What You Need to Know About Rent Deposits in Ontario
3 min read.
When renting a place to live in Ontario, landlords commonly request a deposit that includes up to two months' rent. The deposit, designated explicitly for the first and last month's rent, raises several questions among renters.
Below are commonly asked questions and answers about rental deposits in Ontario.
Is Last Month's Rent Deposit Legal in Ontario?
Landlords in Ontario are within their rights to ask for a deposit equivalent to one month's rent, with a maximum of two months. It depends on landlords to require both the first and last month's rent as part of the deposit during the application process. Though not mandatory, landlords typically refrain from accepting anything less.
How Does the Last Month's Rent Deposit Function?
The last month's rent deposit is exclusively reserved to cover the rent for the final month of the tenancy. If you are in a 60-day notice of termination, tenants must pay the rent for the second-to-last month, with the last month's rent deposit applied towards the final month's rent.
Is Last Month's Rent Deposit Considered a Damage Deposit?
In Ontario, the last month's rent deposit does not serve as a damage deposit. Any damages to the rental property prompt landlords to pursue compensation through the Landlord and Tenant Board, potentially leading to legal action if the renter does not pay
Is Interest Accrued on the Last Month's Rent Deposit?
Renters are entitled to interest on their last month's rent deposit. Landlords should distribute interest payments to tenants annually, with the interest rate matching the yearly rent increase guideline set by the Ontario provincial government. Alternatively, the interest may be deducted from the amount needed to adjust the rent deposit to match the current rent.
Can Landlords Retain the Rent Deposit?
Landlords can only keep the rent deposit if it is agreed upon to be used as payment for the first and last month's rent. However, if the deposit is not utilized for the final month's rent, landlords are obligated to return it upon termination of the rental agreement.
Understanding the rights and obligations concerning last month's rent deposits is essential for renters to navigate the rental process in Ontario effectively. By being well-informed, renters can protect themselves from potential disputes and ensure a smooth and fair rental experience. Renters should familiarize themselves with the relevant legislation and seek clarification from landlords or legal professionals as needed.
References
Last Month’s rent deposit. Ontario tenants rights. (n.d.). http://www.ontariotenants.ca/law/lastmonthsrent.phtml
Last Month’s rent in Ontario. Bonnie Hoy & Associates. (n.d.). https://bonniehoy.com/last-months-rent-in-ontario/#:~:text=Last%20month%27s%20rent%20deposit%20can,rent%20in%20your%20final%20month.
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