apply to the Landlord and Tenant Board for resolution.

Understanding these details helps both sides avoid disputes related to the security deposit Ontario rules.

Disputes Over Deposits

Deposit disputes usually happen for three reasons:

• Landlords keep deposits illegally
• Rent deposits are not applied correctly
• Interest is not paid as required

LTB cases, such as TST-00923-18, demonstrate that the Board frequently rules against landlords who collect unlawful deposits or fail to comply with rental deposit laws.

Tenants can file for reimbursement, and landlords may also be ordered to pay administrative penalties.

Disputes can become stressful quickly, especially when communication breaks down.

This is when many people turn to paralegal tenant landlord professionals who understand LTB rules and know how to prepare evidence.

Paralegal Support in Deposit Cases

Deposit issues are one of the most common matters brought before the LTB. A paralegal makes the process much easier by:

• Reviewing the tenancy agreement
• Checking whether deposits were collected legally
• Calculating correct interest amounts
• Preparing refund applications
• Representing clients at LTB hearings
• Advising on next steps if the other party refuses to cooperate

This is where competitive differentiation matters.

A skilled paralegal does more than fill forms. They explain the law in simple terms, organize evidence, prepare submissions, and help avoid unnecessary delays.

Because deposit disputes depend heavily on documentation, having paralegal tenant landlord support often leads to faster resolutions.

Paralegals familiar with the LTB also understand how Board members evaluate deposit claims. Their experience helps clients avoid errors that could weaken their case.

Conclusion

Both landlords and tenants need to understand the regulations governing security deposits Ontario. The law will only permit certain types of deposits, and making a mistake may result in a financial penalty or dispute. 

By learning about deposit laws and seeking professional advice, you can protect your rights and avoid unnecessary stress. 

If you are experiencing a dispute over a deposit, an interest calculation, or a refund issue, an experienced professional can provide assistance. 

Need help with a deposit dispute? Contact our paralegal services now.

FAQs

1. What deposit can a landlord collect in Ontario?

 Only last month’s rent and refundable key deposits.

2. Are damage deposits allowed?

 No. The RTA prohibits damage, cleaning, and pet deposits.

3. Does the rent deposit earn interest?

 Yes. Landlords must pay interest every 12 months.

4. Can a tenant get their deposit back early?

 Yes, if the landlord refuses occupancy or the tenancy comes to an end.

5. What if the landlord refuses to refund the deposit?

 A tenant can apply to the LTB, and a paralegal can assist in preparing the case.