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The Alberta Landlord Tenant Act states that Landlords may ask tenants for a Security Deposit, sometimes called a Damage Deposit
Security deposit amount: The security deposit cannot amount to more than one month’s rent at the time the tenancy starts. It cannot be increased as rent increases.
- The Landlord does not have to collect a Security Deposit. However, I do not know why they would not do so. Also collect the maximum amount you legally can.
- Some tenants my ask to pay the Security Deposit in installment payments. This is an indication that the tenant may not be able to pay the rent on time and is a warning. I expect full payment before the keys are released to the tenant.
- Holding the money: Landlords must put all security deposits in an interest-bearing trust account in a bank, treasury branch, credit union or trust company in Alberta within 2 banking days of the time they collect them from the tenant.
- I have gone to numerous banks and have asked for a trust account, and the banker looks at me like I am from Mars and said only lawyers can get trust accounts. Long story short it is difficult to get a real trust account, at a reasonable cost so put the money into a regular interested bearing saving account. So go to your bank and ask I hear recently some banks are offering them.
- Only Put Deposit Money into that account and do not co Mingle that money with rents etc.
- Records: The landlord is required to keep security deposit records for at least 3 years after the tenancy ends. Record all transactions in and out of your account. Keep the bank statements that show interest payments into the account.
- A non-refundable Pet fee may be charged but it must not be refundable. It should not be part of the Security Deposit. It is separate “Fee” not “Deposit.”
Returning the Deposit: The tenants have the right to get their Security Deposit returned with any Interest owing, as long as:
- There is no damage beyond normal Wear and Tear. This normal wear and tear is deterioration that occurs over time with use with even reasonable care and maintenance.
- The Rental Property has been Properly Cleaned.
- No rents are owing.
- If the tenant does not meet the conditions, the landlord has the right to keep part or all of the security deposit to cover costs. If the costs exceed the security deposit, the landlord can take legal action to claim for the money owing.
- Landlords cannot make deductions for damages or cleaning costs if the inspection report requirements have not been met. You must complete a move in and move out inspection with the tenant when the tenants move in.
- You must give the tenants a copy of the inspection report within 2 days of them moving in. (use the multipart forms, and hand them to the tenants as soon as you fill it in on move in day.)
- If there are no deductions for rent, cleaning, repairs, or other costs, such as utilities, late fees or legal fees, the landlord must pay the tenant the full deposit plus interest within 10 days of the day the tenant gave up possession of the rental premises.
DEDUCTIONS: However, if there are deductions, the landlord must do one of the following within 10 days:
- Provide the tenant with a statement of account that lists all the damages, repair costs, details of the cleaning charges and any fees. Then return the remaining amount of the security deposit.
- Give the tenant an estimate of the deductions that will be made and return any money that will not be used. The tenant must receive a final statement and any money owing within 30 days after the tenancy ends.
- Consider giving the tenant a chance to mitigate their losses by doing extra cleaning and repairs, as long as you feel the tenants will act in good faith and can complete the work in a timely manor. This is why it is important to meet with them a month in advance as soon as they give notice to tell them what is expected.
INTEREST PAYMENTS: As a landlord you must pay your tenants an interest payment on any damage deposits you have collected and held
- The minimum annual interest rate that landlords must pay on security deposits is determined by a formula set out in the Alberta landlord tenant act
- The current and past interest rates payable are as follows:
- January 1 2024 to December 31 2024 = 1.6%
- January 1 2009 to December 31 2023 = 0 %
- January 1 2008 to December 31 2008 = 0.5%
- January 1 2007 to December 31 2007 = 0.3 %
- January 1 2002 to December 31 2006 = 0 %
- Always check on the Alberta Landlord tenant site for any current updates to these rates
The permanent formula for setting the yearly interest rate payable on security deposits is 3 percent below the rate of interest that is in effect on November 1 of the previous year for cashable one-year guaranteed investment certificates held or offered by Alberta Treasury Branches Financial (ATB Financial).
The formula was set by an Order in Council passed on September 8, 2004 that amended the Security Deposit Interest Rate Regulation.
You can calculate the interest rate owing on Security Deposits here: