How Should a Calgary Landlord Handle a Security Deposit?

Alberta's current guidance limits the security deposit to no more than one month's rent at the time the tenancy starts. Record the amount, payment date, payer, payee, premises and method and provide a receipt when requested. Keep rent, pet-related charges and other payments classified according to the agreement and current law.

The deposit cannot be increased later because rent rises. If the file includes an additional deposit, prepaid amount or fee, obtain advice about its legal treatment rather than quietly adding it to the damage-deposit ledger.

Landlords must place security deposits in an interest-bearing trust account at an Alberta bank, treasury branch, credit union or trust company within two banking days of collection. Preserve the deposit slip or transaction record and identify the tenancy in the ledger.

Do not use the security deposit for repairs, mortgage payments or operating cash during the tenancy. Reconcile the trust balance to the tenant ledger and investigate any difference immediately.

The prescribed rate can change each January. Alberta lists 1.6% for 2024, 0.5% for 2025 and 0% for 2026. Apply the rate for each period rather than using today's rate for the entire tenancy. Use the official calculator when dates cross years.

When interest is payable, it must generally be paid annually unless the landlord and tenant agree in writing to compound it and pay at the end. If the agreement promises a higher rate, the landlord may be bound by that promise. Keep the calculation, payment and written compounding record.

Link the move-in report, copy-delivery evidence, photographs and attendance record to the deposit ledger. Calendar the move-out inspection before the tenancy ends. Alberta guidance warns that a landlord cannot deduct damage or cleaning costs when the inspection requirements were not met.

Do not wait until move-out to discover the baseline is missing. A management or ownership transition should include an immediate inspection-file audit because the new operator cannot recreate a compliant move-in process.

Compare the signed reports and supporting images item by item. Identify the tenancy obligation, starting condition, ending condition, alleged cause, ordinary-wear question, useful-life or depreciation issue and repair or cleaning evidence. Keep unpaid rent or utilities calculated separately even if the final statement combines amounts.

A landlord's estimate is not automatically the tenant's liability. Use actual invoices where available, reasonable estimates when the current process permits them and qualified advice for disputed or material claims.

Show deposit principal, interest by year, each deduction, supporting document, subtotal and amount returned or still claimed. Include the tenant, premises, tenancy end, possession return and statement date. Avoid lump sums such as repairs that cannot be traced to evidence.

Follow the current Alberta timing for returning the deposit or providing the statement or estimated statement. Preserve delivery and payment evidence, then issue any required final statement after estimates become actual costs.

When supported costs exceed the deposit, the deposit is not the ceiling on a potential claim, but the landlord must still prove responsibility and amount. Send a factual account and consider resolution before filing. Keep mitigation and payment communication.

Use RTDRS or court where appropriate. Do not hold unrelated property, change locks, publish tenant information or invent charges to improve recovery.

Reconcile principal, accrued or paid interest, trust balance, inspection reports, current tenancy, deductions already asserted and tenant communication. Use written closing or management instructions for the money and records. Notify the tenant through the appropriate channel.

Alberta law can make a new landlord responsible for the deposit even if the prior landlord failed to transfer it. A buyer should treat the deposit as a due-diligence and closing-control item, not a post-closing administrative detail.

Limit access to bank records and tenant financial information. Use tenancy identifiers in the operating ledger without placing unnecessary banking or identity data in general email, contractor systems or lead forms. Back up the deposit file and record who can authorize movement.

Review the ledger annually, before rent or management changes, at notice, before listing a tenant-occupied property and before deposit return. Small discrepancies become harder to resolve after turnover or ownership transfer.

Last source review: July 30, 2026. Tenancy rules, forms, interest rates, service methods, dispute procedures, health requirements, insurance terms and licensing can change. Verify the actual agreement, property, event and deadline with the Alberta lawyer, licensed property manager, insurer, accountant, contractor, municipality or government service responsible for the answer.