Security Deposits in Nova Scotia: What a Landlord Must Do

The limit is half of one month's rent. Under section 12 of the Residential Tenancies Act, any money or value you take from a tenant on top of the rent is treated as a security deposit. So everything extra counts toward that single half-month cap.

The standard lease has a box for locked-out or key charges up to an amount you set. That is a charge the lease sets, not a deposit.

For the tenant's view, see our Nova Scotia security deposit guide. Short answers are on the Ask page how much can a landlord ask for as a deposit.

The Renting Guide says the deposit goes into a trust account. The regulations require this no later than the third banking day after you receive it, and the standard lease says within 3 days of receipt. Do not mix it with your own money.

You must credit interest to the tenant on the full deposit at the rate set by regulation. That rate has been 0% per year since January 1, 2013, compounded annually, and the regulations list no later change. In practice, a deposit taken after 2012 earns no interest. Deposits held across earlier years can carry interest at the older regulation rates, and the program page offers a security deposit interest calculator.

If you sell the property, the deposit is deemed transferred to the new landlord, who becomes responsible for it. You must transfer the trust account and its records to the buyer. The Renting Guide puts it simply: the trust account stays with the property, not with the landlord.

1. Note the date the lease ends. The 10 days run from the date of termination of the lease, not from the day the tenant hands back the keys.
2. Inspect the unit. The Ending Guide says landlords and tenants should inspect at the end of the tenancy. Compare what you see with the move-in report if you have one.
3. Decide what you may claim. You can claim unpaid rent and damage the tenant is responsible for. You cannot claim ordinary wear and tear.
4. Get the tenant's written consent, or file a claim. If the tenant does not agree in writing to a deduction, file a Security Deposit Claim (Form R) with the Director within the same 10 days.
5. Send the tenant a copy of Form R by registered mail, express post or courier. Email works only if the lease gives an electronic address.
6. Return the balance with interest within the 10 days if nothing is being kept.

If unpaid rent or damage is more than the deposit, you may file an Application to Director (Form J) instead of Form R. Tenants are expected to give you an address where the deposit can be sent, so ask for one before they leave. Find the forms on the Residential Tenancies forms page.

You may deduct unpaid rent and the cost of damage the tenant is responsible for. Under Statutory Condition 4 the tenant must repair damage caused by their own wilful or negligent act, or by anyone they let onto the premises.

You may not deduct ordinary wear and tear. The Act defines it as the usual depreciation or deterioration caused by living in a unit, relative to the length of the lease. A claim for damage must not include those costs.

Cleaning has no separate rule. The tenant must keep the interior ordinarily clean, so a cleaning cost can only be claimed through a Form R or Form J claim that the Director decides. It cannot simply be subtracted from the deposit.

A condition report is not required by law. The standard lease says a signed inspection report within 7 days of the start of the tenancy and within 7 days of the end is recommended, and a report forms part of the lease. The province publishes a Rental Unit Condition Report Form. Photos and condition reports are acceptable evidence on a claim. Our condition reports guide covers the tenant side.

If you neither have the tenant's written consent nor file a Form R within 10 days of the lease ending, you lose the right to apply to keep the deposit. You must return it, with interest.

The tenant has up to one year after the lease ends to apply to the Director, using Form S (Application to Director to return a security deposit) or Form J. If you cannot show the tenant's written consent or a timely Form R within 10 days of being served, the Director may order the deposit returned with interest, plus the application fee, without a hearing.

No double-deposit penalty exists in the Act. There are other consequences:

• A breach of the deposit sections is an offence with a fine of up to $5,000.
• An owner, partner or director of a company that owns or manages the premises is personally liable for deposit breaches.

Treat day 10 as a hard stop and file early. Compare it with the 10-day rule on our Ask page about keeping a deposit.

Keep the lease, the receipt for the deposit, the trust account record, the move-in and move-out reports, dated photos, repair quotes and any written consent from the tenant. The Form R guide says condition reports and photographs are acceptable evidence.

Disputes go to the Residential Tenancies Program, where the Director first tries to mediate. The Form J fee is $31.15. Appeals go to the Small Claims Court within 10 days of the order. The Ending a Tenancy guide walks through the end-of-lease steps.

If you are still choosing tenants, read how to screen tenants legally in Nova Scotia first. This guide explains the rules in general terms; for a specific case, ask the tribunal or a licensed legal professional.