On January 1, 2020, revised condominium governance regulations came into effect in Alberta. One of the changes has to do with rental deposits. As you may already know, whenever you (the condominium owner) rent out a condominium unit, the condominium corporation has the right to ask you for a rental deposit. Previously known as a “security deposit” under the Condominium Property Act, a “rental deposit” covers two things:
- repair and replacement of the corporation’s real/personal property or common property and
- maintenance or repair of any common property.
The rental deposit cannot be more than $1000 or one month’s rent, whichever is greater. The condominium corporation must hold the rental deposit in trust and repay it along with interest earned (if any) at the end of the rental period.
Tip: Did your condominium corporation collect a rental deposit from you before the changes came into effect (on January 1, 2020)? If so, then the corporation can retain it during the remaining tenancy of your unit. For example, if you rented out a condominium on July 1, 2019 and the corporation collected a $1500 rental deposit from you, then the corporation can still keep the deposit during the remaining tenancy of your unit.
The regulations also provide additional guidance on what the corporation must do with any interest earned on the rental deposit. When you give notice that you are no longer renting your unit to a tenant, the condominium corporation must deliver to you a statement of account and any unused portion of your rental deposit, along with interest earned (if any). The corporation must do so within 20 days of you giving notice. If the corporation used some of the rental deposit, then it must provide a statement of account with the following information:
- the amount used and interest earned, if any
- the balance of the deposit not used and interest earned, if any
- an itemized list of deductions from the rental deposit and why the deductions were made.
… whenever you (the condominium owner) rent out a condominium unit, the condominium corporation has the right to ask you for a rental deposit.If a condominium corporation needs additional time to determine the amount to be deducted from the deposit (e.g., a contractor needs to provide an estimate of costs), the corporation must provide an estimated statement of account to you within 20 days of receiving notice from you. Within 60 days of delivering to you the estimated statement of account, the corporation must also deliver to you:
- a final statement of account showing the amount used and interest earned (if any) and
- the balance of the deposit not used and interest earned (if any).
Another key addition is the explicit recognition of the corporation’s right to recover the rental deposit from you. If you owe the corporation a rental deposit, the corporation has legal rights to recover the deposit from you (for example, by suing you). It may also recover the amount from you as if it were a condominium contribution.
Tip: A rental deposit under the Condominium Property Act is separate from the security deposit that you collect from your tenants under the Residential Tenancies Act. When you collect a security deposit form your tenant, you cannot use that money to pay the condominium corporation’s rental deposit. You must put the tenant’s security deposit into a trust account within 2 banking days of receiving it.
Reminder: If you are planning to rent out your condominium unit, you are responsible for providing the condominium board with certain written information. The condominium board cannot prevent you from renting your unit but they are legally entitled to the following information:
- Your intention to rent your unit, including an address where you can be personally served with documents and how much rent you will be charging the tenant.
- The name of the tenant renting the unit. You must provide this notice within 20 days of the tenancy starting.
- When you decide to stop renting your unit. You must provide this notice within 20 days of the tenancy ending.
To learn about the latest changes to Alberta’s Condominium Property Act and Regulation, go to our website: www.condolawalberta.ca.