Late Rent Fees and NSF Charges in Canada: What Landlords Can Charge, Province by Province

There Is No National Late Fee Rule in Canada

This article covers Canadian law. Landlords with properties in the United States should read their state's late fee statute instead, because the American rules work differently.

In Canada, what a landlord may charge when rent arrives late, or when a rent payment bounces, is set by provincial tenancy law. Some provinces fix a dollar amount in a regulation. Some set a percentage. One leaves the amount to the tenancy agreement and lets the tribunal cut back a fee that is out of proportion. Ontario and Quebec leave very little room for a separate fee at all.

The difference matters most when the fee is never paid. A fee the province does not allow cannot be recovered at the tribunal, and in Ontario adding the wrong charge to a notice for unpaid rent can sink the notice itself. The figures below come from each province's statute, regulation or official tenancy guidance. Check the current version for your own province before you write a fee into a lease.

The Rules at a Glance

The table summarizes the rules in six provinces for an ordinary residential tenancy: what may be charged for late rent, what may be charged for a returned payment, and the condition attached. The sections that follow explain each row.

Ontario: Penalties Are Barred, NSF Charges Are Limited

Ontario starts from a prohibition. Section 134 of the Residential Tenancies Act, 2006 says that, unless otherwise prescribed, no landlord shall collect or require from a tenant, prospective tenant or former tenant a fee, premium, commission, bonus, penalty, key deposit or other like amount of money, whether or not the money is refundable. A late payment penalty falls within that wording, so a lease clause cannot create one on its own.

The Landlord and Tenant Board's interpretation guideline on rent arrears says certain charges are not permitted by the Act even if they are set out in the tenancy agreement. Its list includes non-refundable key deposits, most administrative charges and late payment charges beyond what is permitted, and it points to section 17 of Ontario Regulation 516/06 as the provision that sets the exceptions.

A bounced payment is the main exception. The same guideline says a landlord's application for arrears may include the NSF charges a financial institution charged the landlord, plus administrative charges that are limited to $20.00 per cheque under section 17 of the regulation.

Keep NSF charges off the N4. The guideline is explicit that although a landlord may apply for charges due to NSF cheques, they cannot be claimed in an N4 Notice, the notice to end a tenancy for non-payment of rent, and including them will likely invalidate it. The N4 must correctly set out how much rent the tenant owes on the date it is given. Claim the NSF amounts in the application to the Board instead.

British Columbia and Manitoba: A Fixed Dollar Limit

British Columbia lists the fees a landlord may charge in section 7 of the Residential Tenancy Regulation. Paragraph (1)(d) allows an administration fee of not more than $25 for the return of a tenant's cheque by a financial institution or for late payment of rent. Paragraph (1)(c) separately allows the service fee the financial institution charged the landlord for the returned cheque.

The BC fee has a condition. Section 7(2) says a landlord must not charge the administration fee unless the tenancy agreement provides for that fee. A landlord who forgot to include it in the agreement cannot add it later by sending the tenant a bill.

Manitoba sets a sliding scale in section 20 of the Residential Tenancies Regulation. A landlord may charge up to $10 for the day the rent is due and up to $2 for each day after that the rent is late, to a maximum late payment fee of $100. The cap applies whether the amount owing is rent, a tenant services charge, or both.

Manitoba adds two protections. The landlord must tell the tenant in writing of the intention to charge a late fee before charging it, and no fee may be charged where the delay was caused by an interruption in mail service or another circumstance beyond the tenant's control, or where a government agency that pays the rent was responsible for the delay. Under section 21, the costs a landlord may charge for a dishonoured cheque or other negotiable instrument must not be more than $60.

Alberta and Nova Scotia: The Lease Sets It, Within Limits

Alberta's Residential Tenancies Act does not set a dollar figure for late rent. The province's information guide for landlords says that if a residential tenancy agreement allows for a late payment fee, and the fee does not reflect the actual loss the landlord suffered because of the late payment, the fee could be waived by the Residential Tenancy Dispute Resolution Service or the Court. A flat fee chosen to discourage late payment is exactly the kind that risks being set aside.

In practice, an Alberta landlord who wants a late fee should write it into the agreement and be able to explain how it relates to real costs, such as the time spent chasing the payment or charges from the landlord's own lender.

Nova Scotia uses a percentage. The province's renting guide says landlords can charge 1% of the monthly rent per month for any late rent, and the standard form of lease prescribed under the Residential Tenancies Act (Form P) says a late payment fee, if any, shall be charged at no more than 1% per month of the monthly rental. On a monthly rent of $1,500, that is no more than $15 for the month.

The Nova Scotia lease form also lists returned cheque charges as an item the tenant may be made responsible for, with the dollar amount left blank for the parties to fill in. Separately from any fee, the guide says that once rent is 3 days late the landlord can give the tenant a Form D notice to quit for rental arrears, and the tenant who does not pay within 10 days of receiving it must move out by the date on the notice.

Quebec: Interest and the Tribunal, Not a Fee

Quebec handles late rent through the Tribunal administratif du logement rather than a fee schedule. The Tribunal says a lessee who does not pay the rent in full on the agreed date is in default as of the next day, and the lessor can then apply to recover the rent owing, the interest and the costs of the application. If the rent is more than three weeks late, the lessor can also ask the Tribunal to terminate the lease and evict the lessee.

The lessee can avoid termination by paying, before the decision, the rent owing plus costs and interest at the rate provided for in section 28 of the Tax Administration Act, or at the rate the parties agreed on if it is lower. The Tribunal adds that rent paid by cheque counts as paid only once the financial institution honours the cheque, that a lessor cannot require postdated cheques, and that a lessor cannot charge additional amounts in the form of a security deposit or other charge, such as a key deposit. Frequent late payment can justify ending the lease, but only if the lessor shows it has suffered serious harm as a result.

Practical Steps for Landlords

Write the fee into the lease only if your province allows one, and in the form it allows: a dollar amount in British Columbia and Manitoba, a percentage no higher than 1% per month in Nova Scotia, a figure tied to actual cost in Alberta. In British Columbia the agreement must provide for the fee; in Manitoba the tenant must be told in writing before it is charged. In Ontario and Quebec, do not rely on a late fee clause at all.

Keep rent and charges apart in your records. A notice for unpaid rent should demand rent, not fees, and Ontario's tribunal says NSF charges on an N4 will likely invalidate it. A ledger that records rent, late fees and returned payment charges as separate lines makes the right figure easy to find. Rent collection software, TenantFort's rent ledger included, can keep them separate, but a careful spreadsheet does the same job.

Keep the evidence. Save the bank's notice of every returned payment, the date each payment actually arrived, and a copy of any written notice you gave about fees. Those records are what a tribunal will ask for if a fee is disputed.

This article is general information, not legal advice. The provinces not covered here, and the territories, have their own rules, and regulations change. Check your province's tenancy statute and tribunal guidance before charging a fee, or consult a lawyer or paralegal licensed in your province.