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Can My Tenant Use Last Month’s Rent Deposit for Their Final Month?

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OHI | Can My Tenant? · Ontario rental question #44

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Last verified: September 15, 2026

Quick answer: Yes—the rent deposit is generally intended to be applied to the last rent period before the tenancy ends. But the tenant must still end the tenancy lawfully. Calling a month “the last month” does not shorten a fixed term or replace required notice.

Sections 105 and 106 of the RTA govern rent deposits. A landlord may collect no more than one rent period and must apply it to the final rent period. The deposit is not a damage or cleaning fund.

The landlord generally owes annual interest at the applicable guideline rate and may request a lawful top-up after rent increases.

Can it cover an ordinary missed month?

No. While the tenancy continues, the deposit is not a revolving rent fund. Using it early can leave the final period unpaid.

What if the tenant gives insufficient notice?

The deposit can still be applied to the actual last rental period, but the tenant may owe additional rent or losses depending on notice, mitigation and re-rental.

Can the landlord deduct damage?

The rent deposit should not be diverted to damage or cleaning claims. Those claims follow separate agreement or LTB processes.

What should the tenant do?

  • Give the correct notice and identify the lawful termination date.
  • Confirm in writing that the deposit will be applied to the final rent period.
  • Keep proof of the deposit and rent increases.
  • Ask for the interest calculation.

What should the landlord do?

  • Apply the deposit only to the final rent period.
  • Track required interest and lawful top-ups.
  • Keep damage and cleaning claims separate.
  • Clarify when notice is defective without misusing the deposit.

Example

A monthly tenant gives valid notice ending June 30. The deposit is applied to June rent. It cannot automatically be applied to May simply because the tenant says they plan to leave later.

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General information only: This article discusses Ontario residential tenancies and is not legal advice. Other laws, bylaws and condominium rules may also apply. Rules and forms change; verify current information with the responsible authority or obtain advice from a licensed Ontario legal professional.

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