Tenants moving to Ontario from other provinces or countries often expect to pay a security or damage deposit, and many landlords — knowingly or not — ask for one. Ontario law does not allow that. The only deposit a landlord can require is a rent deposit, it can only be used in one specific way, and it earns interest the landlord must pay you. A lease clause that demands a damage deposit, a key deposit beyond actual cost, or a pet deposit is asking for money the law says you do not owe.
What is a Rent Deposit Rules?
A rent deposit in Ontario is a payment a landlord may collect at the start of a tenancy, limited to the rent for one rent period — one month for a monthly tenancy, one week for a weekly tenancy. It is not a security or damage deposit: by law it can only be applied to the rent for the last rent period of the tenancy. The landlord must pay interest on it each year at the provincial rent increase guideline rate. The Residential Tenancies Act 2006 sets these rules, and they cannot be overridden by anything written in the lease.
Red flags to watch for
Ontario law does not permit damage or security deposits. A lease requiring one is asking for an unlawful payment you can refuse or recover.
The rent deposit is capped at the rent for one rent period. A deposit equal to first and last month plus extra exceeds what the landlord can lawfully collect.
The rent deposit can only be applied to the last month's rent; a clause letting the landlord use it for repairs or cleaning misstates the law.
The landlord must pay annual interest on the deposit at the rent increase guideline; a lease that is silent on, or denies, interest is not compliant.
A landlord may take a refundable key deposit only up to the expected cost of replacing the key, fob, or card — not an arbitrary amount.
A landlord cannot require post-dated cheques or automatic debit as a condition of the tenancy; presenting them as compulsory is not permitted.
Your legal rights
The Residential Tenancies Act 2006 governs residential rent deposits in Ontario. A landlord may collect a rent deposit of no more than the rent for one rent period, and the deposit may only be applied to the rent for the final rent period of the tenancy — it cannot be used for damage, cleaning, or arrears during the tenancy. The landlord must pay the tenant interest on the deposit every 12 months at the rate of the annual rent increase guideline. Damage deposits and security deposits are not permitted. A landlord may take a refundable key deposit limited to the reasonable cost of replacing the key or fob, and cannot require post-dated cheques or automatic payments. Disputes are handled by the Landlord and Tenant Board, and any lease term that conflicts with the Act is void.
Questions to ask before you sign
- 1Is the only deposit being charged a rent deposit, and is it limited to one month's rent?
- 2Does the lease correctly state that the rent deposit applies only to the last month's rent?
- 3Will the landlord pay annual interest on the deposit at the guideline rate?
- 4Is any damage, security, or pet deposit being requested — and do I understand those are not allowed?
- 5If there is a key or fob deposit, is it limited to the actual replacement cost and refundable?
- 6Am I being required to provide post-dated cheques or automatic payments?
- 7Does any term in this lease conflict with the Residential Tenancies Act, making it void?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.