Know the rules in BC on damage deposits

Get the rules in BC about security deposits and pet damage deposits at the start and the end of a rental term, and find out if you should be getting interest on the return of your damage deposit.

The security deposit is also known as damage deposit because the landlord can apply to keep all or part of it cover any damage the tenant does to the rental unit beyond normal wear and tear, or any costs related to the tenancy.

How much is a damage deposit in BC? 

The damage deposit cannot be more than half the first month’s rent. The security and pet damage deposit combined cannot be more than one month’s rent. A landlord cannot increase the amount of a deposit with a rent increase.

As per the Residential Tenancy Act, here are the basic rules about security deposits and pet deposits:

  1. Once the security deposit is paid, the tenancy is considered to be started regardless of whether a tenancy agreement is signed.
  2. A landlord can only request one pet deposit even if there are multiple pets.
  3. The only time a landlord can request a security deposit is at the beginning of the tenancy.
  4. The landlord can charge only one security deposit per rental unit, no matter how many tenants live in the unit.
  5. If the tenant fails to pay the security deposit within 30 days of the start date of the tenancy agreement, the landlord may give a one month notice to end the tenancy.

Can a landlord keep a damage deposit?

The landlord cannot automatically keep all or part of the deposit at the end of the tenancy. Unless the landlord has the tenant’s written consent to keep all or part of a deposit or has an outstanding dispute resolution officer’s order that can be applied against the deposit, the landlord must return the deposit plus interest within 15 days after the tenancy ends, or apply for dispute resolution with the Residential Tenancy Branch to make a claim against the deposit. The 15 day period commences when the tenancy ends or the tenant provides a forwarding address in writing, whichever is later. The fee to apply for dispute resolution is $100. Low income landlords can submit a paper application to waive the application fee.

Here are the rules for the damage deposit at the end of the rental term:

  1. Tenants cannot use a deposit as rent without the landlord’s written permission.
  2. A pet damage deposit can only be used to cover the costs of repairing damage caused by a pet, unless the tenant agrees in writing.
  3. If a tenant does not provide the landlord a forwarding address, in writing, within one year after the end of the tenancy, the landlord may keep the security deposit and/or the pet deposit.
  4. A landlord may return the damage deposit to the tenant by e-transfer, in person, by mail or by leaving it in the mailbox or mail slot at the tenant’s residence.
  5. A tenant can apply for dispute resolution if the landlord kept all or part of the deposit without the tenant’s written permission. The tenant’s application can be made within two years of the end of the tenancy.

Is there interest earned or paid on the damage deposit?

It’s been a long time since tenants have received any interest on their held damage deposit. In fact, the interest rate has been sitting at 0% since 2009. Here is a link to the interest rates on damage deposits since the year 1974: https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy/returning-deposits#Deposit%20Interest