1. The Problem: The “Trust Fund” Misconception
Deposit handling is one of the most litigated areas in BC tenancies because the rules are strict and deadline-driven. The landlord may hold the funds, but the law treats the deposit as money held for the tenant unless the tenant gives written consent to deduct or an RTB order authorizes retention.
If you keep a deposit past the 15-day deadline without written consent or an RTB application, you can be ordered to pay the tenant double the deposit—even if there was damage.
What “Professional” Looks Like
- Collect deposits within legal limits (no “extra months up front” disguised as deposits)
- Complete RTB-27 move-in and move-out inspections with photos
- Use useful-life depreciation (Policy Guideline 40) instead of “new for old”
- Follow the 15-day protocol immediately when tenancy ends + forwarding address arrives
2. Collecting Deposits: Legal Limits & Rules
2.1 Security Deposit (50% Rule)
- Maximum: 50% of one month’s rent
- One per tenancy: Not “per roommate”
- Fixed amount: It does not increase later even if rent increases
If rent is $2,400/month, the maximum security deposit is $1,200. Simple math. No exceptions.
2.2 Pet Damage Deposit (Separate 50% Rule)
- Maximum: 50% of one month’s rent
- Combined max (security + pet): one full month’s rent total
- Mid-tenancy: If the tenant gets a pet later (with permission), you may require the pet deposit at that time
- Restricted use: Pet deposit is for pet damage—do not treat it as “rent insurance”
Service dogs: Certified guide/service dogs are not treated as “pets” for deposit purposes. Do not charge a pet deposit for them.
2.3 Key / Fob / Access Device Deposits
- No deposit for the key/fob that is the tenant’s sole means of access
- Refundable deposit allowed for additional keys/fobs requested by the tenant
- Limit: Deposit should not exceed direct replacement cost
Best practice: keep access deposits separate and refundable immediately upon return (with a receipt and tracking log).
3. RTB-27 Condition Inspections: “No Report, No Claim”
Your ability to claim for damage is tied to the condition inspection process. The RTB expects a structured comparison: move-in condition vs. move-out condition, documented on the RTB-27 and supported by photos.
3.1 Mandatory Process
- Move-in inspection: on possession day (or immediately before move-in)
- Move-out inspection: on move-out day when the unit is empty
- Use RTB-27: complete it properly and provide copies
If you fail to properly offer/complete inspections, your right to claim against the deposit for damage can be extinguished (lost), even if damage exists.
3.2 Photo Standard (Practical)
- Wide-angle photo per room + close-ups of pre-existing marks
- Appliances inside + serial/model if possible
- Date-stamped files stored in the tenancy folder
- Repeat the exact photo set at move-out (same angles)
4. Mechanism: The 15-Day Return Protocol
4.1 When the Clock Starts
The 15-day countdown starts on the later of: (1) the date the tenancy ends, or (2) the date the landlord receives the tenant’s forwarding address in writing.
Within 15 days, you must do ONE of the three actions below. “Doing nothing” is the fastest route to a double-deposit order.
4.2 Landlord’s Three Options (Choose One)
- Return the full deposit(s) (plus interest)
- Obtain written consent to deduct a specific amount (then return the balance + interest)
- Apply for Dispute Resolution to claim all/part of the deposit
Text-message “ok” is risky unless it clearly meets the written-consent requirement and is tied to a specific amount and reason. Safest method: signed deduction section on the RTB-27.
5. Interest Payable on Deposits (2025–2026 Update)
Interest must be calculated on the deposit before returning it, asking for deductions, or applying to keep it. Use the official RTB calculator to reduce mistakes.
Confirmed interest payable on deposits for 2025 is 0.95%. Use the RTB Deposit Interest Calculator for accuracy.
Official calculator: Deposit Interest Calculator (RTB)
Operational tip: Record “Deposit received date” and “Deposit returned date” in your ledger. Interest disputes often happen because dates are unclear.
6. Documenting Deductions: Useful Life & Evidence
To win a claim, you must prove the value of the loss. You generally cannot claim “new for old.” Policy Guideline 40 is commonly used to assess depreciation (remaining useful life).
6.1 Useful Life Quick Table (Common Items)
| Item | Typical Useful Life (Guide) | What This Means for Claims |
|---|---|---|
| Interior paint | 4 years | Claims beyond normal wear must account for age; old paint rarely supports big deductions. |
| Carpet | 10 years | If carpet is near end-of-life, your claim is typically limited to remaining value, not full replacement. |
| Stove / Fridge | 15 years | Claim depends on age + repair vs replacement evidence. |
| Dishwasher | 10 years | Use receipts to prove age; claim remaining life. |
| Faucets | 15 years | Cosmetic wear is usually not claimable; damage from misuse may be. |
6.2 “Remaining Life” Example (Carpet)
Example: Carpet is 8 years old (useful life 10 years). Replacement cost is $2,000. Remaining life is 2/10 = 20%. A reasonable maximum claim may be ~$400, not $2,000.
6.3 Evidence Checklist (Minimum to Win)
- RTB-27: move-in and move-out reports
- Photos/video: high-res, date-stamped, same angles
- Receipts: original purchase (age) + replacement/repair invoice
- Communication: written requests/quotes/approvals
7. Failure Point: Common Landlord Mistakes
7.1 The “Text Consent” Trap
A casual text exchange (“ok keep $200”) can unravel later. If the tenant changes their mind and disputes, you may lose on procedure even if the cleaning was real.
Safest approach: have the tenant sign the RTB-27 deduction section (specific amount + reason), or file for dispute resolution within the 15-day deadline.
7.2 The “Key Exchange Handshake”
Accepting keys and skipping the move-out inspection because “it looks fine” is how landlords lose later damage claims. Damage discovered after the fact is hard to link without a move-out baseline.
7.3 Ignoring the Forwarding Address Trigger
If the tenant provides a forwarding address later, the 15-day clock starts then. Missing that window can create a double-deposit award.
The law rewards landlords who follow the process, not landlords who feel “morally right.” Procedure is the protection.
8. FAQ (Top 20) — Deposits in BC
Q1: Can I ask for a full month’s rent as a security deposit?
No. The security deposit is capped at 50% of one month’s rent.
Q2: Can I collect both security and pet deposits?
Yes. Each is capped at 50% of one month’s rent, so combined maximum is one month’s rent total.
Q3: Can the deposit amount increase when rent increases?
No. The deposit amount is fixed at the start of the tenancy.
Q4: Can I take a pet deposit mid-tenancy if the tenant later gets a pet?
Yes, if you permit the pet, you can require the pet deposit at that time (within legal limits).
Q5: Can I charge a pet deposit for a certified service dog?
No. Certified guide/service dogs are exempt from pet deposits.
Q6: Can I charge a deposit for the unit’s main key or fob?
Not for the primary access device that is the tenant’s sole means of entry. Deposits are typically only permitted for additional/replacement devices requested by the tenant, limited to replacement cost.
Q7: How long do I have to return the deposit?
15 days from the later of (1) tenancy end date or (2) receipt of the tenant’s forwarding address in writing.
Q8: What are my options within the 15 days?
Return it, get written consent for deductions, or apply for dispute resolution to keep some/all of it.
Q9: What happens if I miss the 15-day deadline?
The tenant may apply for dispute resolution, and you can be ordered to pay double the deposit.
Q10: Can I automatically deduct a cleaning fee?
No “automatic” fee. You need written consent or an RTB order, and the unit must be left not reasonably clean beyond normal expectations.
Q11: Can I use the pet deposit for unpaid rent?
Generally no. Pet deposit is for pet damage unless the tenant agrees in writing to apply it differently or an RTB order allows it.
Q12: Do I have to pay interest on deposits?
Yes, when interest is payable. You must calculate it before returning the deposit or claiming deductions. Use the RTB calculator.
Q13: What is the confirmed deposit interest rate for 2025?
0.95% for 2025.
Q14: What if the tenant won’t attend the move-out inspection?
Document your offered opportunities and follow the RTB process (including “final opportunity” steps if needed). Keep evidence that you complied.
Q15: If I didn’t do a move-in inspection, can I still claim damages?
Your claim becomes much harder and can be extinguished if inspection requirements were not met. Always do RTB-27 move-in and move-out.
Q16: What counts as “normal wear and tear”?
Normal aging and minor scuffs from reasonable use. Claims usually require damage beyond wear and tear, supported by photos and useful-life depreciation.
Q17: Can I claim full replacement cost for an old carpet?
Usually no. Use useful-life depreciation (Policy Guideline 40). You generally claim only the remaining value, not “new for old.”
Q18: What documents should I keep for a deposit claim?
RTB-27 reports, photos/video, receipts proving age, invoices/quotes, and written communications. Store them together in the tenancy file.
Q19: What if damages exceed the deposit?
You can apply for dispute resolution to seek additional compensation beyond the deposit, supported by evidence.
Q20: If I sell the property, what happens to deposits?
Deposits (plus any interest) transfer with the tenancy. Ensure the transfer is documented and reconciled at closing.
References & Sources
- BC Government — Tenancy deposits and fees
https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/starting-a-tenancy/deposits-fees - RTB — Deposit Interest Calculator
https://www.housing.gov.bc.ca/rtb/WebTools/InterestOnDepositCalculator.html - RTB Policy Guideline 40 — Useful Life of Building Elements (PDF)
https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/residential-tenancies/policy-guidelines/gl40.pdf - RTB Form RTB-47 — Tenant’s Notice of Forwarding Address (PDF)
https://www2.gov.bc.ca/assets/gov/housing-and-tenancy/residential-tenancies/forms/rtb47.pdf - TRAC — Deposits (tenant-side guidance)
https://tenants.bc.ca/your-tenancy/deposits/