Security Deposits in Ontario: What Landlords Can and Cannot Collect

For an Ontario residential tenancy covered by the RTA, a landlord cannot collect a general damage, cleaning or pet deposit. The permitted rent deposit and refundable key deposit have different limits and purposes.

Rent in advance is not security for damage

The rent deposit is capped at the lesser of one rent period and one month, and must be applied to the final rent period before termination. It cannot be kept to cover repairs or cleaning after an inspection.

For a monthly tenancy, the cap is one month's rent; for a weekly tenancy, it is one week's rent. A first rent payment pays for its own period and should be recorded separately from money held for the final period.

The rule is not accurately described as banning every deposit other than rent: the regulation separately permits a limited refundable key deposit.

Keys and pets involve different rules

A deposit for keys, access cards or remote-entry devices must be refundable and no greater than expected direct replacement cost. It cannot be used as a second reserve for property damage.

A pet deposit is not a permitted substitute. RTA section 14 makes a tenancy-agreement provision prohibiting animals void. That does not mean every dispute involving an animal has the same result: damage, interference and applicable condominium rules can raise separate questions.

Writing a prohibited payment or invalid restriction into a lease does not make it enforceable. The standard-lease guidance and the legislation are more useful starting points than an informal house-rule template.

Interest, the final account and recovery

The landlord owes annual interest on the rent deposit at the applicable rent-increase guideline rate. Interest may be applied to a permitted top-up when lawful rent increases; it should not simply disappear into an unexplained account balance.

At move-out, identify the final-period rent application, any outstanding interest and the separate key-deposit refund. Claims for tenant-caused damage follow their own process and do not authorise damage deductions from the rent deposit.

The LTB's T1 instructions explain specified tenant claims for improperly collected money or unpaid interest. For an individual dispute, the applicable facts, deadlines and official instructions need review.

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.