Security deposits in Alberta – do you know what a security deposit is, how much to charge, how and when to collect it, where to deposit it, and how to return it?
First things first.
What is a security deposit?
In Alberta, most landlords require a one-time security deposit in addition to the first month’s rent before releasing the property’s keys to the tenants. A security deposit cannot exceed the fee you are charging per month for rent. For example, if you charge $2500/month of rent, you can only charge a one-time security deposit of $2500 and you cannot increase the security deposit for the duration of the lease.
Where to deposit a security deposit
According to Security Deposits and Changes, Alberta, “landlords must place the security deposit in an interest-bearing trust account in a bank, treasury branch, credit union, or trust company in Alberta within two days of receiving it.”
You cannot touch the security deposit until the tenant moves out.
The government determines the interest rates on the security deposit. Since 2009, the interest rates in Alberta have remained at 0%.
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Below is a chart from Service Alberta showing the historical security deposit interest rates.
When to collect the security deposit
If you allow the tenant to move in without collecting the security deposit, there is a strong likelihood you’ll never see it. To bypass this issue, let the tenants know you require both the security deposit and the first month’s rent before releasing the keys.
If you agree to allow the tenant to pay the security deposit in installments, document it. Although I’ve never had a problem with tenants paying the security deposit in installments, I certainly know landlords who did, especially if it was agreed to verbally.
Record keeping
Record keeping is a critical part of any business. Landlords are required to keep deposit records of security deposits for at least three years following the end of the tenancy.
Returning a security deposit
If you have not completed a move-in inspection report and a move-out inspection report, you cannot keep any of the security deposit. If you have completed a move-in/move-out inspection report; once your tenants have moved out, you can return their security deposit if they have met certain conditions:
- There is no damage beyond normal wear and tear (take pictures/videos of the property during the move-in inspection report)
- The tenants have followed your move-out cleaning checklist (give them a move-out cleaning checklist when they move in and again as a reminder a couple of weeks before moving out)
- There are no rent or other costs (condo fines, noise fines, unpaid utility bills, pet fines for bylaw infractions, etc.)
If your tenants do not meet the requirements, you have the right to keep all or part of the security deposit to recover your costs. If the costs exceed the security deposit, you can take legal action to recoup your losses. Tenants have the right to contest your decision and could apply to the Residential Tenancy Dispute Resolution Service (RTDRS) or court.
Time Frame for returning the security deposit
If the tenant has not damaged your property, paid their rent in full, and met all the move-out conditions, you must pay the tenant the full deposit plus interest within 10 days of the day the tenant gave up possession of the rental premises.
However, if there are upcoming deductions for repairs that you must wait to have completed and don’t know the total costs within 10 days, follow the Alberta Security deposits and changes regulations and;
- Send the tenant a statement of account listing all the damages, repair costs, details of the cleaning charges, and any fees, or
- Send the tenants a statement of account with an estimate of the deductions that will be made and return any money that will not be used.
- Tenants must receive a final statement of account and any money owing within 30 days after the tenancy ends.
How to return the security deposit
For multiple tenants listed on the lease who each paid a portion of the security deposit separately, return each amount of their security deposit directly to them. If there are multiple tenants on the lease, but only one person paid the security deposit, return the security deposit directly to the person who paid.
Recently, the Alberta Government passed legislation amending the RTA that allows more flexibility in returning security deposits to tenants.
Section 46(1) (a) was repealed and in its place:
- “deliver” means
(i) deliver by personal service,
(ii) send by regular mail or registered mail, or
(iii) deliver in any other manner agreed to in writing by the landlord and tenant
In short, if, at the end of the tenancy, you and your tenant agree in writing to an e-transfer, regular mail, check, or money order – it’s all good.
For more detailed information, here is the Information for Landlords tip sheet.
Have you had any issues with security deposits? I’d like to hear about it. If you’d like to connect with me, I’m at [email protected].
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