Last Month's Rent Deposit Rules in Ontario
Ontario law prohibits traditional security deposits. The only deposit a landlord may collect is a Last Month's Rent (LMR) deposit — equal to one month's rent — which must be applied to the tenant's final month of rent. Landlords must pay annual interest on this deposit.
Educational purposes only: The information on this page is for general educational purposes. RentalDistrict does not provide legal advice.
Laws vary and change — always verify information with official government sources and consult a qualified legal professional for advice about your specific situation.
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Tenant Rights
- Right to have the LMR deposit applied to the last month of rent when the tenancy ends
- Right to receive annual interest on the LMR deposit at the same rate as the provincial rent increase guideline
- Right to file a T1 Application if an illegal deposit was collected or interest was not paid
- Right to have any illegal deposits (security deposits, pet deposits, damage deposits) returned
Landlord Obligations
- Collect no more than one month's LMR deposit (cannot collect a separate security deposit)
- Pay annual interest on the LMR deposit equal to the provincial rent increase guideline
- Apply the LMR deposit to the last month's rent — not to damages
- Issue a receipt for the LMR deposit if requested
- Return any excess deposit collected above the legal limit
Important Limitations
In Ontario, a landlord cannot collect a security deposit, pet deposit, damage deposit, or key deposit. These are all prohibited under the RTA. A landlord may require a key deposit but only if the deposit is refundable and does not exceed the replacement cost of the key. The LMR deposit cannot be used to cover damage — landlords must use the LTB process to claim compensation for damage at the end of a tenancy.
Relevant Forms
Related Processes
Frequently Asked Questions
What are tenant rights under Last Month's Rent Deposit Rules?
Right to have the LMR deposit applied to the last month of rent when the tenancy ends Right to receive annual interest on the LMR deposit at the same rate as the provincial rent increase guideline
What are landlord obligations?
Collect no more than one month's LMR deposit (cannot collect a separate security deposit) Pay annual interest on the LMR deposit equal to the provincial rent increase guideline
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