Rent Deposits and Security Deposits in PEI: Tenant Rights

Understanding the rules about rent deposits and security deposits is essential for tenants in Prince Edward Island. These terms are often confused, and getting it wrong can impact your finances and your rights as a renter. This article breaks down what landlords are allowed (and not allowed) to ask for, how deposits work under PEI law, and how to protect your interests if there’s a dispute over your deposit.

What Is the Difference Between a Rent Deposit and a Security Deposit?

In Prince Edward Island, the law draws a clear line between rent deposits and security deposits:

• Security Deposit: Money paid at the start of the tenancy to cover any potential damages or unpaid rent at the end of the lease.
• Rent Deposit: An advance payment of rent (for example, paying the first or last month’s rent upfront).

Under the Prince Edward Island Residential Tenancy Act, landlords may only collect a security deposit — and it’s strictly regulated. Collecting extra rent ahead of time (beyond the first regular rent payment) is not permitted.^[1]

What Deposits Can Landlords Legally Collect in PEI?

The law in PEI is clear:

• Landlords may collect a security deposit at the time of signing the rental agreement.
• The security deposit cannot exceed one month's rent.
• It is illegal for a landlord to demand a "damage deposit," pet deposit, or additional deposits of any kind.
• Landlords cannot require post-dated cheques for rent beyond the first month.

For more details on deposit types, check out Understanding Rental Deposits: What Tenants Need to Know.

How Is the Security Deposit Used?

The security deposit is held by the landlord in trust during your tenancy. It can only be used to cover:

• Unpaid rent at the end of your tenancy
• Damages beyond normal wear and tear

If there's a dispute over the deposit after you move out, you have the right to apply to the tribunal for resolution.

Returning Your Security Deposit

Once you move out, the landlord must return your security deposit with interest, unless they have applied to the tribunal to keep all or part of it to cover damages or unpaid rent. The landlord has ten days after the end of the tenancy or the return of the keys (whichever is later) to return your deposit, or provide written reasons if claiming all or part of it.

For step-by-step tips on getting your deposit back, see How to Get Your Security Deposit Back with Interest When Moving Out.

Forms You Might Need

• Form 9 – Application for Return of Security Deposit
  Use if the landlord fails to return your deposit. Available from the PEI Residential Tenancy Office: PEI Residential Tenancy Forms.
• Form 2 – Notice of Termination by Tenant
  Required if you plan to end your tenancy properly. This notifies your landlord and is available on the same page above.

Who Regulates Rental Deposits in PEI?

All tenant and landlord deposit issues are managed by the Residential Tenancy Office (PEI Justice and Public Safety). If there's a conflict, you can file a complaint or application using the official forms.

For a deeper look at your responsibilities, see Obligations of Landlords and Tenants: Rights and Responsibilities Explained.

What About Interest on Deposits?

Landlords are required to pay you interest on your security deposit. The Residential Tenancy Office sets the interest rate annually. Landlords cannot waive this obligation. The current rate and details can be found on the Residential Tenancy Office website.

For Tenants Moving In or Out: Inspection Matters

Complete a move-in and move-out inspection (with the landlord if possible) and keep records. This can help avoid disputes over damages and deposit deductions later on.

Need to review your general rights as a PEI tenant? Visit Tenant Rights and Landlord Rights in Prince Edward Island. If you're planning a move elsewhere, Explore Houseme for nationwide rental listings to make your search easier.

FAQ: Rent Deposits and Security Deposits in PEI

1. Can my landlord ask for both a security deposit and a last month's rent?
   No, in PEI landlords can only collect a security deposit (up to one month’s rent) and cannot ask for additional rent in advance beyond the standard payment schedule.
2. What happens if my landlord does not return my security deposit?
   File Form 9 – Application for Return of Security Deposit with the Residential Tenancy Office. The tribunal can order the landlord to repay the deposit with interest.
3. How soon should I get my deposit back after moving out?
   Your landlord must return your security deposit with interest within ten days after you’ve moved out or provide written reasons for withholding it.
4. Is an inspection required in PEI when moving out?
   While not mandatory by law, a joint inspection is highly recommended to minimize disputes over the deposit.

Key Takeaways

• PEI landlords are only allowed to collect a security deposit (up to one month’s rent).
• Security deposits must be returned with interest within ten days of moving out (unless claimed for rent or damages).
• If you face problems, contact the Residential Tenancy Office or use official forms to assert your rights.

Need Help? Resources for Tenants

• PEI Residential Tenancy Office – Information, forms, and dispute process
• Prince Edward Island Residential Tenancy Act – Full provincial legislation
• PEI Tenancy Forms (Applications and Notices)
• Tenant Rights and Landlord Rights in Prince Edward Island – In-depth tenant information

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1. Prince Edward Island Residential Tenancy Act: Provincial legislation
2. PEI Residential Tenancy Office: Dispute resolution, forms, and information

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