Requiring Key Deposits

Can a Landlord Use a Key Deposit For Anything Other Than Replacing a Key?

A Landlord May Require a Key Deposit In An Amount Equivalent to Cost of Replacing the Key. The Key Deposit Must Only Be Used For Replacing the Key. It Is Unlawful to Use the Key Deposit For Any Other Purpose. If Otherwise, a Tenant May Apply to the Landlord Tenant Board For Remedy.

Understanding When a Key Deposit Is Legal and What Conditions or Restrictions Apply

A landlord may lawfully require a key deposit; however, such a deposit is subject to various conditions including the requirement that the key deposit be limited to an amount equivalent to the direct costs to replace the key whereas "direct costs" means only the cost of a replacement key (or entry card or other access device) as charged by the supplier without any further sum such as compensation for inconvenience to the landlord.

Note: Please contact DK Legal Practice by phone at: (416) 906-6663 to discuss any specific questions that you may have.

The Law

The conditions are mandated per the Residential Tenancies Act, 2006, S.O. 2006, Chapter 17 as read in combination with O. Reg. 516/06, being a regulation to the Residential Tenancies Act, 2006, which state:

Complete Reading Required

At first glance, if someone were to only read the Residential Tenancies Act, 2006 including section 134(1) without further review of section 17, paragraph 3 within O. Reg. 516/06, it would appear that a key deposit is unlawful.  Accordingly, significant confusion and disputes may, and sometimes do, arise.

Illegal Applying of Deposit Monies

Sometimes a landlord will use a key deposit for a purpose other than replacing the key such as applying key deposit money to the cost of repairing damage.  Per the law shown above, applying key deposit money for anything other than the direct costs of replacing the key is unlawful.  Ironically, even using the key deposit money for the purpose of repairing a damaged door appears as unlawful.

Remedies

When a landlord misapplies or withholds key deposit, a tenant may apply to the Landlord Tenant Board for an Order per section 135(1) of the Residential Tenancies Act, 2006 directing the landlord to properly return the key deposit money to the tenant.  Specifically, section 135(1) states:

When applying to the Landlord Tenant Board for return of key deposit monies unlawfully withheld or applied to another concern, the tenant must use the mandatory Form T1 document as required by the Landlord Tenant Board.

Summary Comment

A landlord may require a key deposit; however, the amount of the deposit must be limited to the direct cost of replacing the key (or card or other access device).  The direct cost means that the sum of the deposit must be equivalent to the amount charged by the supplier of the key.  The landlord is unable to charge a sum that includes compensation for inconvenience to the landlord, or other sum.  Additionally, a key deposit must be applied only to the replacement of a key.  It is unlawful for a landlord to apply monies held as a key deposit for any reason such as rent shortfall, repairs of damage, or for loss of anything other than the replacement of the key.