s.106 — Rent deposit may be required

106 (1) A landlord may require a tenant to pay a rent deposit with respect to a tenancy if the landlord does so on or before entering into the tenancy agreement. (2) The amount of a rent deposit shall not be more than the lesser of the amount of rent for one rent period and the amount of rent for one month. (3) If the lawful rent increases after a tenant has paid a rent deposit, the landlord may require the tenant to pay an additional amount to increase the rent deposit up to the amount permitted by subsection (2).  ; (4) A new landlord of a rental unit or a person who is deemed to be a landlord under subsection 47 (1) of the Mortgages Act shall not require a tenant to pay a rent deposit if the tenant has already paid a rent deposit to the prior landlord of the rental unit. (5) Despite subsection (4), if a person becomes a new landlord in a sale from a person deemed to be a landlord under subsection 47 (1) of the Mortgages Act, the new landlord may require the tenant to pay a rent deposit in an amount equal to the amount with respect to the former rent deposit that the tenant received from the proceeds of sale.  ; (6) A landlord of a rental unit shall pay interest to the tenant annually on the amount of the rent deposit at a rate equal to the guideline determined under section 120 that is in effect at the time payment becomes due. (7) The landlord may deduct from the amount payable under subsection (6) the amount, if any, by which the maximum amount of the rent deposit permitted under subsection (2) exceeds the amount of the rent deposit paid by the tenant and the deducted amount shall be deemed to form part of the rent deposit paid by the tenant. (8) Despite subsection (6), the first interest payment that becomes due under subsection (6) after the day this subsection comes into force shall be adjusted so that, (a) the interest payable in respect of the period ending before the day this subsection comes into force is based on the annual rate of 6 per cent; and (b) the interest payable in respect of the period commencing on or after the day this subsection comes into force shall be based on the rate determined under subsection (6). (9) Where the landlord has failed to make the payment required by subsection (6) when it comes due, the tenant may deduct the amount of the payment from a subsequent rent payment. (10) A landlord shall apply a rent deposit that a tenant has paid to the landlord or to a former landlord in payment of the rent for the last rent period before the tenancy terminates.