The short version
- Ontario allows rent, a last month's rent deposit of up to one month, and a refundable key deposit limited to actual replacement cost. That is close to the whole list.
- Damage deposits, security deposits and pet deposits are not permitted, whatever you call them on the lease.
- Late fees on rent are not permitted either. The only charge for a failed payment is your bank's actual NSF charge plus up to $20 in administration.
- You cannot charge for a credit check, an application, or a rent receipt.
- A tenant can apply to the Landlord and Tenant Board to recover an unlawful charge, and they can do it after they move out.
01The short list of what you can charge
Section 134 of the Residential Tenancies Act works by exclusion. A landlord cannot collect anything from a tenant other than lawful rent and the specific amounts the Act and its regulations permit. Anything not on the list is not allowed, regardless of what the lease says or whether the tenant agreed to it.
The permitted list is short: rent, a rent deposit of up to one month, a refundable key deposit limited to what a replacement key actually costs, an NSF charge, and a small number of specific extras like a fee for a cheque you have to replace.
| Charge | Allowed? | The detail |
|---|---|---|
| Last month's rent deposit | Yes | Up to one month's rent. Interest owed annually at the guideline rate. |
| Key or fob deposit | Yes | Refundable, and capped at the direct replacement cost. A $300 fob deposit for a $40 fob is not a key deposit. |
| NSF charge | Yes | Your bank's actual charge, plus an administrative amount of up to $20. |
| Damage or security deposit | No | Not permitted in Ontario in any amount. |
| Pet deposit | No | Not permitted, and blanket no-pet clauses in a lease are void. |
| Late fee on rent | No | Not permitted. Interest on late rent is not permitted either. |
| Credit check or application fee | No | You may run the check. You cannot bill the applicant for it. |
| Fee for a rent receipt | No | Receipts are free on request, including after the tenancy ends. |
02The lease said so, and it still does not count
03The one that surprises people: no late fees
Ontario does not let a landlord charge a late fee, a penalty, or interest on rent that arrives late. There is no threshold and no grace period after which it becomes allowed.
What you do have is the process side of the Act. Rent that is late is grounds for an N4, and rent that is persistently late, even if it always arrives, is grounds for an N8. Those are the remedies. A $50 charge added to the ledger is not.
The NSF charge is the narrow exception. If a payment bounces, you can pass on what your bank actually charged you, plus an administrative amount of up to $20. Keep the bank's statement showing the charge, because the amount you can pass on is the amount you were actually charged.
04Key deposits, and where the line is
A key deposit is legal, which is why it gets used as a wrapper for things that are not. The test is simple: it has to be fully refundable, and it cannot exceed the direct cost of replacing the key, fob or card. Direct cost means what the supplier charges, with nothing added for your time or inconvenience.
So a $25 deposit on a $25 fob is fine. A $150 deposit on the same fob is an unlawful charge that a tenant can recover, and it tends to be recovered along with everything else once a dispute starts.
05How to stop this from being a problem
The reason these charges persist is that they get written into a lease template once and then copied for years. Nobody re-reads the template. It ships with every new tenancy until someone challenges it.
Two things fix it. Use the Ontario Standard Lease, which does not have a slot for a damage deposit for a reason. And keep every charge on a ledger where you can see the label, so an unlawful line stands out before a tenant finds it.
That is a good part of what TenantBay is for. Leases built from the standard form, rent and charges recorded against the tenancy, receipts generated on demand, and a year-end that adds up because the underlying records were clean the whole way through.
Questions landlords actually ask
Can an Ontario landlord charge a damage deposit?
No. Ontario permits a last month's rent deposit of up to one month and a refundable key deposit limited to replacement cost. Damage deposits, security deposits and pet deposits are not permitted, and a lease term collecting one is void.
Can I charge a late fee if rent is late?
No. Late fees and interest on late rent are not permitted in Ontario. Your remedies are the N4 for arrears and the N8 for persistent lateness, not a charge on the ledger.
How much can I charge for a bounced cheque?
The amount your bank actually charged you, plus an administrative charge of up to $20. Keep the bank record, because the pass-through is limited to the real charge.
Can I charge an application or credit check fee?
No. You are entitled to run a credit check with consent, but you cannot bill the applicant for it. It is an additional charge the Act does not permit.
What happens if I already collected a deposit I should not have?
The tenant can apply to the Landlord and Tenant Board to get it back, including after they have moved out. The cleanest move is to return it before it becomes part of a larger dispute.
Sources
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