Limit - Security Deposit - Before - Laws for Landlords in Alberta

Limit on Amount of a Security Deposit

A security deposit cannot be more than one month’s rent. The amount is based upon the monthly amount of rent at the start of the tenancy. The deposit amount cannot be increased if the rent increases.

It is important to be clear as to what you might ask for as a security deposit, and what might be a non-refundable, one time payment. A security deposit includes all refundable fees. Even if the security deposit includes items such as a refundable deposit for having a pet, for having keys, or for damage to the premises, the total amount can never be more than one month’s rent.

There can also be a separate non-refundable, one time payment for something like having a pet in the premises that does not form part of the security deposit. It is important for you and the tenant to understand any oral or written agreement you have, so that you can determine what is considered a security deposit and what is not.

For example, a rental agreement can state that a tenant pay $100 refundable deposit for possible damages from a pet. That would likely be part of the security deposit and the tenant may receive all or part of that deposit back when he leaves. However if your rental agreement states that the tenant must pay a fee of $100 in order to be allowed to keep a pet in the apartment, that is a one time, non-refundable payment, and you won’t have to return it. The non-refundable fee is not part of the security deposit.

The law places few limits on what you can ask for as a one time fee in the contract. In cases where a landlord is asking for a fee to cover losses he might suffer, for example due to rent being late or a tenant leaving before the tenancy is over, the fee must be a genuine estimate of the losses a landlord might suffer. The fee cannot be so high that it is in fact a penalty rather than a fee. In practical terms, a tenant will have to decide when making the rental agreement with you, whether or not to agree to pay any one time fees as a condition of renting the property.

It is important to give a receipt to tenants for the security deposit and for any one-time fees paid.

A condominium corporation can also request a deposit from an owner for a unit that is being rented. This is in addition to any deposit the owner/landlord might have requested. The landlord must hold security deposits on trust in an interest bearing account. It is not possible for the owner/landlord to use a security deposit to pay for the deposit required by the condominium corporation.

Although a security deposit is usually an amount of money, it can also be an item of property which is equal in value to the amount of a security deposit.

January 2006