Is a Security Deposit Legal in Ontario?
Damage deposits and pet deposits are illegal in Ontario. The only deposit a landlord can collect is a rent deposit for the last rental period. Here is what the RTA actually allows.
The Short Answer
In Ontario, a landlord cannot collect a damage deposit, a pet deposit, a cleaning deposit, or any other "security deposit" — with one exception. Section 105(1) of the Residential Tenancies Act, 2006 (RTA) says: "The only security deposit that a landlord may collect is a rent deposit collected in accordance with section 106."
That rent deposit is what most people call "last month's rent."
What a Rent Deposit Can Be
Under section 106, a landlord may require a rent deposit on or before entering the tenancy agreement — but it cannot be more than one rental period's rent (one month, for a monthly tenancy). It can only be applied to the rent for the last period of your tenancy. It is not the landlord's money to spend on repairs, cleaning, or anything else.
Your landlord also owes you interest on the deposit every year, at a rate equal to the annual rent increase guideline (2.1% for 2026). Most landlords never pay it — but the obligation is in section 106(6), and unpaid interest can be deducted from a rent payment or claimed at the Landlord and Tenant Board.
What Is Illegal
- Damage deposits — illegal, no matter what the lease says.
- Pet deposits — illegal, even if you have a pet.
- Cleaning or "move-out" fees collected up front — illegal.
- Post-dated cheque requirements — a landlord cannot require them (section 108).
Section 134 of the RTA prohibits a landlord from collecting any fee, premium, commission, or charge that is not lawful rent. A lease clause requiring an illegal deposit is void, and the money is recoverable.
The One Grey Area: Key Deposits
A refundable key deposit is permitted, but only up to the actual replacement cost of the keys or fob, and it must be returned when you hand the keys back. A non-refundable key charge is illegal.
How to Get an Illegal Deposit Back
- Write to your landlord, cite section 105 of the RTA, and ask for the money back.
- If refused, file a T1 application (Tenant Application for a Rebate) with the Landlord and Tenant Board.
- Do it within one year of the payment — the RTA imposes a one-year limitation period.
Before you sign a lease that demands a "deposit," check what it actually says. A clause demanding a damage deposit is a red flag for other illegal terms.
Frequently Asked Questions
Can my landlord ask for first and last month's rent in Ontario?
Yes. First month is rent, and last month is a lawful rent deposit under section 106 of the RTA. That combination is legal. Anything beyond it — damage deposit, pet deposit, extra months — is not.
Can my landlord keep my deposit for damage when I move out?
No. A rent deposit can only be applied to the last period's rent. If a landlord wants compensation for damage, they must apply to the Landlord and Tenant Board and prove it — they cannot simply keep deposit money.
Is a pet deposit ever legal in Ontario?
No. There is no pet-deposit exception in the RTA. A landlord who collects one is collecting an illegal charge under section 134, and you can recover it through a T1 application.
Does my landlord owe me interest on my last month's rent deposit?
Yes, annually, at the rent increase guideline rate for that year (2.1% in 2026), under section 106(6) of the RTA.
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