Rental deposits, province by province

When I worked at a tenant legal clinic, deposit questions came in more than almost anything else. Someone had moved from Calgary to Toronto and was asked for a “damage deposit.” Someone in Vancouver was still waiting for their money a month after moving out. Someone in Montréal had been told they couldn’t get the keys without paying two months up front.

Each of those situations has a clear answer, but the answer changes at the provincial border. Residential tenancies in Canada are governed by provincial and territorial law, and deposits are one of the areas where the rules differ most. What is normal and legal in one province can be prohibited in the next.

This is a general guide to how the main deposit rules work, not legal advice for your situation. Deposit limits, interest rates and deadlines are set in legislation and regulations that do change, so always check the current rule with your provincial tenancy body before you rely on a number.

Two kinds of deposit, and why the difference matters

Most provinces allow a security deposit (often called a damage deposit). The landlord holds it during the tenancy and can, following the province’s process, keep some or all of it at the end to cover unpaid rent or damage beyond normal wear and tear. The rest comes back to you.

Ontario works differently. There, a landlord can collect a rent deposit, which can only be applied to the rent for the last rental period of the tenancy. It is not a damage deposit and cannot be held back to pay for repairs. That one distinction explains a lot of the confusion I saw from people who had moved between provinces.

Quebec sits at the other end of the scale. Under the Civil Code of Québec, a landlord can require the first month’s rent in advance but cannot demand a security deposit or any other sum on top of that.

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The deposit you were asked for in your last apartment tells you nothing about what is legal in your next one.

The limits at a glance

The table below summarises the general caps as I understand them at the time of writing. Treat it as a starting point for a conversation with your provincial tenancy office, not the last word. Some provinces also allow separate pet deposits or refundable key deposits with their own rules.

Interest is owed more often than people think

Many tenants don’t realise that in several provinces, the landlord owes them interest on money held as a deposit. The rate is set by the province, sometimes as a fixed formula and sometimes by an annual announcement, and in some years it has been very low or even zero.

In Ontario, the landlord must pay interest on a last month’s rent deposit every year, at the same rate as the annual rent increase guideline. The landlord is also allowed to keep that interest and use it to top up the deposit so it still matches the new, higher rent. Either way, it should be accounted for, not simply forgotten.

Here is an illustrative example. Say you pay $1,800 a month in Ontario and gave a $1,800 last month’s rent deposit. If the guideline for the year were 2.5 per cent, the interest owed would be $45. If your landlord then raised your rent by the same 2.5 per cent to $1,845, they could apply that $45 to bring the deposit up to the new rent, and nobody would owe anybody anything. The numbers are made up; the mechanism is the point.

Getting your deposit back

In provinces with security deposits, the end of the tenancy is where most disputes happen. A few habits make a big difference wherever you live.

If the landlord wants to keep money and you disagree, the usual path is a dispute or application at the provincial tenancy body, not a fight over text messages. In most provinces the landlord cannot simply decide to keep the deposit; they need your written agreement or an order.

What landlords can’t ask for

Some requests come up again and again even though they are not allowed in many provinces. In Ontario, a landlord can’t require a damage deposit, and key deposits must be refundable and limited to the cost of replacing the key. In Quebec, a landlord can’t ask for any deposit at all. In provinces with a cap, asking for more than the cap, or calling an extra amount a “holding fee” or “admin fee,” doesn’t make it legal.

Tenants in a tight rental market often pay what is asked because they are afraid of losing the apartment. That is understandable. If it happens to you, keep a record of what you paid and how. In many provinces you can apply afterwards to recover money that was collected illegally, though there are time limits on doing so.