Last Month's Rent Deposit Rules and Disputes (Ontario)

For Landlords and Tenants Ontario

Step-by-Step Process

1. 1
   Understand What is Permitted

   In Ontario, landlords can ONLY collect: (1) Rent for the first rental period. (2) A Last Month's Rent (LMR) deposit. Landlords CANNOT collect: a security deposit, a pet deposit, a damage deposit, or a key deposit. Any money collected beyond LMR and first month's rent is illegal.
2. 2
   Know the Interest Rules

   Landlords must pay interest on the LMR deposit every year. The interest rate is the same as the annual rent increase guideline for that year. If the landlord fails to pay interest, tenants can claim it in a T1 application at the LTB. The interest does not compound — it is calculated on the original deposit amount.
3. 3
   Application of the LMR

   The LMR deposit must be applied to the tenant's last month of rent before leaving. It cannot be used for damages. If the landlord improperly holds the LMR after the tenancy ends (e.g., claims it for 'damages'), the tenant can file a T1 application.
4. 4
   If a Landlord Collects an Illegal Deposit

   If a landlord collected a security deposit, pet deposit, or any other deposit not permitted by the RTA, the tenant can file a T1 Application at the LTB to recover the money. File as soon as possible — there is a one-year limitation period from the date the deposit was collected.
5. 5
   File a T1 Application

   The T1 (Tenant Application for a Rebate of Money the Landlord Owes) covers illegal charges including improper deposits, unpaid LMR interest, and rent overcharges. Complete the form at the Tribunals Ontario website and file it with supporting evidence (receipts, bank records, lease agreement).
6. 6
   Attend the LTB Hearing

   Bring documentation: your lease showing what was paid, bank records of the deposit transfer, the LTB guideline rates for the years interest is owing. The LTB will order repayment of any illegal deposits plus interest owing.

Relevant Forms

Related Laws

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