Interest - Security Deposits - Moving In - Laws for Tenants in Alberta

Interest on a Security Deposit

The law requires landlords to put the security deposit in an interest-bearing trust account in a bank, treasury branch, credit union, or trust company in Alberta within two banking days of receiving the money. Until the deposit is dealt with as required by the Act, a landlord must make sure the deposit stays in trust.

The interest must be returned to you. The law states that the interest is to be paid to the tenant at the end of each tenancy year, but you and your landlord can agree in writing that the interest on the account will be paid at the end of the tenancy. The interest has to be compounded annually.

By an Order in Council passed on September 8, 2004, the Security Deposit Interest Rate Regulation includes a permanent formula setting the yearly interest rate payable on security deposits. The annual rate is 3% below the rate of interest that is in effect on November 1 of the previous year for cashable one-year guaranteed investment certificates held or offered by Alberta Treasury Branches Financial (ATB Financial). The rates can be obtained from a Landlord Tenant Advisory Service, or Service Alberta (Security Deposit Interest Calculator).

You can agree with your landlord that a higher rate of interest will be paid. If the interest received from investing the security deposit is more than you both agreed would be paid, the landlord can keep the surplus. The minimum rate set by the government must always be paid.

Your landlord must take care of the trust account during the tenancy, but must not take money out during the tenancy to cover expenses. A landlord is entitled to money from the security deposit to repair property at the end of a tenancy, but the rules for accounting for the security deposit to you must be followed.

If a new landlord takes over the premises during the tenancy, he or she must serve you with a statement showing the amount of interest and security deposit applying to your tenancy as of the date he or she took over the property.

February 2008