The Security Deposit in All Legality

Despite popular belief, a security deposit becomes legal if a tenant seeking for a dwelling offers it as one of several options to motivate a landlord to consider their application. Although it is still against the law to require any form of money other than the first rent upon signing a lease, a security deposit becomes a legally valid instrument when a tenant finds it beneficial, and the landlord agrees.

According to article 1904 C.C.Q., a landlord is allowed to offer security options to a tenant who does not satisfy a pre-rental screening. The landlord can thus accept the option of a security deposit offered by the tenant if both parties agree.

In fact, the form produced by CORPIQ provides three security options for a rejected applicant: a roommate, an individual who will co-sign the lease as a guarantor, or a security deposit. This same form allowed a landlord to use the amount of the security deposit to cover the rental fees owed by a tenant whose lease had been terminated for non-payment of rent.

In a decision rendered by the Tribunal administratif du logement (TAL) in 2020 (formerly the Régie du logement), it was noted that a landlord effectively offered several options to a tenant who had already been turned down (due to lack of financial solvency) without forcing her to choose the security deposit as an option. Once in the unit, the tenant attempted to apply this security deposit against unpaid rent. By placing herself in a situation of non-payment of rent, the tenant no longer had any legitimacy to reclaim the security deposit that she had originally offered as a security deposit to become a tenant. The Court recognized that the deposit was not a rent and had to be paid and the deposit returned at the end of the lease.

The security deposit also becomes a legal tool in cases where tenants do not have a verifiable credit history and wish to demonstrate their solvency to a landlord. Indeed, the TAL ruled in June 2021 that there was a valid agreement between two tenants from Europe with no verifiable credit record, and a landlord who received their agreement to accept the equivalent of three months rent as security. In such case, which may benefit a tenant, the latter agrees to voluntarily waive the protection provided for in article 1904 C.C.Q. When this agreement is accepted by the tenant and the landlord, it becomes part of the lease.

There are probably several other cases that demonstrate the usefulness of a security deposit that did not end up at the TAL. The fact remains that the security deposit is a legally valid instrument that, when consciously used, allows the tenant and landlord to ensure the best possible cooperation between the two parties. By using the CORPIQ form, a lot of hassle is avoided, and landlords have less fear of having to go to court if a tenant stops meeting his or her financial commitments.