Ontario Deposit Disputes: How Tenants Can Resolve Issues

If you’re a tenant in Ontario, trying to recover your deposit at the end of a lease can feel confusing, especially if disagreements arise. The province has specific rules governing deposit disputes under the Residential Tenancies Act, 2006^[1]. This article explains your rights, common problems, and how to take action if your landlord refuses to return your deposit or makes deductions you believe are unfair.

Understanding Rental Deposits in Ontario

In Ontario, landlords can only collect a rent deposit (often called a last month’s rent deposit). Security or damage deposits are not allowed. This deposit is meant to cover the last month’s rent, not damages or unpaid utilities.

• The deposit amount cannot be more than one month’s rent.
• Landlords must pay you annual interest on your deposit at the law’s prescribed rate.

For a full overview, visit Understanding Rental Deposits: What Tenants Need to Know.

Common Causes of Deposit Disputes

Disagreements over deposits usually happen for a few reasons:

• The landlord refuses to return the last month’s rent deposit after you move out.
• The landlord wants to keep all or part of the deposit for repairs or cleaning.
• Interest on the deposit hasn’t been paid as required.

Remember, in Ontario, your rent deposit cannot be used for damages or cleaning. The law is very clear on this point. In situations like these, following the correct process is key to protecting your rights and resolving the issue.

How to Try Resolving the Dispute Directly

It’s best to start by communicating with your landlord in writing. State what you believe you are owed and politely ask for an explanation or payment by a specific date.

Filing a Formal Complaint: Steps for Tenants

If talking to your landlord doesn’t work, tenants in Ontario can apply to the Landlord and Tenant Board (LTB) to resolve the dispute. The most common official form used is:

• T2: Application about Tenant Rights
  
  • Form number: LTB Form T2
  • When to use: If your landlord won’t return your last month’s rent deposit or pay the required interest.
  • Get the T2 form (Landlord and Tenant Board)

How it works: Complete the T2, including details and evidence like your lease, payment receipts, and written communications. File the form online, by mail, or in person at the Board. There is a fee, but you may request a fee waiver if you can’t afford it. The Board will review both sides and issue a legally binding decision.

Useful Documents and Inspections

It helps to have:

• Your lease or rental agreement
• Deposit payment receipts
• Any move-in or move-out inspection reports
• Copies of letters or emails between you and your landlord

For more on preparing for moving out and inspection, read The Final Inspection: What Tenants Need to Know Before Moving Out.

What the Law Says in Ontario

The rules about deposits are found in the Residential Tenancies Act, 2006. It outlines:

• What deposits landlords can and can’t collect
• Requirements for interest payment
• Penalties if a landlord fails to follow the law

If the Board decides in your favour, they can order the landlord to return your deposit, pay interest owed, or even compensate you for extra costs.

Helpful Tips for Tenants Facing Deposit Disputes

• Always pay your last month’s rent on time to avoid confusion over the deposit.
• Request a receipt for your deposit and interest payments.
• Document the condition of the rental when you move in and out.

If you’re moving, check out How to Get Your Security Deposit Back with Interest When Moving Out.

Learn more about your rights at Tenant Rights in Ontario and find additional support below.

Want to find your next home? Browse apartments for rent in Canada with easy-to-use tools and up-to-date listings.

Frequently Asked Questions about Deposit Disputes in Ontario

1. Can my landlord keep my last month’s rent deposit as a damage deposit?
   No. In Ontario, the rent deposit can only be used for the last month’s rent. It cannot be used for damages, cleaning, or other charges.
2. What if my landlord refuses to pay interest on my deposit?
   If your landlord does not pay required interest, you can ask for it in writing. If needed, file a T2 application with the Landlord and Tenant Board.
3. How long does my landlord have to return the deposit?
   Since Ontario’s deposit is for last month’s rent, it is not automatically returned—it is applied to your final rent payment. Any interest owing must be paid annually and/or when you move out.
4. Can I use my deposit to cover repair costs?
   No. The deposit cannot be redirected by the tenant for other expenses or repairs. It is specifically for the last month’s rent only.
5. What can I do if the landlord deducts money from my deposit illegally?
   Keep records and apply to the Landlord and Tenant Board using the T2 form to seek recovery and compensation if your landlord wrongfully withholds the deposit.

Key Takeaways for Tenants

• Ontario rent deposits cover only the final month’s rent—never damages.
• Landlords must pay annual interest on deposits by law.
• If disputes arise, try to resolve matters in writing before applying to the Landlord and Tenant Board.

By knowing your rights and using official forms, you can confidently resolve most deposit disputes.

Need Help? Resources for Tenants

• Landlord and Tenant Board Ontario – Applications, process info, tenant-landlord dispute resolution
• Ontario Ministry of Municipal Affairs and Housing: Renting in Ontario
• Advocacy Centre for Tenants Ontario – Free legal info and tenant support
• Tenant Rights in Ontario – Overview of tenant and landlord rights

1. Residential Tenancies Act, 2006 (Ontario)
2. Landlord and Tenant Board (Ontario) Official Website
3. Ontario Government: Renting in Ontario