Ontario Security Deposit Bill Defeated, Opponent Blames Alberta Landlords

by | Mar 14, 2011 | Rental Property Management Tips

A bill progressing through Ontario’s legislative assembly to allow landlords there to collect a damage deposit from tenants has been defeated.

MPP Savoline introduced the measure last fall in an attempt to bring Ontario in line with other provinces –British Columbia, Alberta, Saskatchewan, Manitoba, and the Maritime provinces, in allowing landlords to collect a deposit up front as an incentive for tenants to resist damaging rental units.

Mrs. Savoline made the argument that Ontario landlords are reeling from an 8% HST and a measly 0.7% rental increase guideline for 2011.  In the debate which took place before the vote, Mrs. Savoline argued that this measure benefits tenants and landlords alike because it “protects the future viability of rental housing stock in Ontario.”

She pointed out that only tenants who cause damage to their rental homes would be adversely affected by the bill.

Mrs. Savoline discussed that motels and hotels have the ability to guarantee reimbursement for damages by holding a credit card in reserve, where residential landlords have no similar rights.

She also mentioned receiving a number of emails from individual landlords in support of the bill.

Despite these arguments, twenty-six members voted against the measure, while 7 voted in favour of the bill.

Currently, Ontario landlords only can collect last month’s rent in advance, and those funds cannot be applied towards any damages a tenant causes to the property.  If damages are discovered during the term of the tenancy agreement, the only remedy provided to the landlord is a reduction in the notice period needed to evict the tenant.  The landlord must take legal action to collect damages, regardless of how much or how little those damages may cost to repair. This bill would have allowed a landlord to collect 25% of the monthly rent as a deposit, and then deduct from that fund at the end of the lease if the tenant wilfully or negligently caused damages to the rental property.

Opponents to the bill, including MPP Cheri DiNovo argued that the measure would have placed too much burden on the Landlord and Tenant Board to sort out damage deposit disputes.  Ms. DiNovo cited the Alberta damage deposit law as an example of a broken system, claiming that in Alberta, it is “extremely difficult if not impossible” for tenants to get their deposits back. “In fact, it acts as almost a disincentive for good tenants, because if you’re not going to get the deposit back anyway, why keep the place pristine?”  Ms. DiNovo also argued that the system would offer large landlords a “windfall of equity.”

Another  opponent, MPP Michael Price said he may have given some support for the bill if it would help only small business landlords, but his sympathies did not extend to large landlords. “They seem to do very well by themselves,” he argued.  Mr. Price believed that it would be too difficult to discern tenant damage from normal wear and tear.  “It would be an opportunity for some unscrupulous people to simply take half of the deposit and define the wear and tear in any way they wanted,” he claimed. He also felt that the amount of the deposit would be too small to really do any good.

MPP Donna Cansfield, on the other hand, felt the 25% deposit would be too great a burden on tenants. 

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post in 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.

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