Security Deposit Rules for Landlords in Newfoundland and Labrador

Security deposit rules in Newfoundland and Labrador are tighter than many landlords realize. The Residential Tenancies Act, 2018 sets hard caps on what you can collect upfront — and some common practices that are standard in other provinces are flatly illegal here.

The Deposit Cap

Under Section 14 of the Act, the maximum security deposit depends on the tenancy type:

• Monthly or fixed-term tenancy: 75% of one month's rent
• Weekly tenancy: two weeks' rent

On a $1,200/month apartment, that means the most you can hold as a security deposit is $900. On a $350/week room, it is $700.

The deposit must be held in trust and returned at the end of the tenancy, subject to permitted deductions for damage beyond normal wear or unpaid rent.

No Last Month's Rent

This catches many landlords off guard: Section 12 of the Act prohibits requiring prepayment of the last week's or last month's rent. Asking for "first and last" upfront — routine in Ontario — is illegal in Newfoundland and Labrador.

You also cannot require a single rental payment that exceeds any other regular periodic payment. In practical terms, you can collect the first period's rent and the security deposit at the start of the tenancy. That is it.

Late Payment Fees

Section 15 allows landlords to charge a late fee when rent is overdue: $5 for the first day and $2 for each additional day, up to a maximum of $75 per late instance. These fees are part of the statutory definition of "rent" under the Act.

If a tenant bounces a cheque (NSF), you can charge the actual fee your bank charged you — nothing more.

How Deposits Connect to Rent Increases

When you increase the rent, the security deposit does not automatically increase. The deposit was set at the start of the tenancy and remains at that amount unless you and the tenant agree otherwise.

Some landlords wonder whether they can require a "top-up" deposit after a rent increase to maintain the 75% ratio. The Act does not provide for this — the deposit cap applies to the initial deposit, and there is no statutory mechanism for demanding additional deposits during an ongoing tenancy.

Record-Keeping Requirements

Under Section 17, landlords must maintain records of all rent payments, security deposit transactions, and receipts. A tenant can request a receipt for any payment at any time, and you are required to provide one.

Good records protect you in a dispute. If a tenant claims you over-collected the deposit or applied it improperly, your ledger is your defence.

For the full rent increase process — including how increased rent interacts with deposits, late fees, and the record-keeping requirements — see our NL Rent Increase Guide.

See more Newfoundland and Labrador guides →