Guides · reviewed 2026-09-04

Deposits in Ontario: rent, damage, and prepaid goods

Legal information, not legal advice. Results depend on the facts of your case.

Legal information, not legal advice. This guide and our free tools give legal information. They do not give advice about your case. A licensed lawyer can give legal advice.

The answer

Ontario rental law allows one deposit only: a rent deposit. A damage deposit is not legal. A deposit for goods or services is different. If the business does not deliver, you can sue for the deposit in Small Claims Court, up to $50,000.

Rent deposits: the rules

  • A landlord can collect a rent deposit only on or before the tenancy agreement. The limit is 1 month's rent, or 1 rent period if that is less.
  • The landlord must apply it to the rent for the last rent period before the tenancy ends. It is not a damage fund.
  • The landlord must pay you interest on the deposit every year, at the rent-increase guideline rate. If not paid, you can deduct it from a later rent payment.
  • A key deposit, a fee, a premium, or any like charge is illegal.
  • If you never get the unit, the landlord must repay the rent deposit.
  • These disputes go to the Landlord and Tenant Board, not Small Claims Court, in most cases. Read: the LTB or Small Claims Court.

Deposits for goods and services

These claims belong in Small Claims Court, in most cases. Examples: a renovation deposit, a custom furniture order that never came, or an event deposit after the venue cancelled.

What to do

  1. Read the agreement: what did the business promise, and by what date?
  2. Did you pay by credit card? Did you cancel the agreement under the Consumer Protection Act and get no refund? You can ask the card issuer in writing to reverse the charge.
  3. Send a demand letter with one date to pay: /demand-letter.
  4. You can also complain to Consumer Protection Ontario. The ministry does not collect your money for you.
  5. Sue for the deposit plus interest: /build/7a. The fee to file is $108.
  6. Check the 2-year clock: /calculators/deadlines.

Common mistakes

  • Do not wait through repeat delivery promises. The 2-year clock runs.
  • Store credit is not always your only option. Read the agreement, or get advice.
  • Tenants: a landlord who demands a damage deposit demands an illegal charge.
  • Do not sue a business that no longer exists. Check the registry first. Read: name the right defendant.

Good to know

The Consumer Protection Act, 2023 is passed but not yet in force. The Consumer Protection Act, 2002 still applies.

When to get a lawyer

Get legal advice if the deposit is large, or the business blames you for the failed deal. Legal services provided by Mithril Law — Jonathan Kleiman, licensed Ontario lawyer.

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