Many landlords charge illegal deposits — know your rights ↓
Ontario has some of the strictest tenant protection laws in North America — including strict limits on what deposits a landlord can collect. Damage deposits, cleaning deposits, and pet deposits are all illegal in Ontario. Yet many landlords continue to charge them because tenants don’t know their rights.
1
Only Two Deposits Are Legal
Under Section 105 of the Residential Tenancies Act (RTA), landlords may only collect at the start of a tenancy:
✅ First month’s rent
✅ Last month’s rent deposit
The last month deposit must be held in trust and earns annual interest tied to the rent increase guideline (0% for 2026). Landlords must provide the interest credit to tenants each year.
2
These Are ALL Illegal in Ontario
Prohibited deposits include:
❌ Damage / security deposit
❌ Cleaning deposit
❌ Pet deposit
❌ Key or fob deposit
❌ Furniture deposit
❌ Any additional month’s rent as “security”
Note: Ontario differs significantly from BC and Alberta, which do allow damage deposits. Don’t assume rules from other provinces apply here.
3
Already Paid an Illegal Deposit? Here’s How to Get It Back
File a T1 Application (Application About Tenant Rights) with the Landlord and Tenant Board (LTB). Filing fee: ~$53. The LTB will schedule a hearing and if the deposit was illegally collected, the landlord will be ordered to repay it — plus potential penalties. You don’t need a lawyer; many tenants handle this themselves successfully.
4
Landlord: How to Legally Protect Yourself
Without a damage deposit, smart landlords protect themselves by:
① Thorough move-in inspection with photos — signed by both parties. This is your strongest evidence at move-out.
② Pricing rent slightly above market to build in a wear-and-tear buffer
③ Getting landlord insurance with tenant damage coverage
④ Rigorous tenant screening: credit check, employment verification, reference from prior landlord
⑤ Filing an L10 (Application to Collect Money) at LTB if damage exceeds normal wear and tear at move-out
Important Nuance
A key deposit is illegal — but a lease clause stating “tenant responsible for actual cost of replacing lost keys/fobs” is perfectly legal. That’s a damage compensation clause, not a deposit. The distinction matters: one is collected upfront without cause, the other is triggered by an actual event.
