Prince Edward Island’s Island Regulatory and Appeals Commission upheld tenants’ entitlement to double their security deposit while allowing their landlords’ appeal in part and awarding $2,800 for lost rent. The commission’s operative order required the landlords to pay the five tenants collectively $1,025.08.
In Mreesh and Abou Assali v. Ali and others, 2026 PEIRAC 55, issued Sept. 10, 2026 as Order LR26-43, Commissioner Gordon MacFarlane and Vice Chair Kerri Carpenter distinguished two obligations: tenants must give the statutory notice required to end a fixed-term tenancy, and landlords must separately comply with the rules governing security deposits.
Fixed-term expiry did not replace notice
The tenants paid monthly rent of $2,800 and had provided a $2,800 security deposit. Their renewed fixed-term agreement ran to Aug. 31, 2025. On Aug. 29, they told the landlords they would leave at the end of the month, and they moved out on Aug. 31.
The tenants argued that the agreement already identified the end of the tenancy and that they had advised the landlords they would not renew it. They also disputed liability for September rent because the landlords explored selling the house rather than simply finding new tenants.
The commission applied subsection 55(3) of the Residential Tenancy Act. It requires a tenant ending a fixed-term tenancy to give notice effective no earlier than one month after the landlord receives it, no earlier than the contractual end date, and on the day before rent is payable.
The contractual expiry date did not relieve these tenants of that statutory notice requirement. Two days’ notice was insufficient to terminate the tenancy effective Aug. 31. The tenants were therefore responsible for rental loss reasonably attributable to their inadequate notice—not automatically for every later month the property remained vacant.
Landlords still had to prove loss and mitigation
The commission emphasized that the landlords had to establish their actual loss and remained subject to the duty to mitigate under section 46. The question was whether they took reasonable steps in the circumstances to reduce the loss caused by the short notice.
It rejected the argument that exploring a sale alongside efforts to re-rent necessarily showed a failure to mitigate. The landlords said they advertised through Facebook and pursued both possibilities to limit the financial loss. The finding was tied to those efforts and the circumstances, not a general exemption from mitigation whenever an owner considers selling.
The panel found that two days left an extremely limited opportunity to inspect the house, address cleaning or repairs, advertise, arrange viewings and secure replacement tenants before Sept. 1. While the tenants remained in possession, the statutory requirement for 24 hours’ notice of entry further limited the landlords’ ability to show the property.
The evidence established that the house was advertised at $2,800 after the tenants left and that the asking rent was reduced to $2,200 in February 2026. The later reduction did not establish that maintaining the higher asking rent during fall 2025 had been unreasonable. The commission found the September loss was caused by insufficient notice and that reasonable mitigation steps had been taken, supporting the $2,800 award.
New evidence accepted on rehearing
The tenants challenged new evidence about the landlords’ attempts to re-rent. The commission explained that an appeal before it proceeds by rehearing and that subsection 89(8) permits it to receive and accept evidence in its discretion.
It considered the appeal-hearing evidence about rental efforts, advertised prices, the later reduction and when the property was ultimately rented. The decision did not treat the appeal as limited to the material previously before the Residential Tenancy Office.
Rent entitlement did not cure the deposit breach
The landlords’ success on rent did not alter their obligations concerning the security deposit. They filed their application on Nov. 21, 2025, well outside the 15-day period the commission found applicable after the tenants vacated on Aug. 31.
There was no evidence of an order permitting retention, the tenants’ written agreement to retention or another applicable exception under section 40. Subsection 40(4) required the landlords to pay double the deposit and barred a claim against it for non-compliance.
The commission therefore held that the landlords could not retain the $2,800 deposit as compensation for September rent. The separate rent award and the tenants’ statutory double-deposit remedy both stood.
Double the deposit was $5,600 in total, not $5,600 in addition to returning the original deposit. The decision also listed $212.26 in interest for Aug. 19, 2023 through Sept. 10, 2026, bringing the tenants’ listed entitlement to $5,812.26.
Expenses confirmed; operative order set payment amount
The tenants did not dispute the $1,987.16 previously awarded for oil and repair expenses. The commission confirmed it: $1,155.50 for oil, $50 for a lock and key, $461.16 for bathroom tiles, $111.43 for a kitchen light and $209.07 for grass. With September rent, the decision listed the landlords’ entitlement as $4,787.16.
The commission varied the earlier order to add the September rent award and confirmed it in other respects. Its operative order directed the landlords to pay the tenants $1,025.08 by Sept. 24, 2026, replacing the earlier direction to pay $3,804.22. The payment order was for the tenants collectively, not that amount for each person.
The accompanying notice described a right to appeal to the PEI Court of Appeal within 15 days on a question of law only. It also explained that the commission’s order could be filed with the Supreme Court and enforced as an order of that court.
