Key Deposits in Ontario: What Landlords Can Charge and When

A refundable key deposit is permitted for an Ontario residential tenancy covered by the RTA, but it cannot exceed the expected direct cost of replacing the keys, remote entry devices or cards. It is not a second damage deposit.

What a key deposit can cover

Ontario Regulation 516/06, section 17, permits a refundable deposit for keys and access devices. The limit is tied to expected direct replacement cost, not a percentage of rent or an amount chosen to discourage damage. A key, fob and access card may have different replacement costs; the amount needs a basis in the items actually supplied.

A deposit for an ordinary key should not become a general reserve for repainting, cleaning or unpaid charges. Those purposes do not turn into key-replacement costs because the lease calls the payment a key deposit.

A deposit and a replacement charge are different

The regulation also addresses additional keys requested by a tenant and replacement keys or devices. Those charges are limited to the relevant direct costs. The replacement-charge exception does not apply when replacement is needed because the landlord changed the locks on the landlord's own initiative.

A refundable amount held when keys are issued is different from a charge for a replacement that has actually been supplied. Keeping those entries separate makes the account easier to understand.

Record the items and the amount

A useful record identifies the keys or devices supplied, the deposit received and the basis for the replacement-cost estimate. This is practical recordkeeping, not a statutory requirement to use a particular template or management platform.

Under the RTA's receipt rules, a requested receipt must be provided without a fee. A deposit receipt should be distinguishable from the last-month rent deposit and the first rent payment.

Return of the keys and deposit

The deposit is refundable when the keys or devices are returned. Record what was returned and the amount refunded so the transaction does not remain mixed into the rent account.

A disagreement about damage to the unit is a separate issue. Keeping a returned-key deposit as a substitute damage fund is not the purpose of the permitted key-deposit payment.

Lost keys need a cost-based response

Where a key or device is missing, the relevant question is the direct replacement cost, not an automatic penalty written into a house rule. A larger disputed claim needs its own factual and legal basis.

The permitted key deposit does not justify a blanket non-refundable administration charge or an unrelated security deposit. The official regulation is the source for the specific exceptions.

When the amount or refund is disputed

The LTB's T1 application covers specified claims for money a landlord collected or retained improperly. Its current instructions explain the applicable reasons, evidence and time limits. A tenant or landlord dealing with a disputed amount should check those instructions rather than rely on an informal deposit label.

This guide concerns residential tenancies covered by the RTA. Commercial leases and exempt accommodation require a separate analysis.

Devon Moore, Operations Lead Co-Founder & Operations Lead — D&D Property Management

Devon Moore is the co-founder and Operations Lead at D&D Property Management, managing rental properties across Kitchener-Waterloo, Cambridge, Guelph and Waterloo Region.