Applying Deposits Towards Rent
The Residential Tenancy Act outlines two types of deposits – security deposits and pet damage deposits.
A security deposit – sometimes referred to as a “damage deposit” – is money that a landlord collects at the start of the tenancy and holds until the end of the tenancy. According to section 19(1) of the Residential Tenancy Act, the maximum amount a landlord can charge for a security deposit is half the monthly rent. If a landlord requires a security deposit, the tenant must pay it within 30 days of the date it is required to be paid.
A security deposit secures the tenancy for the tenant and landlord. Once you have paid your deposit, you cannot decide to move in somewhere else, and your landlord cannot decide to rent to someone else. If you pay a security deposit but then change your mind about moving in, the landlord may be allowed to use your deposit to cover unpaid rent. You may even have to pay additional money beyond the security deposit to cover the costs associated with re-renting the unit, or to cover your landlord’s lost rental income if they have trouble finding a replacement tenant.
In addition to unpaid rent, a security deposit protects the landlord against damage caused to the rental unit. If your landlord believes you are responsible for damage beyond reasonable wear and tear, they can apply to the Residential Tenancy Branch (RTB) for permission to keep your security deposit.
Pet Damage Deposits
If you are allowed to have a pet, your landlord can require a pet damage deposit of up to half the monthly rent. This is the maximum amount a landlord can charge, regardless of the number of pets they allow you to have. You will have to pay this deposit either at the start of your tenancy, or when you get a pet at any point during your tenancy. If your pet causes significant damage or unreasonably disturbs others, your landlord may have grounds to evict you and keep your pet damage deposit. See TRAC’s webpage, Pets, and Residential Tenancy Branch Policy Guideline 31 for more information.
Guide dogs: If you have a dog that falls under the Guide Dog and Service Dog Act, your landlord must allow it and cannot require a pet damage deposit.
Applying a Deposit Towards Rent
According to section 21 of the Residential Tenancy Act, you are not allowed to apply your security deposit towards rent without your landlord’s permission. For example, you cannot pay only half of your last month’s rent and tell your landlord to cover the remaining half with your security deposit, unless you have their written consent.
Overpaying a Deposit
The maximum amount a landlord can charge for a security deposit or pet damage deposit is half the monthly rent. In other words, if a landlord requires both deposits, they can ask for one full month of rent. If you have overpaid for either a security or pet damage deposit, section 19(2) of the Residential Tenancy Act allows you to withhold the overpayment from next month’s rent. Some landlords may not be aware that tenants have this right, so make sure to clearly communicate with your landlord if you decide to withhold rent for this reason. See TRAC’s template letter, Withholding Overpayment of Deposit from Rent. Alternatively, you can apply for dispute resolution through the Residential Tenancy Branch to recover the overpayment..
When a tenant would like to have a security and/or pet damage deposit returned, the first step is to provide the landlord with a forwarding address in writing indicating where the deposit(s) can be sent. While this typically happens just before or after moving out, a tenant can provide their forwarding address within one year of the end of the tenancy. See TRAC’s template letter, Return of Security / Pet Damage Deposit. Make sure to have evidence that you provided your forwarding address, such as a witness or registered mail confirmation. You should also have the option to list your forwarding address on the move-out condition inspection report.
Once you have provided your forwarding address in writing and your tenancy has ended, your landlord has 15 days to take one of the following three actions:
- return your deposit;
- get your written permission to keep some or all of your deposit, and return any amount owed to you; or
- apply for dispute resolution to keep some or all of your deposit.
Your landlord can return your deposit by delivering it in person, mailing it, leaving it in your mailbox or mail slot, or sending it electronically. According to section 5 in Schedule of the Residential Tenancy Regulation, “a landlord must not charge a fee in relation to any cost incurred by the landlord to repay a deposit”
Your landlord cannot simply decide on their own to keep your deposit. If they want it, they need written permission from you or the Residential Tenancy Branch (RTB). After 15 days, if your landlord has not returned your deposit, obtained your written permission, or applied for dispute resolution, you have the right under section 38 of the Residential Tenancy Act (RTA) to apply for double the amount of your deposit.
Interest Payable on Deposits
Section 4 of the Residential Tenancy Regulation states that,
The rate of interest under section 38 (1) (c) of the Act [return of deposits] that is payable to a tenant on a security deposit or pet damage deposit is 4.5% below the prime lending rate of the principal banker to the Province on the first day of each calendar year, compounded annually.
Since 2009, no interest has been payable on deposits. But for 2023, the interest payable is 1.95%.
To help you calculate how much interest, if any, is owed on your deposit(s), use the Residential Tenancy Branch’s Deposit Interest Calculator.
Right to Deposit Forfeited
If your landlord does not give you a chance to participate in a move-in or move-out condition inspection, or does not provide you with a copy of either report within the required timelines, they lose the right to claim against your security or pet damage deposit for damage to the rental unit. Conversely, if you fail to participate in an inspection after receiving two opportunities, you may lose the right to have your deposit(s) returned. See sections 24 and 36 of the RTA for more information.
Previous Legal Decisions
- Tenant awarded double security deposit
- Landlord may not collect last month’s rent as deposit
- Tenant may deduct money paid as deposit for last month’s rent