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.

Key Money

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

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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