Security Deposit How to legally Charge it?

[DK123]

HI All respected members of REIN and guests.



I have a question that at first will be simple to answer and believe me I have heard several times a flat NO answer. But need to discuss it with somebody who has more experience maybe then I do and my so called experts that I talked to.



I own few houses in Hamilton, several units have been completely renovated and are ready to go for rent. I have a hard time seeing the new tenants move in and start damaging the place within few hours of their move. Then some of them do no pay and we have to evict them. I have a good property management company, but every time we evict somebody there is about 400 dollars charge for cleaning and fixing small things.

Is there a way to charge security deposit let say in the amount of $300?

My former real estate agent said that he had charged security deposit on all his rentals despite the fact that it is not quite legal in Canada.

Now, does any one have any suggestions as to how to structure the rental agreement? Maybe put a key deposit? but 300 for a key deposit would be crazy and would look obvious to the tenant board if the case goes that far.

Is it possible to make a separate agreement on a side with the tenants for the security deposit? My property manager does not want to even ask the tenants for it.

Any suggestions? Ideas?

 

[bizaro86]

[quote user=dmitrik]My former real estate agent said that he had charged security deposit on all his rentals despite the fact that it is not quite legal in Canada.





Landlord-tenant law is province specific. For example, in Alberta a security deposit equivalent to one month's rent can be charged.



My understanding is that Ontario does not permit security deposits, full stop. Probably your best bet is to upgrade your tenant selection standards.



Regards,



Michael

 

[DK123]

Thanks Michael,

We do the best we can for tenant selection, unfortunately in Hamilton it is hard to find decent people, I mean impossible. They all check well, have jobs, good credit, but then suddenly they stop paying rent and move out leaving a mess and a lot of damage... We tried all kind of screening and selection, does not work 100 percent.

DK

 

[invst4profit]

There is no way to charge tenants any "extra fees" in Ontario at this time. You need to be very careful with any attempt to charge any fees as some unscrupulous tenants are now actually offering extra money only to turn around and demand it back as soon as they move in. They then threaten to take the LL to the board if they do not return the money and some even attempt to blackmail the LL into reducing the rent etc. Some then stop paying the rent, wait to be taken to the board by the landlord and cry the blues about being taken advantage of by the landlord. They then insist on a rent rebate which they often get, negotiate a repayment plan for back rent, which they never do pay, and end up getting evicted several months later after having lived rent free for 3-6 months.



The only way to avoid damage to your units, or at least the cost of repairs, is to do regular inspections every quarter and when damage is found insist they pay to repair or take them to the board for costs.

Most just chalk it up to the cost of doing business in Ontario.



If you are interested in connecting with Ontario landlords visit the Ontariolandlord site/forum.

 

[Thomas Beyer]

Invest in more landlord friendly provinces like AB or SK ?



Or: ask for a far higher rent as that screens out many tenants.



Or: do not own expensive homes, say over $200,000 ..



Or: keep first month rent



Or: insist on credit card or electronic bank debit / electric transfer of funds (ETF) or PayPal only. Most banks offer that and there are some credit card providers that charge less than 2% now. For example: base rent is $1500, however if you pay by credit card or ETFor PayPal it is only $1200.

 

[dplummer]

In Ontario you can only ask for first & last month rent. No security or damge deposits allowed. For God's sake don't do side deals with tenants here in Ontario you'll open yourself up for all kinds of legal problems. Greg has given you some good advice. Check out the Ontario Landlord Assoc. for tips & help with proper tenant screening & selection.



Doug