Security Deposits for Alberta Landlords

No more than one month's rent under the agreement, measured when the tenancy starts. Section 43 of the Residential Tenancies Act also bars you from requiring the tenant to pay a higher deposit later, so a rent increase never raises the deposit.

The name you give a charge does not matter. Any refundable fee counts as part of the security deposit. A refundable pet deposit or key deposit therefore comes out of the same one-month limit, and the total of all refundable amounts cannot go over it.

Alberta has no separate pet deposit category. A non-refundable pet fee is different. The Residential Tenancies Act Handbook says a fee that you keep and never return is treated as rent, not a deposit, so the cap does not apply to it. Say clearly in the lease which charges are refundable and which are not.

This guide is for landlords. The tenant's view is in the Alberta security deposit guide.

Within 2 banking days after you receive a money deposit, put it into an interest-bearing trust account at a bank, treasury branch, credit union or trust corporation in Alberta. The deposit is not your operating money.

You owe the tenant interest on a deposit paid in money. It is paid each year, or, if you and the tenant agree in writing, it can be compounded and paid at the end of the tenancy. The rate is set by regulation at 3% below the Alberta Treasury Branches one-year cashable GIC rate in effect on November 1 of the previous year. If your lease sets a higher rate, the higher rate applies.

The government publishes the rate each year on its security deposit interest rate page. Check it each January, because the rate changes with the GIC rate.

The Act does not require a landlord to give receipts, but the government recommends a receipt for the deposit and any other payment. Tenants can ask for one showing the amount, the date and the parties.

Move-in and move-out inspection reports are mandatory in Alberta. They also decide whether you can deduct for damage. Follow these steps.

1. Inspect the unit with the tenant within one week before or after move-in.
2. Give the tenant a written report of the condition right after the inspection.
3. Repeat the inspection within one week before or after move-out, again with a written report straight away.
4. If the tenant will not take part, offer a time twice, on different days, not on holidays, between 8 a.m. and 8 p.m. After two offers you may inspect alone.
5. Keep the reports for 3 years.

If the inspection requirements were not met, section 46(6) bars any deduction for damage, and the government adds cleaning costs to that. You can still take unpaid rent from the deposit without the reports, and you can still claim the cost of damage from RTDRS or court as a debt. Skipping the reports is also an offence under section 60.

Deductions must follow the conditions the tenant agreed to, so the lease matters. The allowed items are:

• Damage beyond normal wear and tear, if the inspection reports were done.
• Cleaning beyond ordinary use, but only where the tenant agreed to cleaning charges, for example in the lease or in the move-out report.
• Unpaid rent and other arrears.
• Other amounts the tenant agreed to in the lease, such as utilities, late fees or legal fees.

Nothing may be deducted for normal wear and tear, which the Act defines as the deterioration that happens over time with use even when the premises get reasonable care. The Handbook gives carpet as an example. Everyday spills and the slow wear of repeated cleaning are normal. A landlord cannot bill a leaving tenant for replacing a worn-out carpet just because the tenant happens to be the last one on it. Burns, oil stains and similar damage are different.

Late fees and similar charges should reflect your actual loss. The government warns that a fee which does not may be treated as a penalty and refused.

Within 10 days after the day the tenant gives up possession, you must do one of three things.

1. Deliver the whole deposit to the tenant.
2. Deliver the balance of the deposit plus a statement of account showing what you deducted.
3. If you cannot yet work out a deduction, deliver an estimated statement within the 10 days. Then deliver the remaining balance and a final statement within 30 days after the tenant gave up possession.

"Deliver" means personal service, regular or registered mail, or another way you and the tenant agreed to in writing. You do not need to apply to RTDRS or get fresh written consent before making a deduction that the lease allows.

If the tenant ends the tenancy early because of domestic violence, using the certificate route under the Act, they can ask you to apply the deposit to rent for the notice period. The Act requires you to do that on request.

If you sell the building, the buyer takes over your duties on the deposit and must refund it even if the seller never passed it on.

Alberta has no double-deposit penalty. The consequences are these:

• Failing to return the deposit or a statement on time, or deducting for damage without the inspection reports, is an offence with a fine of up to $5,000.
• After a conviction, a court can order you to pay the tenant the deposit with interest.
• A prosecution starts with a written complaint to Service Alberta and Red Tape Reduction and must begin within 3 years.
• The tenant can also apply to RTDRS or court for the deposit. RTDRS accepts claims within 2 years of when the claim came to the applicant's attention, up to $100,000.

If damage costs more than the deposit, you can claim the difference. The RTDRS filing fee is $75 for claims of $7,500 or less and $150 for larger claims. The RTDRS overview explains the process, and this guide to filing an RTDRS claim walks through it.

A tidy paper trail is your best protection: the lease terms, both inspection reports, photographs, receipts for repairs and the statement of account. Starting a tenancy well helps too, and the Alberta landlord starter guide covers the rest of the basics. For a short answer on keeping a deposit, see When can a landlord keep a security deposit?.

This guide explains the rules in general terms; for a specific case, ask the tribunal or a licensed legal professional.