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Paying an illegal damage deposit

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slowtyper

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As you all know, its not legal for a landlord to demand or collect a damage deposit.

I've been looking at rentals and I have found one I like but the realtor has informed me that the owner will only deal with renters willing to leave a damage deposit. I was told that the owner has had better experiences and received his condo back in better shape with people who agreed to leave a deposit. The owner is apparently also very picky about checking credit records.

On one hand, its blatantly illegal. On the other hand, I see where the owner is coming from with wanting to protect his property.

I haven't decided yet if this is the condo that I want to rent so treat it as a hypothetical, I always have other options. If I do want to rent this condo, what ways do you have to protect your security deposit besides just documenting everything when you move in? Any kind of ammendments to the lease you can make that will protect both the landlord and the renter?

Or would you recommend simply not dealing with this guy?

I was thinking that since damage deposits are illegal, wouldn't that benefit me? If the landlord does try to withhold deposit, doesn't the fact that its illegal give me a lot more leverage? Since its an illegal practice, I think this is something that give the upper hand to the renter and could really backfire on the landlord! Is this not the case?
 
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As you all know, its not legal for a landlord to demand or collect a damage deposit.
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I'm not aware of this at all. Nearly everybody in Toronto collects and holds last month rent, simply another name for a security deposit.

That, and different types of rentals (short-term, long-term, furnished, commercial, etc.) can have different rules as to what may or may not be demanded.
 
I can see where the owner is coming from. I've seen renters mistreat rental buildings. Brand new buildings only a year old, after having the renter live in it looks like it's 5 years old or more. They break the balcony screen doors, ruin the stove, ruin cupboards and storage, dirty the carpets, scratch hardwood floors, poke holes in walls when moving furniture, etc. The list goes on. Who protects the owners?
 
AGTO said:
no one. A tenant can withhold rent for 3 months before the owner can start eviction proceedings.
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Just out of curiosity, what would happen if because of a tenant not paying rent the owner defaulted on the mortgage and the bank took possesion of the home? Would they be able to evict the deadbeat immediately?
 
Im pretty sure its legal to ask for a damage deposit. Most of the rentals I looked at asked for one. I paid a $350 deposit at the place Im at now. Its just a deposit. You get it back when you move out as long as the apartment is in the same condition you got it.

Ask the landlord for their inspection checklist if you are concerned about them lying about the previous condition. They do pre-move in inspections and then one when you move out and compare them to determine whether or not to return the deposit.
 
rbt said:
I'm not aware of this at all. Nearly everybody in Toronto collects and holds last month rent, simply another name for a security deposit.

That, and different types of rentals (short-term, long-term, furnished, commercial, etc.) can have different rules as to what may or may not be demanded.
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Nope. Last months rent is allowed but is only for rent. It is different from a damage deposit.

However, to further define my point of this thread....as an owner, isn't asking for a damage deposit, knowing full well it is illegal (max $25 000 fine) doing the exact opposite of its intended purpose? As mentioned, the tenant can easily report you to the "landlord police" at any time and it seems the the landlord is left holding the short end of the stick in this case.
 
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Tuscani01 said:
Im pretty sure its legal to ask for a damage deposit. Most of the rentals I looked at asked for one. I paid a $350 deposit at the place Im at now. Its just a deposit. You get it back when you move out as long as the apartment is in the same condition you got it.
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It is illegal.

Ontario Tenants Rights Tenant Law Questions Residential Tenancies Act Reports Apartment search Web site search

Last Month's Rent Deposit

Version 1.00 written March 31, 2007


Amount of a Rental Deposit

A landlord can demand a last month's rent deposit on or before the landlord and tenant enter into the tenancy agreement. The rent deposit is to be for one month's rent or the rent for one rental period, whichever is less.

It is illegal for a landlord to demand or to collect a rent deposit of more than one month, or if it is less, then one rental period, (ie. if you pay weekly, then they can only collect one week's deposit.

The rent deposit must be used for the rent for the last month before the tenancy ends. It is a violation of the law to use it for anything else, such as to pay for damages.

If the rent increases after a tenant has paid a rent deposit, the landlord can ask the tenant to pay an additional amount towards the rent deposit to bring it up to the smame amount as the new rent.

It is important to get receipts for all deposits as proof of payment, including key deposits. While the legal onus is on the landlord, when a new landlord purchases a property, it is very common for some to claim they never received any deposits from the previous owner and try to get the tenants to pay the deposits all over again; Don't, you don't have to. It is the problem of the new landlord to collect these deposits paid from the previous landlord, or to somehow provide proof you never paid them when you moved in.


Interest owed to the tenant on the Last Month's Rent Deposit

The landlord must pay tenants interest on the rent deposit every 12 months. The amount a landlord must pay is the same as the rent increase guideline that is in effect when the interest payment is due under section 106, Interest owed on rent deposits. Click here for the annual rent increase guideline amount.

For the transition year, the first year of the new Act, the amount is instead calculated, based upon simple interest for each of the following months:
January 2007 - 0.5% (6% annual amount divided by 12 months);
February through December 2007 - 0.2167% each month (2.6% guideline divided by 12 months).

Landlords are now permitted to deduct from the interest payment any amount needed to legally raise the rent deposit to the amount permitted under the Act.

If the landlord does not pay the interest owed on the last month's rental deposit to the tenant when it is due, the tenant can deduct the interest from a future rent payment or file an application for a rebate with the Landlord and Tenant Board.


What other deposits are permissable?

A landlord can ask for a deposit on keys or pass cards but the amount must be refunded with the return of the keys or pass cards at the end of the tenancy, and can not exceed the expected costs of replacing the keys or pass cards.

If a tenant's cheque is returned for Non-Sufficient Funds, (NSF), a landlord can ask the tenant to pay for the charges the landlord has to pay to the bank, plus an administrative charge of up to $20.00.


Illegal deposits

It is a violation of the law for a landlord to demand or collect a "damage deposit" to cover any possible future damages done to a rental unit.

It is also illegal to have a locker deposit, for a building storage locker, though a refundable key deposit can be asked for though not for more than the replacement cost of the key.


Violations of the Law

Under section 234, Other Offenses, it is a violation of the Act not to pay interest on last month's rent deposit or to charge illegal fees.

And under section 238, Penalties, violations of the Residential Tenancies Act, are punishable by fines of up to $25,000 for each individual, and up to $100,000 for corporations.
If a landlord is breaking the law, you should first verify this by contacting the customer service line of the Landlord and Tenant Board at 416-645-8080 or outside of the 416 calling area, toll free at 1-888-332-3234. If they agree the landlord is breaking the law, then you should inform the landlord of that in writing and keep a copy for your records. And if the landlord will still not comply, then contact the Investigation and Enforcement Unit, (IEU,) of the Ontario Ministry of Municipal Affairs and Housing at 416-585-7214, or outside of the 416 calling area, toll free at 1-888-772-9277, and follow this up with a letter to them with a copy of your letter to the landlord.
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from http://www.ontariotenants.ca/
 
rbt said:
That, and different types of rentals (short-term, long-term, furnished, commercial, etc.) can have different rules as to what may or may not be demanded.
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Also wrong. There are some exclusions to the tenant act but they are stuff like "short term emergency shelter" or situations where you share a kitchen or a bathroom with the landlord. Short term, long term, furnished, unfurnished are all the same. Not sure what you mean by commercial. If you are leasing a retail space obviously the laws are different. If you meant renting from a corporate entity and not a person, also wrong.
 
While damage deposits are perfectly legal in many provinces, and act as a bit of protection to landlords against irresponsible tenants, they are nevertheless illegal in Ontario.

The fact that a landlord wishes to charge a damage deposit doesn't necessarily mean that he's a shit, quite to the contrary he may very well be interested in maintaining the property. If the suite for rent was to my liking, then I would not let the requirement for a damage deposit dissuade me from renting the place.

I've lived and rented in other provinces and almost always got the entire damage deposit back, with interest, when I left the place in good condition. Typically the damage deposit was around 50% of a monthly rent.

It is very important however, to get a pre-move in inspection, signed and agreed to by both parties. Also, get a receipt for the damage deposit, and also ask about interest... although these days interest should be negligible.

Good luck with this, however it turns out...
 
Or you could just tell them you'd pay the deposit so you get the place. Then when it comes to the last month, don't pay it. It's an illegal fee. Just say you found out it is illegal and you want to have nothing to do with it.

BOOM.

You get the place and you don't pay the deposit. When someone is doing something illegal, that person is giving up some rights.
 
Not a great way to start a tenancy, Higher Primate.

And think this through, if there is a problem during the tenancy, do you think the landlord is going to want to be responsive to someone who deliberately went out of their way to mislead at the beginning. Not all landlords incidently realize every intricacy of the landlord /tenant act (myself included).

The landlord should not violate the law, but lying and commiting another wrong is not a smart way to go. I guarantee you that on move out the landlord will go over with a fine tooth comb and any minor damage which would have been accepted will be charged to the Nth degree at the end of the lease.

Landlords can withhold a tenancy without giving a reason.

If you like the place, I would approach the landlord and state you like the place, and make the effort to meet him. State you will provide proper references and show that you have good credit. State that while you understand the "damage deposit request", but was he/she aware that what he/she is a is doing is "not allowed" and you do not wish to be a participant to an illegal act. If the place is in a great location and very popular, hemay however get someone who will just pay what he requests.

As a landlord, I don't request damage deposits. I have a very nice condo that someone's friend thought it would be nice to remodel an inside door by putting his fist through it. I am trying to deal nicely with the tenant but it is ridiculous that as a landlord we have to deal with tenants who have no pride or understanding that this is unreasonable.
When I was a tenant, I took care of my properties and if there was damage, I had it repaired before the landlord even knew( caused by a guest visiting) because I did not think it was something I would have liked the landlord to see and in any event it was never in my view the landlord's issue.
The point is: tenants who treat landlords badly ruin it for all tenants going forward and vice versa.

Now as a small landlord, I am very responsive to my tenants. I get to know them and ask them how I can make their stay enjoyable. Until now, I have had very few problems.

This was a relatively younger person and now I will go out of my way to rent to more mature people. No guarantee but the point is as a landlord you can't help but learn when you get "hurt".

Are there great tenants, yes. Crappy landlords, yes. But the reverse also exists.

If I really liked the property and I were you and did not want to lose it, if the damage deposit is small, I would just pay it with a clear inspection beforehand and an agreement to refund it at the end of the lease with the prescribed rate of interest from the rental act or what the government assigns yearly (which incidently is less than 1% at present).
If the amount is excessive, I would seriously wonder if I wanted to start with that landlord at all.

Good luck.

Good luck.
 
interested said:
If I really liked the property and I were you and did not want to lose it, if the damage deposit is small, I would just pay it with a clear inspection beforehand and an agreement to refund it at the end of the lease with the prescribed rate of interest from the rental act or what the government assigns yearly (which incidently is less than 1% at present).
If the amount is excessive, I would seriously wonder if I wanted to start with that landlord at all.

Good luck.

Good luck.
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This is exactly the kind of thinking that makes landlords think they can get away with charging even a minimal amount for damage deposits. They think "if tenants are smart, they'd follow my advice anyway".

But tenants aren't all smart and not all tenants are passive. It defeats the purpose of the deposit if there is an agreement to refund it. If you are returning that money for sure anyway, why are you so much after it??

Look. Karma begets karma. If you do something illegal, there is a big chance you will be lied to. There is a chance you can get reported and be in big trouble.

Is the damage deposit really worth it? Tenants can go after you and you'd have a bigger headache. Landlords arent all that smart either. You are smart in obeying the law. There are tenants who will think like me. Lie to you and not pay you. Guess what, we're not supposed to pay you, and you can't do anything about it. So what's the solution? Just don't break the law. Evaluate your tenant properly.

The people who made these laws arent monkeys sitting in an office dreaming the whole day. This has been thought through.

To the original poster. Yes you are right in thinking this law gives you leverage as a tenant. It is supposed to protect you from landlords who might scam you with damage deposits. Know that they exist. So don't worry about damage deposits. Its very simple. Don't do anything that's illegal.

There are other laws that protect the landlord from tenants who damage the units, but that's not our subject of discussion here.
 
by the way, a landlord WOULD be responsive to a tenant if he thinks that tenant would pay a damage deposit at the last month of tenancy.

the tenant has every right to NOT PAY that illegal deposit, even if he had promised to do so.
 
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