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Landlords have to pay interest on security deposits collected from tenants. However, the security deposit interest rate went to zero % back in 2009. That was because interest rates were so low it didn't make any practical sense to force landlords to pay interest for a few dollars or perhaps even a few cents.
The days of low interest are past. You can easily get 5% in Guaranteed Investment Certificate.
The Alberta Government says landlords must now start paying interest on tenant security deposits.
So, effective January 1 2024, landlords have to start paying interest on security deposits. There is a formula for determining the interest and is starting at 1.6%. Interest is payable once a year unless the parties agree to pay differently.
Buyers and sellers Realtors should ensure their investor clients know they must pay interest on tenant security deposits.
Protect yourself.
Cheers,
Barry
I'm taking on new clients. Please consider me and Field Law when you write your next deal.
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