In Ontario, it is strictly illegal for a landlord to demand a security deposit, damage deposit, or “wear and tear” deposit. Under the Residential Tenancies Act, the only deposits a landlord can legally collect are a Last Month’s Rent deposit and a fully refundable key deposit. You have the absolute right to refuse any other financial demands.
Searching for a new apartment in a competitive market can make tenants feel desperate to secure a lease. Unscrupulous landlords often exploit this by asking for extra upfront money to protect their property. If you are looking at rentals in Mississauga, London, or Brampton and the landlord asks for a “wear and tear deposit” or a “pet damage deposit,” you need to know that they are breaking provincial law.
The Ontario Residential Tenancies Act (RTA) heavily regulates how much money a landlord can ask for before you move in. 📍 Landlords are expected to absorb the costs of normal wear and tear as part of doing business. This guide will show you exactly how to handle illegal deposit demands and how to get your money back if you have already paid one. If your landlord is threatening to cancel your lease over this, connecting with a legal professional from our directory is a wise move.
Step-by-Step Process for Refusing Illegal Deposits in Ontario
Standing up for your rights while trying to secure housing requires a delicate but firm approach. Follow these steps to protect your finances without necessarily losing the apartment.
Step 1: Know Your Legal Rights Under the RTA
First, educate yourself. Section 105 of the RTA clearly states that security deposits and damage deposits are void and illegal. 📖 The landlord can only ask for your Last Month’s Rent (which can only be applied to your final month of tenancy) and a refundable deposit for physical keys or fobs, which cannot exceed the actual replacement cost of those keys.
Step 2: Communicate Clearly in Writing
If the landlord requests a damage deposit, reply politely via email or text. Having a written paper trail is crucial. You can say something like, “I am very excited to rent the unit, but I understand that damage and wear-and-tear deposits are not permitted under the Ontario Residential Tenancies Act. I am happy to provide the standard Last Month’s Rent and the key deposit.”
Step 3: Refuse to Write the Cheque
If the landlord insists, simply refuse to write the cheque or send the e-transfer for the illegal amount. 💰 A lease agreement cannot override the law. Even if a clause in your signed lease says “Tenant agrees to pay a $500 damage deposit,” that specific clause is void and unenforceable in Ontario.
Step 4: Contact the Rental Housing Enforcement Unit (RHEU)
If the landlord threatens to deny you the unit unless you pay the illegal fee, you can report them to the Ministry of Municipal Affairs and Housing. The Rental Housing Enforcement Unit (RHEU) investigates landlord offences and can often call the landlord to warn them of massive administrative fines, which usually resolves the issue quickly.
Step 5: File a T1 Application if You Already Paid
Sometimes tenants pay the deposit out of sheer desperation to get the keys. If you already paid an illegal wear and tear deposit, you can get it back. ⚔️ You must file a Form T1 (Tenant Application for a Rebate of Money the Landlord Owes) with the Landlord and Tenant Board (LTB). The LTB will order the landlord to refund the money in full.
How Much Does it Cost in Ontario?
Defending yourself against illegal deposits is generally quite affordable, and the law is heavily weighted in the tenant’s favour.
- RHEU Intervention: Calling the Rental Housing Enforcement Unit to report a landlord offence is completely free ($0 CAD).
- LTB T1 Application: Filing a T1 application for a rebate costs $53 CAD, and the adjudicator will usually order the landlord to reimburse you for this fee if you win.
- Paralegal Advice: If you need a legal professional to draft a firm letter to your landlord, it typically costs between $150 and $300 CAD.
| Type of Action | Estimated Cost (CAD) | Likelihood of Success |
|---|---|---|
| Refusing to Pay Upfront | $0 | Very High (Law is clear). |
| Filing a T1 Application | $53 | Excellent (If you have receipt proof). |
| Hiring a Paralegal | $500 – $1,500 | High (For complex LTB hearings). |
How Long Does the Process Take?
Getting your money back depends entirely on which avenue you use to enforce your rights.
- RHEU Action: A compliance call from the RHEU to your landlord can happen within 1 to 3 days.
- LTB Hearing: If you must go through the formal LTB process to get a rebate, you may wait 4 to 8 months for a hearing date in 2026.
- Limitation Period: You must file your T1 application within exactly 1 year from the date the landlord collected the illegal deposit.
Frequently Asked Questions (FAQ)
Can the landlord charge a pet deposit instead?
No. Pet deposits, cleaning deposits, and damage deposits are all equally illegal under the Residential Tenancies Act in Ontario. A landlord cannot ask for any money related to pets.
Can I just tell the landlord to use the deposit for my rent?
Yes. If you already paid an illegal damage deposit, you can formally inform your landlord in writing that you are applying that illegally held money towards your next month’s standard rent payment.
What is the maximum amount for a key deposit?
The law states a key deposit must be strictly refundable and cannot exceed the actual, direct replacement cost of the keys or electronic fobs. If a standard cut key costs $5, a $100 key deposit is illegal.
Will I be evicted if I complain to the LTB?
No. Seeking to enforce your legal rights is protected under the RTA. If a landlord tries to evict you because you reported an illegal deposit, the LTB will view this as retaliation and dismiss the eviction application.
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