Damage deposits and key deposits in Ontario rentals

In a tenancy covered by Ontario's residential tenancy rules, a landlord generally cannot require a damage deposit. A refundable key deposit is treated differently and must meet the applicable requirements, including the limit tied to replacement cost. A last month's rent deposit serves a separate purpose.

Keep the lease, payment request, receipt, and any statement explaining how the deposit will be used. Identify whether the payment was mandatory, refundable, and actually applied to rent or another charge. Do not assume every amount described as a deposit is lawful or unlawful without checking its purpose. An LTB rebate application may be relevant, but deadlines and the correct legal basis need review. Ask for a clear written accounting before escalating the dispute.

Ask for the payment's purpose and refund conditions in writing. A charge described as security, cleaning, furniture protection, or pet protection may need examination even if the lease avoids the words damage deposit. Keep proof showing whether you had a real choice about paying it. If the landlord says the amount has already been used, ask for the accounting and the legal basis. Do not assume a label on a receipt determines how the payment is treated under the legislation.

When preparing a dispute, list the date paid, amount, recipient, stated purpose, later deductions, and any amount returned. Separate a last month's rent deposit from a key deposit and other charges. A disputed deduction may also raise a separate allegation of damage, which needs its own evidence and appropriate process. Before filing, review the application instructions and limitation requirements for the particular amount. A complete payment history helps identify whether the issue is an unlawful requirement, a failure to return funds, or a disagreement about a legitimate charge.

Sources

• LTB T1 instructions for rebates and illegal charges
• Ontario guide to the standard lease

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General Ontario legal information, not legal advice for your matter, and reading it does not create a retainer. Sources checked 15 October 2026: check the current law, forms and dates before you act.

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This article is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.