Large N.S. landlord running 'scheme' to collect illegal deposits, says legal aid group

Zhaojun Xu held her breath and sent the money. The $3,142.50 deposit drained her bank account, but she needed a place for herself and her adult son to live.

It wasn't until weeks later, after much back and forth with the landlord and still no lease signed and no apartment, that Xu started to panic.

"That's when I feel so uncomfortable and I feel something has gone wrong," Xu said in an interview Monday."And I also askthem to show me the lease. They never did."

Xugave upand withdrew her application in September, but the rental companydidn't return her money. Her son picked up a second job to try to keep the family afloat, but they ended up living in a hotel for weeks, supported by a local non-profit she volunteers with.

A Halifax legal aid organization says the deposit Xu paid to secure an apartment is illegal, but this practice is becoming more common as affordable housing becomes increasingly scarce and people grow more desperate.

"People feel pressured to pay these kinds of fees because they know it's very difficult to find somewhere to live," said Sydnee Blum, a community legal worker with Dalhousie Legal Aid Service.

"Landlords know that people are in a desperate situation and frankly, a lot of bad actors are capitalizing off of that."

Blum is representing Xu in her fight to retrieve the thousands of dollars she paid to Olympus Properties, a property management company that owns at least 70 residential and commercial buildings in Nova Scotia, according to property records.

Blum says the rental company is running a "scheme" that is impacting many tenants.

Landlords can legally collect half a month's rent as deposit

According to the provincial department that oversees the Residential Tenancies Act, the most a landlord can charge for a security deposit is50 per cent of one month's rent, but only after a lease is signed.

"Anyone who has been charged an application fee for an apartment should apply to the Residential Tenancies Program to get that money back," Rachel Boomer, a spokesperson for the Department of Service Nova Scotia, said in an email.

CBC News reviewed correspondence between Xu and Olympus Properties employees, in which they said her application had been approved, but the deposit required to secure the apartment was$1,047.50 as well as "the last month rent to be held in trust" of $2,095. The letter also stated the money should be received within six hours.

When presented with the wording in Olympus Properties'letter, anotherdepartment spokesperson said:"The Residential Tenancies Act makes it clear that requesting application fees is not allowed; landlords are also not allowed to request the last month's rent."

In an email to CBC News, Olympus Properties said it follows the correct process as set out in the Residential Tenancies Act and only charges half a month's rent as a deposit.

"Olympus Properties Management Ltd. also never charges a fee to apply for our units," the email said. "Applying is completely free of charge and the rental application form is easily accessible on our website."

The company would not address the specific situation, referencing a policy "to not comment on matters currently before the Director of Residential Tenancies."

Other complaints against Olympus

CaileeClark, a former tenant of Olympus Properties, said at one point during her tenancy, she was asked to pay a 30 per cent rental increase.

When she told the company this was illegal under the province's temporary rent cap, the offer she had been given for a new fixed-term lease was revoked.

"It's just completely shady, from start to finish," Clark said in an interview Monday."I've been renting my whole life and I've never had to have my guard up in terms ofwatching what they're doing andbeing aware of just little sneaky things that they're trying to do."

When she moved out, Clarksaid the company tried to keep $250 of her damage deposit, and she had to fight to get it back. CBC News also spoke to other tenants who say they didn't damage their unitsbut had to go as far as small claims court to recoup their deposit from the company.

Olympus Properties said in its email to CBC that it "has never withheld someone's security deposit without just cause."

Blum says Dalhousie Legal Aid has at least three clients going through a similar security deposit situation with Olympus Properties, and she receives complaints weekly about other matters like lack of repairs and intimidation.

But it's not just this landlord, according to Blum.

"In a well-functioning tenancy system, we would have some kind of mechanism at the provincial level to crack down on landlords who are repeatedly breaking the law, but unfortunately we just don't have that here," shesaid.

Blum is referring toyears of calls from both tenants and landlords for a residential tenancies enforcement system, an idea thatwas quashed by the Houston government in September.

Xu waiting for November hearing

After Xu filed for a hearing with the Residential Tenancies Program, the company offered to return $900 of the$3,142.50 she paid. She said she didn't accept the offer and is now waiting for the hearing on Nov.5.

She found a new place to live last weekand hopes to get the full deposit back.

"My son feel very sad, and also my husband blamed me. They said you threw the money away," Xu said. "That's a lot of money. So I feel so disappointed, very stressed."