The interest rate to accrue on security deposits in British Columbia in 2018 remains at 0%.
Landlords in British Columbia are required to pay interest on security deposits on an annual basis. That rate is set each year by the Residential Tenancy Branch. The rate has remained at 0% for the past nine years. The figure is tied to the prime lending rate, which remains below 4.5%.
Security deposit mistakes can be costly for landlords, so it is important to follow these tips:
1. Don’t charge more than the law allows. In B.C., the security deposit is capped at one-half of one month’s rent. If a landlord charges more for a deposit, the tenant may be allowed to deduct the balance from rent owed. If the landlord increases the rent, the deposit can’t be increased. Only one deposit is allowed per tenancy agreement, regardless of the number of tenants. Roommates should not be charged deposits individually — all tenants should remain jointly and severally liable.
2. The tenancy agreement should be clear regarding money allocated for deposits. For example, it should state that the tenant is paying a deposit, and not last month’s rent. If an additional pet deposit is collected, the terms of that deposit should be stated as well. While a tenant cannot legally apply the deposit to the rent, clarity in the agreement avoids misunderstandings, and the need for dispute resolution.
3. Landlords have a very short window within which to return the deposit after the tenant leaves. The full deposit must be returned within 15 days, unless the landlord files for dispute resolution, the tenant agrees in writing to any deductions, or the tenant fails to provide a forwarding address.
4. Property condition reports — move-in, move-out inspections — are crucial to claiming security deposit deductions. Because tenants are likely to challenge these deductions at move-out, it is a good idea to allow tenants to make notations regarding the property condition at move-in and sign the move-in report. That will make it more difficult for a tenant to deny responsibility for subsequent damage.
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.