NL security deposits: maximum, interest and recovery

Maximum deposit: how much can be collected?

Section 14(1) limits a residential security deposit based on the tenancy type:

• Week-to-week: no more than the rent for the first two weeks.
• Month-to-month: no more than 75% of the first month's rent.
• Fixed term: no more than 75% of the first month's equivalent rent when the fixed-term amount is divided into monthly payments.

For example, at $1,600 monthly rent, the maximum ordinary deposit is $1,200. At $400 weekly rent, the maximum is $800. A landlord cannot simply demand the last month's rent in advance as a substitute for these rules: see section 12 on future rent.

Receipt, bank account and trust rules

The landlord must give a written acknowledgment stating the amount, receipt date and premises to which the deposit applies (section 14(4)). Within two banking days, the money must be put in an interest-bearing account in Newfoundland and Labrador at an authorized financial institution. A landlord with three or more rental premises must use a trust account exclusively for security deposits (section 14(5)–(6)).

The deposit is held in trust and is not an asset the landlord may freely spend. Keep the receipt, payment record and original rental agreement; these can be important if the deposit is disputed.

Security-deposit interest in 2024, 2025 and 2026

Under section 14(7), interest accrues over the time the landlord holds the deposit at the prescribed rate. The province's official interest-rate schedule specifies 1.00% per year for 2024 and 2025 and 0.00% for 2026. The interest is simple, not compounded.

Illustration: a $1,200 deposit held for all of 2025 earns approximately $12 interest for that year; holding it through 2026 does not add 2026 interest at the prescribed zero rate. For partial years or longer tenancies, use the government's security-deposit interest calculator.

The 10-day return rule at move-out

Section 14(9) generally requires the landlord to return the deposit, including credited interest, within 10 days after the tenant vacates, unless the landlord has a claim for all or part of the deposit. The parties can agree in writing about a deduction, or a landlord or tenant can apply to the director to decide the disposition (section 14(10)).

A claimed deduction is not the same as an agreed deduction. Photograph the unit at move-in and move-out, complete condition reports where available, keep cleaning and repair records, and document any proposed deduction and whether it was accepted.

If the landlord keeps the deposit

1. Ask for the proposed deductions and supporting documents in writing.
2. Retain the inspection reports, lease, payment receipt, photographs, correspondence and move-out date.
3. If the parties disagree, the tenant may make a security-deposit return application. The ordinary $20 application fee does not apply to a tenant's application for return of a security deposit.
4. After the landlord is served with the tenant's section 14(10)(b) application, the landlord has a separate 10-day period to file their own claim against the deposit under section 14(11). Failure to do so can result in an order to return the deposit without a hearing under sections 14(12)–(13) and 48.

Missing the deposit-specific claim period does not necessarily bar a landlord from bringing a different section 42 claim, but section 14(14) prevents that later claim from being treated as a claim against the deposit.

Useful tools and official sources