Security Deposits in Prince Edward Island (PEI)

The Residential Tenancy Act sets tight limits on deposits in Prince Edward Island (PEI). Know them before you sign the tenancy agreement, because breaking them can cost you.

• Maximum: one month's rent, or one week's rent where rent is paid weekly.
• Only one deposit. You cannot require or accept more than one security deposit for a tenancy agreement.
• Only at signing. You can require the deposit only when you and the tenant enter into the tenancy agreement, not later.
• No other deposits. The Act bars any deposit other than the security deposit, so a separate pet deposit, key deposit or holding deposit is not allowed.
• No automatic keep clause. A lease cannot say you automatically keep all or part of the deposit at the end of the tenancy.

If you take too much, the tenant may deduct the overpayment from rent or apply to the Director of Residential Tenancy to recover it. Application, processing and screening fees are also banned. The Office of the Director, called the Rental Office, handles deposit disputes first. IRAC only hears appeals. The Act is posted by the Legislative Counsel Office.

For what tenants are told about the same rules, see the tenant-side PEI security deposit guide. A quick answer on amounts is in how much a landlord can ask for as a deposit.

You must give the tenant a written receipt. Then, within two banking days of receiving the deposit, put it in an interest-bearing account at a financial institution located in PEI. If you have three or more rental units, that account must be a trust account used only for security deposits.

Interest is owed on the full deposit for the whole time you hold it. It runs from the date the deposit is paid to you, and you pay it to the tenant with the deposit. The rate is set by regulation, and the Rental Office publishes a yearly table and an online calculator. The rate for 2026 is 2.75%. The 2025 rate was 2.5%. Use the Rental Office interest rate table rather than working out the formula yourself.

You may charge for keys, but only within limits. You can charge the actual cost of replacement keys or of extra keys the tenant asks for. You cannot charge for new keys that became necessary because you changed the locks.

Within 15 days after the tenancy ends or is assigned, you must do one of two things: return the deposit with interest, or apply to the Rental Office for an order about the deposit. Here is the sequence.

1. Do the move-out inspection with the tenant and complete the condition report (see the next section).
2. Calculate the interest owed from the date the deposit was paid.
3. Decide whether you will return everything or claim part of it.
4. If you are returning it, pay within 15 days by cheque mailed to an address the tenant gives, in person, or by electronic transfer.
5. If you plan to keep any of it, file a Landlord Application to Determine Dispute (Form 2B) with the Rental Office within the same 15 days. The option to choose is (e), to make a claim against the security deposit.

Without an application, you may keep money only in two cases. The first is where the tenant agrees in writing, at the end of the tenancy, that you can keep an amount to cover something the tenant owes. The second is to cover an amount the Director has already ordered the tenant to pay that remains unpaid. A written statement of deductions on its own is not enough.

If the tenant gives no address within six months after the tenancy ends and you made reasonable efforts to repay, you may keep the deposit.

The Act does not give a list of allowed deductions. You either get the tenant's written agreement, rely on an earlier unpaid Director order, or prove your claim to the Director. The Rental Office says the burden of proof is on the landlord to show a valid reason for keeping the deposit.

Your claim usually rests on what the tenant must do when leaving. The tenant must leave the unit reasonably clean and undamaged, except for reasonable wear and tear, and must return all keys. The tenant must also repair undue damage caused by the tenant or anyone the tenant allowed onto the property. The tenant does not have to repair reasonable wear and tear, so you cannot claim for it.

For tenancies that started on or after April 8, 2023, the landlord and tenant must inspect the unit together at move-in and again at move-out. You offer at least two reasonable times, complete the approved report (Form 5, Landlord Condition Inspection Report), and both sign. The tenant gets a copy. If the tenant does not take part on either offered occasion, you can inspect alone and give the tenant a signed copy. The move-out inspection happens before a new tenant moves in.

If you skip the reports, the Act does not say you automatically lose your claim. It does say the Director may draw an adverse inference against a landlord who did not comply, which can weaken your case. For more on reports, see the PEI condition reports guide.

This is the costly part. If you neither return the deposit nor apply within 15 days, the Act says you cannot make a claim against the deposit and you must pay the tenant double the amount of the deposit. The Rental Office describes this as something you "may be required" to pay, while the Act uses "shall pay". Plan as if double is on the table.

The tenant uses Form 2A, option (h), to request the return of the deposit. Applications can be made during the tenancy or within six months after it ends. Where you have done neither, the Director can make an order without a hearing.

Either side can appeal an order to IRAC within 20 days, or 7 days for an order to vacate for non-payment or cause. Orders under $50 cannot be appealed. If you are owed more than the deposit, claim it from the Rental Office on Form 2B, which can also be done within six months after the tenancy ends. The Director has exclusive jurisdiction over matters under the Act, so this is not a small claims court matter.

See the Rental Office deposit FAQ for its own wording on these steps.

If you sell the property

The deposit obligations pass to whoever acquires your interest in the unit. The new landlord must give the tenant written notice of its name and service address, and of the deposit and interest held.

If you took too much

The tenant may deduct the overpayment from rent or apply to the Director. Fix it early, because the Rental Office can order repayment.

If the tenant leaves unexpectedly

A tenant who leaves without ending the tenancy properly is covered by the abandonment rules, and you must try to limit your losses. Belongings left behind have their own storage and disposal rules. Do not seize them to cover rent. If you also need to end a tenancy, see the PEI landlord starter guide for the basics of leases and forms. A short answer on keeping deposits is at when a landlord can keep a security deposit.

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