FAQ: How to pay & collect a security or damage deposit in BC

There are tons of specific rules governing how landlords and tenants should collect & pay their security or damage deposit in BC. For both landlords and tenants, familiarizing yourself with the types of deposits that are permitted, maximum amounts, and guidelines for their return is key to avoiding disputes at the conclusion of your tenancy. Like any province, B.C. has clearly laid out how these deposits are to be collected and returned, but finding and understanding this information isn’t always easy. Here, liv.rent will be breaking down all the need-to-know information about rent deposits in B.C. to help you make sense of how they function, including a detailed FAQ section with answers to all your pressing questions.

Can landlords ask for first and last month’s rent in BC?

Landlords in B.C. are not able to request first and last month’s rent upfront, as they would be in Ontario and other provinces. B.C. has its own rules when it comes to how much money landlords can collect at the beginning of the tenancy, as well as when and how that money can be kept and used.

In the province, the maximum a landlord or property manager can collect at the beginning of a tenancy is the equivalent of half a month’s rent as a security/damage deposit, and another half a month’s rent as a pet damage deposit, if applicable. Once these deposits are accepted, the tenancy is generally considered to have begun. First month’s rent is typically paid on the first day of the tenancy.

What types of deposits are permitted in BC?

Landlords in BC can require a tenant to pay:

• a security deposit equivalent to one-half of one month’s rent; and
• if they have a pet, a pet deposit equivalent to one-half of a month’s rent (so a full month’s rent in the case of pet-owning tenant)

Tenants must pay the security deposit within 30 days of entering into the tenancy agreement or the pet damage deposit within 30 days of when it’s required.

Is a damage deposit legal in BC?

A security or damage deposit is legal in B.C. so long as it is equal to no more than half of the first month’s rent. So long as there is no damage to the unit, and the landlord doesn’t seek dispute resolution to withhold part or all of the deposit, the full damage deposit must be returned under B.C. tenancy law.

Is a pet damage deposit legal in BC?

Landlords may also request a pet damage deposit, also referred to as simply a pet deposit, on top of the security or damage deposit. This can either be collected at the start of the tenancy, at the time of signing a lease, or during the tenancy if the tenants get a pet with the landlord’s consent.

Like a security or damage deposit in BC, the pet deposit can equal a maximum of half a month’s rent. Service or guide dogs are also exempt from this type of deposit. As well, this amount can only be used to cover the costs of damages associated with pets, unless the tenant agrees in writing or an arbitrator permits it.

Can landlords collect a key deposit in BC?

Unlike in Ontario, B.C. landlords cannot collect a key deposit at the start of the tenancy, provided that the key or fob is the tenants’ only means of accessing the rental property. If there is another way to enter the rental unit, the landlord may collect a deposit for keys, fobs, or related devices provided that the fee is refunded in full once the device is returned.

When should the security deposit be retured to tenants?

Once a tenancy ends, and the tenant provides their landlord with a forwarding address within one year of the end of tenancy, the landlord will have 15 days to:

• return all deposits to the tenant plus any interest unless you:
  • receive permission in writing from the tenant who agrees to allow you to keep some or all of the deposit; or
  • apply for dispute resolution with the Residential Tenancy Branch asking to keep all or some of the deposit.

If you do not act within the 15 days, tenants can apply for dispute resolution to have the deposit returned. In this case, landlords could be ordered to pay the tenant twice the amount of their deposit.

Do landlords have to pay interest on a damage deposit?

Yes. B.C.’s tenancy laws require landlords to pay a percentage of interest when returning deposits to their tenants following the conclusion of the tenancy. For 2023, this amount is 1.95%.

This applies to both security/damage deposits, as well as pet deposits. For more information on how and when this amount is to be paid, consult this resource on returning deposits.

When can landlords keep the security deposit?

In the case of damage to the rental property, landlords may withhold part or all of the security deposit. This involves either having the tenant agree in writing that they were responsible for the damage, or applying for dispute resolution, in which landlords will need to provide the proper forms to your tenant.

Landlords will also need to have evidence proving their claim. It’s always wise to complete a thorough Condition Inspection Report from the beginning and end of the tenancy along with photos and other relevant items that may support their claim (i.e. witness statements, repair receipts, etc.)

The landlord’s claim should include evidence such as oral testimony, photos, witness statements, receipts, or other evidence (including a copy of the condition inspection report(s).*  Together, this information should provide some proof that:

1. the landlord suffered a loss;
2. the tenant caused the damage or loss;
3. the value of the items that were damaged or the amount of the landlord’s loss; and
4. you took reasonable steps to minimize your losses (such as protecting your property from further damage when you realized it was happening).

Typically, these hearings are conducted by telephone.  Once an application has been received and paid for, landlords will receive a package in the mail outlining their claim and hearing details and a request for an application fee. They’re advised to follow the instructions closely, pay the fee and then wait to be granted a hearing date (assigned once the application fee is received).

* NOTE:  A landlord may lose the right to claim against the deposit for damage to the rental unit if the landlord does not provide the tenant with at least two opportunities to participate in the condition inspection at the start and end of the tenancy and provide a copy of the completed report to the tenant, as required.  A tenant may lose the right to the return of the deposit if the tenant does not participate in the condition inspection of the rental unit at the start and end of the tenancy.

What if damages exceed the amount of the security deposit?

The first step is for landlords to ask the tenant to pay for the damages or have them pay for the repairs.  This includes damages beyond reasonable wear and tear and damage they or their guests or pets caused. If the tenant refuses, the process is the same as keeping deposits. You can apply for dispute resolution  (Landlord’s Application for Dispute Resolution) with the Residential Tenancy Branch requesting the tenant pay money for the damage. You should submit evidence with your application in support of the value of the compensation claimed.

Landlords maintain the right to claim compensation even after the tenancy ends, for up to two years after the conclusion of the tenancy. The tenant can make a separate claim even if it falls outside of the two year period just as long as they do so prior to the first claim being heard.

How to avoid deposit disputes

Of course, the best way to avoid issues around returning or withholding deposits is to be an active landlord and avoid damages in the first place. This means:

1. Conduct regular visits to the premise twice a year is typically sufficient though quarterly is acceptable too. This will enable you to nip the problem in the bud and issue evacuation orders if the state of the premises warrants this. During these inspections, you will notice if wear and tear is harder than normal, extra people residing on the premises or signs of pets, for example.
2. Be aware of your responsibilities and your tenant’s in terms of property repairs and maintenance.
3. Ask to conduct an extra inspection on the month before the tenant is set to move out. This will enable you to gauge the state of the situation and file an application to the Residential Tenancy Branch to hold the deposit if you note significant damages.
4. Screen your tenants thoroughly. Thankfully, liv.rent does this for you by verifying all prospective tenants –  asking them to provide the right information, conducting credit & background checks and verifying social media accounts to generate a “Trust Score” and ensure all applicants using the platform are credible and reliable.

FAQ: How to pay & collect a security or damage deposit in BC

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