Everything You Need To Know About Rent Deposits
2 min read.
Did you know that landlords are obligated to pay you interest on your rent deposit?
If this comes as news to you, then you're in the right place. For many first-time renters, navigating the world of rental agreements can be a complicated task, especially when it comes to financial matters. One crucial aspect to be aware of is the concept of rent deposits, which landlords in Ontario are legally allowed to request from tenants.
The Residential Tenancies Act (RTA) outlines the rules surrounding rent deposits. According to the RTA, landlords can request a rent deposit, which should not exceed one full month's rent or the rent cost for one rental period, whichever is less. Interestingly, both the first and last month's rent can be requested as part of this deposit. However, it's essential to understand that these amounts aren't technically considered deposits in the traditional sense. The first month's rent is used to cover the initial month of the tenancy, and the last month's rent is essentially prepaid through this deposit. Therefore, when tenants decide to end their tenancy, they are only required to pay the second-to-last month's rent, as the last month's rent has already been accounted for.
Furthermore, landlords are obligated to pay interest on the rent deposit to tenants every 12 months. The interest rate corresponds to the yearly rent increase guideline set by the province for each calendar year. If renters wish to collect the owed interest, they may deduct it from their rent with the landlord's consent. However, if a landlord refuses to pay the interest, renters can take the matter to the Landlord and Tenant Board, seeking an order requiring the landlord to pay or an abatement of rent.
To ensure a transparent and equitable rental experience, it's crucial to familiarize yourself with the RTA regarding rent deposits. Effective communication, diligent documentation, and adherence to legal procedures are fundamental in preventing disputes and protecting the rights of both landlords and tenants in your rental relationship.
References
Park, G. (2023, August 16). FAQ: Everything you need to know about rent deposits in Ontario. liv.rent. https://liv.rent/blog/rental-laws/faq-everything-you-need-to-know-about-rent-deposits-in-ontario/
Residential Tenancies Act, 2006. Ontario.ca. (2018, November 19). https://www.ontario.ca/laws/statute/06r17#BK170
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