Key Money
Learn what key money means in Canadian rental markets, how it’s regulated, and why both tenants and landlords should proceed with caution.
May 22, 2025
What is Key Money?
Key disclosure refers to the seller’s obligation to disclose material facts or known defects about a property that could affect a buyer’s decision to purchase.
Why Key Money Matters in Real Estate
In Canadian real estate, key money is generally discouraged and in many provinces may be illegal unless explicitly permitted under tenancy law.
Key facts about key money:
- Often paid upfront and separate from rent or deposit
- May be required for commercial or residential leases
- Can violate tenancy legislation depending on jurisdiction
Tenants should be cautious and review provincial laws before agreeing to pay key money. Landlords found demanding unauthorized payments can face legal penalties.
Understanding key money helps renters identify unethical practices and landlords ensure compliance with tenancy regulations.
Example of Key Money in Action
A landlord in a high-demand neighborhood asks for $2,000 in key money to prioritize the applicant over other interested tenants.
Key Takeaways
- Upfront payment to secure a lease.
- Often discouraged or illegal.
- Common in tight or rent-controlled markets.
- Not considered rent or damage deposit.
- May expose landlords to legal action.
Related Terms
- Security Deposit
- Lease Agreement
- Rental Application
- Residential Tenancies Act
- Landlord Responsibilities
Average and median describe different aspects of the same month’s transactions. Both are affected by the mix of homes sold.
Category averages compare different homes and locations; the gaps are not estimates of the cost to upgrade an otherwise identical property.
The five categories shown account for 5,000 of the board’s 5,057 sales. The remaining 57 transactions were in other housing categories.
Monthly observations are not seasonally adjusted. Active listings count properties available at month-end; they are not construction inventory.
Average and median prices share one dollar axis. These unadjusted transaction measures do not control for changes in the homes sold.
TRREB’s 416/905 categories compare the apartments sold in each area. The difference does not isolate a location premium for equivalent units.
5680 Oak Street in Vancouver and its surrounding context. (MCMP Architects)
Ground-level renderings of the tower proposed for 5680 Oak Street in Vancouver. (MCMP Architects)
