ABLawg

By: Jonnette Watson Hamilton

Legislation Commented On: Residential Tenancies Act, SA 2004, c R-17.1, Part 4

PDF Version: “Money for Nothing”: Landlords Take on Residential Tenants’ Security Deposits  

Landlords must place their residential tenants’ security deposits in an interest-bearing trust account. When interest rates are low, landlords take for themselves all of the interest earned in these accounts. When interest rates are higher, landlords take at least the first three percent of the interest earned on their tenants’ money, delivering the rest to their tenants. In addition to benefiting from this “spread,” landlords’ duty to pay interest on security deposits to their tenants ends when tenants vacate the rental premises, but landlords can keep the security deposits for at least ten, if not thirty days. If landlords wrongfully withhold security deposits, they can keep both security deposits and the interest earned for weeks, months or even years of negotiation, law suits, judgment filings and service, and collections. This might seem like small change if your idea of a landlord is a couple renting out a basement suite in their home. However, landlords in Alberta these days tend to be Real Estate Investment Trusts (REITS) and some of these REITS have thousands of residential tenants. If a REIT has 20,000 rental units in Alberta with an average of one $2,000 security deposit per unit, a REIT would have $40,000,000 of their tenant’s money earning the REIT at least 3% interest annually. That would be $1,200,000 per year. Money for nothing and all legal. The three percent spread and the interest-free holding after tenants vacate are enabled by Alberta’s Residential Tenancies Act, SA 2004, c R-17.1 (RTA) and its regulations. The refusal of the Residential Tenancies Dispute Resolution Service (RTDRS) to require landlords to pay interest on wrongfully withheld security deposits, or to otherwise compensate tenants, is not required, but it seems to be their policy.

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