|
|
|
|
Legal Line® provides Free legal information to Canadians through its website, telephone and fax-on-demand systems.
1,000 topics are covered within 35 areas of law...
Search...
Ontario|Landlord & TenantResidential 436 Security deposits and interest
- The only security deposit allowed: last month's rent
Most landlords require that new tenants pay a security deposit before they move in. When a landlord asks a tenant to pay the last month's rent, this is a security deposit. Generally, landlords are not allowed to charge tenants additional fees or charges above rent. For example, a landlord cannot charge a "key deposit", or a repair deposit, or any amount other than a last month's rent deposit. If the landlord charges a security deposit, it must be held and used to cover the tenant's last month's rent. Each time the rent increases, the landlord can require the tenant to top up their last month's rent deposit to the new amount.
- Landlords required to pay annual interest on last month's rent
Since the landlord does not use the security deposit until the end of the tenancy, the landlord is required to pay the tenant interest on the security deposit at a rate of 6% per year. However, if a tenant rents a unit for only part of a year, the interest owing is proportionate to the length of time that the deposit was held by the landlord.
Although landlords are supposed to pay interest to tenants every 12 months, if they do not, the interest owing to the tenant is compounded each year. If tenants want to collect the interest owing, they may be able to subtract it from their rent if the landlord consents. If a landlord refuses to pay interest to a tenant, the tenant can apply to the Ontario Rental Housing Tribunal for an order requiring the landlord to pay.
For additional information about security deposits and interest, you can call the Ontario Rental Housing Tribunal information line listed in the Blue pages of the telephone book.
|