Security Deposits

Quick Facts
  • A security deposit cannot be more than 75% of the monthly rent amount.
  • A landlord must return a security deposit within 10 days of the rental agreement being terminated unless a claim is filed with Service NL.
  • Any over-payment of a security deposit can automatically be applied to the monthly rent.
What You Need to Know

When moving into a new rental unit in Newfoundland and Labrador the landlord can only ask for the first month of rent to be paid, plus a security deposit. A landlord cannot ask for rent to be paid for the “first and last” months.

Landlords are required by law to provide tenants with a written receipt for amounts paid as a security deposit. The receipt should state the date the deposit was paid, the amount of the deposit, and the address of the rental unit for which it was collected.

 

Maximum Amount

The maximum amount a landlord is permitted to collect as a security deposit from a tenant is 75% of the monthly rent amount when the tenant has signed a fixed-term rental agreement or is renting from month to month.

The maximum amount a landlord is permitted to collect as a security deposit from a tenant that is renting week to week is equal to two weekly rent payments.

 

Overpayment

If a landlord collects more than the maximum amount permitted for a security deposit the tenant may put the difference towards their next rent payment and does NOT need permission from the landlord to do so.

For example, if the monthly rent amount is $750 the maximum amount permitted for a security deposit would be $562.50. In this case if the landlord required the tenant to pay $600 for a security deposit that would be an over-payment of $37.50. The tenant would be able to put that $37.50 towards their next rent payment, so the next time rent was due they would only need to pay $712.50.

 

Money to be Held in Trust

When a landlord obtains a security deposit from a tenant, they are supposed to deposit the money into an interest-bearing account within two banking days. If a landlord has three or more rental units, they must deposit the money into a trust account, used only for holding security deposits. The security deposit does NOT belong to the landlord and should NOT be used except in accordance with the Residential Tenancies Act.

 

When a Tenancy Ends

Within ten days of the tenant moving out of the rental unit the landlord should return the security deposit to the tenant, unless the landlord has filed a claim with Service NL. A tenant can also agree in writing to permit the landlord to keep any portion of the security deposit.

If the landlord has not either returned the security deposit, or filed a claim with Service NL, within ten days of the rental agreement being terminated the tenant can file their own claim with Service NL to determine what will happen with the security deposit.

Once a tenant files a claim with Service NL for the return of a security deposit, the landlord has ten days from the date they are served with a copy of the tenant’s application to file a counterclaim if they believe they are entitled to keep any portion of the security deposit. If a landlord does not file a counterclaim within that ten-day period Service NL may order the landlord to return the security deposit to the tenant without holding a hearing on the matter.

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Files / Documents
Claim Form and Notice of Hearing (PDF)
This form can be used by landlord and tenants to file a claim with Service NL and bring a matter to a hearing.
Download / View
Resources
Fact Sheet – Security Deposit (Service NL) (PDF)
A fact sheet from Service NL about security deposits.
Visit
Fact Sheet – Dispute Resolution (Service NL) (PDF)
A fact sheet from Service NL explaining the dispute resolution process.
Visit
Security Deposit Interest Calculator (Website)
This tool can be used to determine the amount of interest that should be paid for security deposits held by a landlord.
Visit
Security Deposit Interest Rates (PDF)
A list of security deposit interest rates from 1989 to present.
Visit
Security Deposit Interest Regulations (Website)
These regulations specify the calculation that is used by Service NL to determine how much interest should be paid on deposits held by a landlord.
Visit
Legislation

Security deposit

14. (1) A landlord shall not demand from a tenant a security deposit that is

             (a)  more than the amount of rent payable for the first 2 weeks where the residential premises is rented from week to week;

             (b)  more than 3/4 of the amount of rent payable for the first month where the residential premises is rented from month to month; or

             (c)  more than 3/4 of the amount of rent that would be payable for the first month if rent was divided into a monthly payment where the residential premises is rented for a fixed term.

(2)   Where a landlord receives from a tenant money or other value that is more than the amount of rent payable in respect of the residential premises, the money or value shall be considered to be a security deposit.

(3)  Where a landlord receives a security deposit that is more than the amount permitted under subsection (1), the tenant may deduct the overpayment from rent or may recover the overpayment together with interest on the amount of the overpayment at the rate prescribed in the regulations.

(4)  Upon receipt of a security deposit, the landlord shall give the tenant a written acknowledgement of receipt stating the amount of the security deposit, the date of receipt and the residential premises and residential complex to which it applies.

(5)  Within 2 banking days of receipt of a security deposit, the landlord shall deposit it in an interest bearing account located in the province at a financial institution authorized to accept deposits.

(6)  Where a landlord has 3 or more residential premises, the interest bearing account referred to in subsection (5) shall be a trust account used exclusively for security deposits.

(7)  A landlord shall credit interest to the tenant on the full amount or value of the security deposit, at the rate prescribed by the regulations, during the time the security deposit is held by the landlord.

(8)  A security deposit is not an asset of the landlord but is held by the landlord in trust and may be used, retained or disbursed only as provided in this section.

(9)  Not later than 10 days after the tenant vacates the residential premises, the landlord shall return the security deposit to the tenant unless the landlord has a claim for all or part of the security deposit.

(10)  Where a landlord believes he or she has a claim for all or part of the security deposit,

             (a)  the landlord and tenant may enter into a written agreement on the disposition of the security deposit; or

             (b)  the landlord or the tenant may apply to the director under section 42 to determine the disposition of the security deposit.

(11)  Where a tenant makes an application under paragraph (10)(b), the landlord has 10 days from the date the landlord is served with a copy of the tenant's application to make an application to the director under paragraph (10)(b).

(12)  A landlord who does not make an application in accordance with subsection (11) shall return the security deposit to the tenant.

(13)  Where a landlord does not make an application under paragraph (10)(b) or return the security deposit in accordance with subsection (12), the director may, without conducting a hearing, make an order requiring the landlord to return the security deposit to the tenant.

(14)  Where a landlord does not make an application under subsection (11), he or she is not prohibited from making an application under section 42 other than an application with respect to a claim against the security deposit.

(15)  For the purpose of subsections (8) to (14), "security deposit" includes the interest credited under subsection (7).