You collected a security deposit to protect your investment against damage, missed rent and other common tenant issues. But when are you allowed to actually use all or a portion of a tenant’s security deposit? Here are some general rules.
- To return the unit to its original condition at the end of a lease term (not upgrade or improve the unit).
- To repair property damage caused by a tenant (this does not include normal wear and tare).
- To clean the property if it’s excessively dirty when turned back over to you.
- To pay for removal of property left by the tenant.
- To make up unpaid rent.
Most provinces require Landlords to send a letter to the tenant notifying them of their intent to use their security deposit funds and to provide an itemized list of deductions and receipts for any repairs they claim to have made. If notification does not satisfy local law, landlords may forfeit their right to use the funds on deposit. Also, the landlord may be required to conduct a walk through with the tenant(s) to point out their reasons for withholding all or a portion of the security deposit and give the tenant a chance to dispute their claims and/or time to make necessary repairs.