Ben  Sage

Ben Sage



(519) 536-7535 ext. 487
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Landlord's Legal Corner - Rental Deposit


A Landlord can retain a maximum deposit of one month’s normal rent.

A Landlord is obligated to pay the tenant interest on the rent deposit every year.  The applicable interest rate is always the same as the Rent Increase Guideline as discussed above.

If the rent increases after the tenant has paid a rent deposit, the Landlord can require the tenant to top-up the rent deposit so that it is the same as the new rent. Rather then actually giving the tenant a cheque, a Landlord is permitted to use the interest on the rent deposit to top-up the rent deposit.  The Landlord should properly document this allocation of interest to the Deposit each year and provide the tenant with a copy of the documentation.

Although the amount of interest that accumulates each year is nominal, it is good advice for a landlord to actually document and deal with the interest each year.  If no records are kept then typically the interest issue is dealt with as an adjustment upon the sale of the rental property as a potential Buyer will not assume this debt if they are retaining the tenant.

Information Provided by:

Derek Truelove

Lawyer, Nesbitt Coulter

35 Perry Street                                                  183 Thames Street South

Woodstock Ontario                                            Ingersoll Ontario

N4S 3C4                                                           N5C 2T6

Tel 519-539-1234 ext 243                                    519-485-5651

Fax 519-539-6832                                              519-485-6582

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