A Canadian Security Deposit Return Letter is a formal written statement from a landlord to a former tenant that accounts for the security deposit (also called a damage deposit) collected at the start of the tenancy. This letter itemizes the original deposit amount, accrued interest, any permitted deductions for damage beyond normal wear and tear, and the net refund amount being returned to the tenant.

Security deposit rules in Canada are governed entirely by provincial legislation and vary dramatically across jurisdictions. In Ontario, the Residential Tenancies Act, 2006 (S.O. 2006, c. 17) takes a unique approach: landlords may only collect a last month's rent deposit (s. 105), and damage deposits or security deposits are prohibited. The last month's rent deposit must be applied to the tenant's final month of rent and cannot be used for cleaning or repairs. The landlord must pay annual interest on the deposit at the rent increase guideline rate (s. 106).

In British Columbia, the Residential Tenancy Act (S.B.C. 2002, c. 78) permits a security deposit of up to 50% of one month's rent, plus a separate pet damage deposit of up to 50% of one month's rent if pets are allowed (s. 20). The landlord must return the deposit with interest within 15 days of receiving the tenant's forwarding address (s. 38). A condition inspection report (Form RTB-27) must be completed jointly, and failure to conduct it forfeits the landlord's right to claim against the deposit.

In Alberta, the Residential Tenancies Act (R.S.A. 2000, c. R-17) limits the security deposit to one month's rent (s. 43). The deposit must be held in a trust account, and the landlord must return it with interest within 10 days of the tenancy ending or the move-out inspection (s. 44). Failure to provide an itemized statement within 10 days may result in the landlord being ordered to pay up to three times the deposit amount.

This letter serves as the landlord's formal compliance with provincial deposit return obligations and provides the tenant with a transparent accounting of all amounts.

When a residential tenancy has ended and the landlord holds a security deposit, damage deposit, or last month's rent deposit that must be returned to the tenant with a formal accounting of any deductions and accrued interest.

When the landlord has conducted a move-out inspection and identified damage beyond normal wear and tear that justifies deductions from the deposit, and needs to provide the tenant with an itemized statement of those deductions.

When the landlord is returning the deposit in full with no deductions and needs a formal record confirming that the premises were returned in satisfactory condition and the full deposit plus interest is being refunded.

When the provincial deposit return deadline is approaching and the landlord needs to comply with the statutory timeline to avoid penalties. In BC, this is 15 days from receiving the forwarding address. In Alberta, this is 10 days from the end of the tenancy.

When a tenant disputes the condition of the unit or the amount of deductions, and the landlord needs a documented statement with specific deduction amounts, repair descriptions, and inspection findings to support their position before a provincial tenancy tribunal.

When the tenancy involved a pet damage deposit in British Columbia and the landlord must account separately for the security deposit and pet damage deposit, including any deductions specifically attributable to pet-related damage.

Identification of Parties and Premises — The letter must include the full names and addresses of both the landlord and former tenant, the rental property address and unit number, and the tenancy start and end dates.

Deposit Summary — A clear statement of the deposit type (security deposit, last month's rent deposit, pet damage deposit), the amount collected, the collection date, and the applicable interest rate and total interest accrued.

Itemized Deductions — If deductions are being made, each must be listed separately with a description of the damage or charge, the dollar amount, and the total of all deductions. Deductions are limited to damage beyond normal wear and tear and other charges specifically permitted by provincial legislation.

Normal Wear and Tear Standard — A statement clarifying what constitutes normal wear and tear (minor scuff marks, slight carpet wear, faded paint) versus damage that justifies deductions. This distinction is critical in provincial tribunal proceedings.

Refund Calculation — A clear breakdown showing the original deposit, plus accrued interest, minus deductions, arriving at the net refund amount. This mathematical transparency helps prevent disputes.

Refund Delivery Method and Date — How and when the refund will be sent to the tenant, with the date confirmed to be within the provincial deadline.

Move-Out Inspection Findings — If an inspection was conducted, a summary of the findings with specific descriptions of any damage noted. In BC, the condition inspection report (Form RTB-27) is mandatory and its absence forfeits the landlord's claim against the deposit.

Provincial Compliance Statement — A section referencing the specific provincial legislation governing the deposit return, including maximum deposit amounts, return deadlines, and interest requirements for each province.

Tenant Dispute Rights — Information about the tenant's right to dispute deductions through the applicable provincial tribunal, including the filing deadline and contact information for the relevant tenancy authority.

Acknowledgment of Receipt — A section for the tenant to sign confirming receipt of both the letter and the refund payment, providing the landlord with documented proof of compliance.