The evolution of security deposit legality in Quebec
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The security deposit (also commonly known as the “garantie” deposit), prohibited by article 1904 of the Civil Code of Québec, represents a major issue for owners of income properties in the province of Québec. Faced with this prohibition, CORPIQ has been lobbying the government and the Tribunal administratif du logement (hereinafter “TAL”) for its legalization for several years.

In 2020, in Les Immeubles À Côté Inc. v. Mirzica, the judge recognized the validity of the security deposit when used as part of a form prepared by CORPIQ. This form offers three security options proposed by the prospective tenant to the landlord: co-location, lease deposit and/or security deposit. So, if a landlord refuses a prospective tenant because of financial risk or lack of credit history (e.g., a newcomer), he or she can present this form to the prospective tenant to make a choice. If the applicant voluntarily chooses the security deposit option by signing the form, the landlord is entitled to retain the deposit amount until the end of the lease, and to return it provided the contractual obligations are met. However, it should be noted that judges have discretion in their decisions and are not obliged to follow this position.
In 2023, the form prepared by CORPIQ was challenged by the Court of Quebec in 9198-0110 Québec inc. v. Simindokht. The Court refused to recognize the security deposit, even though the tenant had signed the security option form. In this case, the landlord had initially refused the applicant, a newcomer with no credit history, but accepted him after he had chosen the security deposit option on the form provided by CORPIQ. However, the Court ruled that, when the form is signed simultaneously with the lease, the tenant has no real choice between the options. Since he could provide neither a surety nor a roommate, the security deposit was seen as a condition imposed to conclude the lease, which amounts to illegally requiring a deposit.
Despite this unfavourable decision, it is important to remember that the TAL can recognize the validity of a security deposit if landlords follow the guidelines set out in the majority of case law. According to this trend, “a deposit may be valid or legal if it is not suggested, requested or required by the landlord, but proposed solely by the tenant for his or her own reasons” (LG2I inc. v. Doyon).
Following this decision by the Cour du Québec, CORPIQ worked to make a new security deposit model available to its members, posted on its website. To comply with the criteria set out in the case law, this time the model takes the form of a declaration by the prospective lessee, allowing him or her to specify the reasons why he or she is offering to voluntarily remit the security deposit. Please note that the old security option form is no longer available on our platform. Please do not use it again, even if you still have a copy in your possession.
We would like to emphasize that this form should only be given to the prospective tenant after he or she has expressed an interest in offering you a security deposit in view of his or her specific situation. Ideally, therefore, it should be signed before the lease is signed, and then attached to the copy of the signed lease. This is a brand-new form that CORPIQ is providing to help its members, but once again, it should be noted that the courts have full discretion to validate it or not, given the specific circumstances of each case.
To ensure that the security deposit is taken legally, we suggest that you retain as much evidence as possible during the negotiation period with the prospective tenant. This evidence will serve to demonstrate to the judge, in the event of a dispute, that the prospective tenant initiated the proposal of the security deposit option, and that his or her consent was given in a free and informed manner, without any pressure from the landlord. Evidence that may be useful includes written communications (text messages, e-mails, etc.), audio recordings and/or the presence of a witness.
In 9198-0110 Québec inc. v. Simindokht, an important clarification was made regarding the use of the security deposit. The judge stated that the deposit can only be used to cover rent arrears. Thus, if all rents have been paid, the deposit must be returned to the tenant in full. It is therefore not permissible to keep this amount to compensate for damage to the dwelling at the end of the lease. In such a situation, the landlord will have to document the damage by taking photos, make the necessary repairs and then file a claim with the TAL to obtain reimbursement of the costs incurred.
In short, although the security deposit remains a controversial practice governed by strict rules in Quebec, it remains a potential tool for landlords and tenants when used in a manner consistent with case law. The recent decisions mentioned above illustrate the importance of respecting established legal criteria, notably the tenant's free and informed consent and the limited use of the deposit.
CORPIQ continues to support its members by providing them with tools, such as the new form adapted to legal requirements, while raising awareness of the importance of documenting every step of the process. Despite the uncertainties associated with judicial discretion, rigorous preparation and solid evidence increase the chances of validating the security deposit. So it's essential for landlords to stay informed and follow recommended practices to protect their interests while respecting tenants' rights.