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Do I have to pay a deposit when I rent a new place?

There are only two kinds of deposit your landlord is allowed to ask for when you rent a new place to live:

  • rent deposit
  • key deposit

A rent deposit cannot be more than one month's rent on a yearly or month-to-month rental, or one week's rent on a weekly rental. The deposit must be used for your final period of rent. It cannot be used for damage or other costs.

A rent deposit is sometimes called a security deposit or a last month's rent deposit (LMR).

A key deposit cannot be more than the actual cost to replace the keys. If you return the keys when you move out, the landlord must give you back the deposit.

If you want extra keys, your landlord can charge you for the cost of making the extra keys.

Instead of keys, your building might use entry cards, fobs, or other devices. The rules for these things are the same as for keys.

Illegal deposits

A landlord cannot ask you for any other type of deposit. They cannot ask for:

  • Pet deposits
  • Damage deposits
  • Any deposit amount that is more than a last month's or last week's rent
  • Post-dated cheques or any other kind of pre-authorized payment
  • A key deposit that is more than what it would cost to replace the keys

Interest on deposits

Each year, the landlord must pay you interest on your deposits. Interest is extra money to make up for the fact that you can't use your money because the landlord is holding it as a deposit.

The interest rate is equal to the guideline rent increase for that year. For example, for 2016, the interest rate is 2.0%. If your last month's rent deposit is $900, your landlord must pay you $18 after one year.

Your landlord pays the interest by giving it to you or by adding it to your deposit. If they do not do this, you can deduct it from your next rent payment or apply to the Landlord and Tenant Board to make them pay it.

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Get receipts for all your payments

A landlord must give you receipts for all payments if you ask for them. It is illegal for a landlord to charge you for a receipt or refuse to give you one.

Whenever you give a deposit, rent payment, or any other money to your landlord, always make sure you get a receipt. Your receipt should have the following information:

  • your name
  • the address of your rental unit
  • the landlord’s name
  • the amount you paid
  • the date you paid
  • what the money was for
  • your landlord's signature
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Figure out if your landlord is asking for an illegal payment

A landlord can only ask for a last month's or last week's rent deposit, or a deposit for keys. A landlord is not allowed to ask for:

  • pet deposits
  • damage deposits
  • first month's rent (or first week's rent in a week-to-week rental) before you move in
  • post-dated cheques or other kind of pre-authorized payment

Sometimes, a landlord may not know that what they are asking for is unlawful. You might be able to solve the problem by explaining this to them.

If the landlord still refuses to rent to you unless you give them the unlawful deposit, you might decide to pay it. Then you can try to get it back after you have moved in.

It is very common for landlords to ask you to pay "first and last month's rent" when you sign the tenancy agreement. But the law says they can't charge you the first month's rent before it is due – which is normally on the first day of your tenancy.

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Get an illegal deposit back after you move in

If you do pay an unlawful deposit, make sure you can prove that the payment was required and not voluntary. You can:

  • ask the landlord to give you the demand in writing
  • check your rental agreement to see if the deposit is listed as "required"
  • send a letter to your landlord confirming that you are paying the deposit because the landlord told you it is a requirement to rent the property, and keep a copy of the letter

Make sure you have a receipt for all deposits that you give to your landlord. Your receipt should have the following information:

  • your name
  • the landlord's name
  • the amount you paid
  • the date you paid
  • what the money was for

Once you have moved in, you can tell your landlord again that the deposit is unlawful. You can ask for the deposit back. If the landlord did not know the deposit was unlawful, they may return it.

If your landlord still refuses to return the deposit, you can apply to the Landlord and Tenant Board of Ontario to make your landlord return the money.

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Apply to the Landlord and Tenant Board

To ask the Landlord and Tenant Board to make your landlord give back your money, you will need to file an application.

For illegal deposits or rent, you will need to file a T1 – Tenant Application for a Rebate of Money the Landlord Owes.

After you file the application, the Landlord and Tenant Board will set a date for a hearing. It is a good idea to get legal advice before your hearing.

If you have a low income, you can call your local community legal clinic and try to make an appointment to discuss your situation.

If you can't get help from a community legal clinic, you can contact the Law Society Lawyer Referral Service for a free half hour consultation with a lawyer or licensed paralegal. Or you can contact JusticeNet, a non-profit organization that can connect you with a lawyer or licensed paralegal who has agreed to work for reduced fees.

If you live in a city where there is a Board regional office, and you can't find legal help, you may be able to speak to Tenant Duty Counsel.

But they are usually busy helping tenants who have eviction hearings that day and they might not have time to talk to you.

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August, 2016

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