As a landlord in Ontario, one of the most important aspects of managing your rental property is handling security deposits. These deposits serve as a form of protection for landlords in case of any damages or unpaid rent by tenants. However, there are specific rules and regulations that landlords must follow when it comes to security deposits in Ontario.
Understanding Security Deposits
In Ontario, security deposits are also known as rent deposits or damage deposits. They are a one-time payment made by the tenant to the landlord before moving into the rental property.The purpose of this deposit is to cover any potential damages to the property or unpaid rent at the end of the tenancy. According to the Residential Tenancies Act (RTA) in Ontario, landlords can only request a maximum of one month's rent as a security deposit. This amount must be paid before or on the day the tenant moves into the rental property. It is important to note that this deposit cannot be used as a substitute for the last month's rent.
Handling Security Deposits
Once you have received the security deposit from your tenant, you must follow specific guidelines to ensure that it is handled correctly. Here are some expert tips for handling security deposits for rental properties in Ontario:1.Keep it Separate
The RTA states that landlords must keep security deposits in a separate bank account from their personal funds.This account must be interest-bearing, and the interest earned belongs to the tenant. It is essential to keep accurate records of this account and provide statements to your tenants upon request.
2.Provide a Receipt
When you receive a security deposit from your tenant, it is crucial to provide them with a receipt. This receipt should include the date, amount, and purpose of the deposit. It is also recommended to have the tenant sign the receipt as proof of payment.3.Conduct a Move-In Inspection
Before your tenant moves into the rental property, it is essential to conduct a thorough move-in inspection.This inspection should document the condition of the property and any existing damages. It is recommended to take photos or videos as evidence. Both you and your tenant should sign this inspection report.
4.Use a Standardized Form
When it comes to handling security deposits, it is crucial to follow the rules and regulations set out by the RTA. One way to ensure this is by using a standardized form for your rental agreement and move-in inspection report.These forms can be found on the Landlord and Tenant Board's website.
Returning Security Deposits
At the end of the tenancy, landlords must return the security deposit to their tenants within 14 days. However, this timeline may be extended if there are any disputes or damages that need to be resolved. Here are some tips for returning security deposits:1.Conduct a Move-Out Inspection
Similar to the move-in inspection, it is essential to conduct a move-out inspection with your tenant present. This inspection should compare the condition of the property to the move-in inspection report and document any damages that have occurred during the tenancy.2.Deducting from the Deposit
If there are any damages or unpaid rent, landlords can deduct these costs from the security deposit.However, it is crucial to provide an itemized list of these deductions and any remaining balance must be returned to the tenant.
