If you’re a tenant in Ontario, concerns about security deposits are common, especially when moving out or ending a tenancy. Ontario’s rules about deposits can be confusing, and disputes over their return are a frequent source of conflict between tenants and landlords. This article explores some of the most notable decisions from the Landlord and Tenant Board (LTB) regarding security deposit disputes, empowering Ontario tenants to better understand their rights and what to do if an issue arises.

Ontario's Legal Landscape: Security Deposits and Tenant Rights

Unlike many other provinces, Ontario law does not allow landlords to collect a traditional security deposit. Instead, landlords can require a "rent deposit"—essentially the last month’s rent—which may only be applied to the final month of tenancy. The Residential Tenancies Act, 2006 spells out all rules about deposits, returns, interest, and permitted deductions.^[1]

If a landlord asks for a deposit to cover potential damages or cleaning, they are violating Ontario law. Disputes often occur over the return of the last month’s rent, unpaid interest, or improper deductions. For a deeper background, see Understanding Rental Deposits: What Tenants Need to Know.

What Is (and Isn’t) Allowed?

• Landlords may collect a rent deposit (up to one month’s rent) at the start of your tenancy.
• The deposit must be used for your last month’s rent only.
• Landlords must pay tenants annual interest on the deposit, at a rate set by the LTB each year.
• Security deposits for "potential damage" or "cleaning" are not allowed.

Important Tribunal Decisions: Security Deposit Disputes

The Landlord and Tenant Board regularly hears cases from tenants and landlords about rental deposits. Recent decisions help clarify the law and provide practical guidance.

Key Case Examples

• Case: Return of Deposit – A.V. v. J.O. (LTB, 2022)
  The landlord withheld a portion of the last month’s rent deposit to cover damage allegedly caused by the tenant. The LTB ruled that such deductions are not permitted. The landlord was ordered to return the withheld amount and pay interest.
• Case: Interest on Deposit – B.K. v. L.S. (LTB, 2023)
  A tenant filed an application when a landlord failed to pay the required yearly interest on the last month’s rent deposit. The Board decided in favour of the tenant and ordered the landlord to pay the outstanding interest amount.
• Case: Deposit for Key or Cleaning – M.R. v. S.P. (LTB, 2021)
  The landlord charged a deposit "in case of lost keys and to cover cleaning costs." The LTB ruled this was illegal, and the landlord was required to return the deposit in full.

Most LTB decisions align closely with Ontario’s strict rules: only last month’s rent deposits are legal, and any other security deposit must be returned in full to the tenant.

How to Address Deposit Disputes: Forms and Your Next Steps

If your landlord refuses to return your rent deposit, does not pay annual interest, or withholds amounts for damages, you have options for resolving the issue. In most cases, tenants begin by applying to the Landlord and Tenant Board.

Essential Forms for Tenants

• Form T1: Tenant Application for a Rebate of Money the Landlord Owes
  If your landlord hasn’t returned a deposit or interest as required, file a T1 Application with the LTB. Practical example: if your landlord refuses to pay interest on your last month's rent deposit, submit a T1 to claim it.^[2]
• Form L9: Application to Collect Rent Deposit
  This form is for landlords, but tenants should be familiar with it. It’s used when the last month’s rent deposit is not paid in full by the tenant at start of tenancy.

Your Rights During Moving Out

At the end of your tenancy, you may face pushback over the deposit or deductions. For tips and a step-by-step guide to closing out your rental, see How to Get Your Security Deposit Back with Interest When Moving Out.

For a complete overview of your local legal protections, view Tenant Rights in Ontario.

FAQ: Security Deposit Disputes and Ontario Rental Law

1. Can my landlord keep my deposit for damages or cleaning? No. In Ontario, the only permitted deposit is last month’s rent, and it can’t be used for damages or cleaning. Landlords can pursue separate claims for damages, but cannot withhold the deposit.
2. Am I owed interest on my rent deposit? Yes. Landlords must pay interest on your rent deposit every year, at a rate set by the Landlord and Tenant Board.
3. What do I do if my landlord refuses to return my deposit? File a T1 Application for a Rebate with the LTB and provide evidence of the withheld amount. You can find instructions on the LTB website.
4. What if I accidentally paid a damage deposit? File a T1 Application to have it refunded. The LTB will require your landlord to return any illegal deposits.

Conclusion: Key Takeaways for Ontario Tenants

• Security deposits as damage protection are not legal in Ontario; only last month’s rent deposits are allowed.
• Tribunal decisions almost always favour returning any illegal deposits to tenants.
• If you have a dispute, prompt action and filing the right LTB form is essential to protect your rights.

Understanding the law and following the proper steps can make a big difference in resolving deposit disputes with your landlord.

Need Help? Resources for Tenants

• Contact the Landlord and Tenant Board (LTB) for forms, filing applications, and guidance.
• Read more on Understanding Rental Deposits: What Tenants Need to Know.
• Explore comprehensive tenant protections at Tenant Rights in Ontario.
• Find rental homes across Canada on Houseme.

---

1. Residential Tenancies Act, 2006 (Ontario)
2. Landlord and Tenant Board Official Website

Categories

Tenant Rights & Responsibilities Rent & Deposits Leases & Agreements Moving In / Out Maintenance & Repairs Evictions Roommates & Shared Housing Discrimination & Accessibility Utilities & Services Affordable Housing & Subsidies Dispute Resolution & LTB Safety & Security Privacy & Entry by Landlord Special Tenancy Situations Tenant Insurance & Liability Post-Eviction Resources Landlord Compliance & Penalties Legal Precedents & Case Summaries Mental Health & Tenancy