Security deposits are one of the most common — and commonly misunderstood — parts of a rental agreement in British Columbia. Whether you’re a new landlord or expanding your rental portfolio, it’s essential to understand how to collect, hold, and return deposits according to the Residential Tenancy Act (RTA).
Here’s a clear guide to help you stay compliant and avoid unnecessary disputes.
What Is a Security Deposit?
A security deposit is a payment collected from a tenant at the beginning of a tenancy to cover potential damage or unpaid rent. It’s held in trust and must be returned at the end of the tenancy (unless deductions are legally justified).
How Much Can You Charge?
In BC, the rules are strict:
● You can only charge up to one-half of one month’s rent for a security deposit.
● If you allow pets, you can also collect a separate pet damage deposit, also capped at half a month’s rent.
Do You Need to Pay Interest?
In BC, landlords must pay interest (when applicable) on security and pet damage deposits when returning them to the tenant. The interest rate is set annually by the provincial government and is typically quite low, but it’s still a legal requirement.
● Interest is calculated from the date the deposit is received to the end of the tenancy.
● Even if the amount is small, failure to pay it can be used as grounds for dispute by a tenant.
● You can find the current and past interest rates on the BC Residential Tenancy Branch website.
What to Know About Returning the Deposit
You must:
1. Complete a move-out condition inspection with the tenant.
2. Return the deposit within 15 days of the tenant moving out or receiving a forwarding address.
3. If there are deductions, you need the tenant’s written consent, or you must file for dispute resolution with the Residential Tenancy Branch.
Failing to follow this process can result in the landlord being required to return the full deposit — and potentially face penalties.
Documentation Is Key: Keep detailed records of the move-in and move-out condition inspections (with photos), copies of all communication, and receipts for any deductions. This protects both parties and helps avoid conflict.
Have questions about collecting, managing, or returning security deposits?
Contact us anytime at info@brixpm.ca