No, a landlord cannot legally demand a damage deposit, pet deposit, or cleaning deposit in Ontario. Under the Residential Tenancies Act (RTA), the only lawful deposit a landlord can collect is a rent deposit equal to one month’s rent, which must be used strictly to pay for your final month in the unit.
Searching for a new apartment in highly competitive markets like Toronto, Mississauga, or Hamilton is already incredibly stressful. To make matters worse, many renters encounter landlords who demand extra upfront money, claiming it is standard procedure to protect their property from damage. 📝
It is crucial to understand that Ontario has some of the strictest laws in Canada regarding what a landlord can and cannot charge you. Any request for a “security deposit” to cover potential wall scratches or stained carpets is completely illegal, even if it is written into your lease agreement.
This guide will clarify exactly what deposits are lawful, how to handle illegal deposit requests during the application phase, and what steps you can take to get your money back if you have already paid an unlawful fee. We will also cover when to consult a local law firm for assistance.
Step-by-Step Process in Ontario
Whether you are renting a house in Ottawa or a condo in London, the rules regarding deposits are governed by the provincial Landlord and Tenant Board (LTB). Navigating deposit requests requires a mix of legal knowledge and tact, especially when you are desperately trying to secure a home. 📍
Knowing how to spot an illegal charge is your best defence against predatory leasing practices.
Step 1: Identify Illegal Deposit Requests
When reviewing a lease application, look out for terms like “Damage Deposit,” “Pet Deposit,” “Security Deposit,” or “End-of-Tenancy Cleaning Fee.” The RTA explicitly prohibits all of these. ❗
If a landlord asks for a $500 pet deposit because you have a dog, they are breaking the law. A clause in the lease stating you must pay this fee is automatically void and unenforceable by the LTB.
Step 2: Pay the Lawful Rent Deposit
The only deposit a landlord can legally demand before you move in is a “Rent Deposit.” This deposit cannot exceed the amount of one rent period (usually one month’s rent).
This money is strictly held to pay for your very last month of tenancy before you move out. The landlord cannot use this money to fix a broken window or hire a cleaner when you leave. They must use it for rent.
Step 3: Handle Key Deposits Correctly
The only other upfront fee a landlord can legally ask for is a Key Deposit. However, this deposit must be fully refundable upon the return of the keys. 🔑
Furthermore, the key deposit cannot be arbitrarily high. It must reflect the actual replacement cost of the keys, fobs, or garage door openers. Charging a $200 key deposit for a standard $5 metal house key is illegal; charging $50 for an electronic condo fob is generally acceptable.
Step 4: File a Form T1 for Illegal Charges
If you were forced to pay a damage deposit to secure the apartment, do not panic. Once you have moved in and secured your housing, you can simply ask the landlord to return the illegal deposit or apply it to your next month’s rent.
If the landlord refuses, you can file a Form T1 (Tenant Application for a Rebate of Money the Landlord Owes) with the LTB. The adjudicator will order the landlord to refund the illegal damage deposit, and it is highly likely the landlord will be ordered to pay your filing fee as well.
How Much Does it Cost in Ontario?
Understanding the financial boundaries of your lease is vital for protecting your hard-earned money. Paying illegal fees can tie up thousands of dollars that you might never get back voluntarily. 💰
Here is a breakdown of legal and illegal costs when signing a new lease:
| Type of Deposit / Fee | Estimated Cost (CAD) | Legal Status in Ontario |
|---|---|---|
| Last Month’s Rent Deposit | Equals exactly 1 month of rent | Strictly Legal (Must be used for rent) |
| Damage / Security Deposit | Usually $500 to $1,000+ | Strictly Illegal (Under the RTA) |
| Pet / Cleaning Deposit | $200 to $500+ | Strictly Illegal (Under the RTA) |
| Refundable Key Deposit | $20 to $100 (Actual cost) | Legal (If fully refundable) |
Interestingly, your landlord is legally required to pay you interest on your last month’s rent deposit every year. The interest rate is equal to the annual Rent Increase Guideline. Most landlords simply apply this interest to top up your deposit when your rent increases.
How Long Does the Process Take?
If you realize you have paid an illegal damage deposit, you should first send a written request to your landlord asking for it back. Give them 7 to 14 days to respond and return the funds. ⏱
If they refuse and you must file a Form T1 with the Landlord and Tenant Board, you will need to be patient. Due to current provincial backlogs, it typically takes 8 to 12 months to get a virtual hearing date.
You must file the Form T1 within 12 months of the date the landlord retained the illegal deposit. If you wait more than a year, the LTB may refuse to hear your case.
Frequently Asked Questions (FAQ)
What if I already signed a lease agreeing to a damage deposit?
Under the RTA, you cannot sign away your rights. Even if you voluntarily signed a contract saying you agree to pay a $500 damage deposit, that specific clause is legally void. The landlord still has to give the money back if you demand it or file a Form T1.
How does the landlord get paid if I actually damage the unit?
If you cause damage beyond normal wear and tear, the landlord must serve you an N5 Notice and ask you to pay for the repair. If you refuse, the landlord must take you to the LTB to get a formal order forcing you to pay. They cannot just hold money upfront.
Can the landlord use my last month’s rent for repairs?
Absolutely not. The rent deposit can only be applied to the rent for your last rental period. It is entirely illegal for the landlord to withhold this money to pay for cleaning, painting, or fixing damages when you move out.
Can I offer a damage deposit to win a bidding war?
You can voluntarily offer to pay multiple months of rent upfront (e.g., 6 months of rent in advance) to secure a unit if your credit is poor, but offering a specific “damage deposit” remains technically illegal for the landlord to retain. Any upfront rent must be used exclusively to pay your rent for those months.
Should I hire a law firm to get my illegal deposit back?
For a small damage deposit, filing a T1 yourself is usually sufficient and cost-effective. However, if the landlord has withheld thousands of dollars in illegal upfront fees and is ignoring LTB orders, hiring a local paralegal or law firm can help enforce the collection process.
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