Landlord Guide: When to return or hold security deposits?

As a landlord in BC, at the beginning of a tenancy, you 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.

At the end of the tenancy, though, how are these security deposits returned? Below, we explore the return and the retention of deposits in the event that the tenant damages the property and claims are made for damage or loss.

When to return security deposit to tenant?

Once a tenancy ends, and the tenant provides you, the landlord, with a forwarding address within one year of the end of tenancy, you 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, the tenant can apply for dispute resolution to have the deposit returned. In this case, be forewarned that you could be ordered to pay the tenant twice the amount of their deposit.

When to keep the security deposit?

In the case that your property is damaged, you can keep the security deposit. This involves applying for dispute resolution, in which you will need to provide special documents to your tenant. You will also need to have evidence proving your claim. Ideally, you will have a thorough Condition Inspection Report from the beginning and end of the tenancy along with photos and other relevant items that may support your claim (i.e. witness statements, repair receipts, etc.)

To have a good chance of success with a claim for compensation, you need 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. you suffered a loss;
2. the tenant caused the damage or loss;
3. the value of the items that were damaged or the amount of your 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 your application has been received and paid for, you will receive a package in the mail outlining your claim and hearing details and a request for an application fee. Follow the instructions closely, pay the fee and then wait to be granted a hearing date (assigned once your 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.

Holding Deposit Calculator

Use this Holding Deposits Calculator and get information about returning and keeping deposits

* An important reminder: 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. 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.

What if damages exceed security deposit?

The first step is 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.

As the landlord, you maintain the right to claim compensation even after the tenancy ends. You can make a claim up to two years after the tenancy ends.   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 your (first) claim being heard.

Avoiding Deposit Drama

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.

Check out some of our other posts:

Deposit Debrief – Your Questions on Security Deposits Answered

Rental Repairs: Who is responsible for what?

How to Pick the Right Tenant

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