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.

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.

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.

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