Security Deposits in Ontario: What Landlords Need to Know

Ontario's Residential Tenancies Act strictly governs security deposits. Understanding the rules protects landlords from costly mistakes.

Property Management in Ontario

Ontario is one of the most tenant-protective jurisdictions in Canada, and the rules around security deposits are a prime example. Unlike many other provinces, Ontario landlords are severely restricted in what deposits they can collect and how.

Under the Residential Tenancies Act, Ontario landlords can only collect a last month's rent deposit — not a damage deposit, not a security deposit, not a pet deposit. This deposit must be held and applied to the last month of the tenancy. It cannot be applied to repairs or damages.

Key Responsibilities and Best Practices

The last month's rent deposit must be placed in a trust account and earn interest at the Bank of Canada rate, which must be paid annually to the tenant or applied to increase the deposit balance to match current rent. The interest rate is typically modest but the obligation to pay it is legally binding.

A key deposit is also regulated. You may collect a deposit for keys, fobs, or access cards equal to the replacement cost of those items. Any unused portion must be refunded when the tenant vacates. It cannot be treated as additional security.

How D&D Property Management Helps

Collecting any deposit beyond what the RTA permits — including a damage deposit or cleaning fee deposit — is illegal and void. A landlord who collects an illegal deposit must repay it. The tenant can file a T1 application at the Landlord and Tenant Board to recover any improperly collected deposits.

D&D Property Management ensures all deposits are collected, held, and administered in strict compliance with Ontario law. We track interest obligations, maintain proper trust accounting, and ensure full compliance at tenancy end.

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.