PEI landlord ordered to return deposit balance after most damage claims fail

The Island Regulatory and Appeals Commission ordered landlord Xue Wang to pay tenants Jiayi Xu and Zhaoxuan Xu $2,199.64 by Oct. 29, 2026, in Xue Wang v. Jiayi Xu and Zhaoxuan Xu, 2026 PEIRAC 70, issued Oct. 15, 2026. In Order LR26-56, the commission partly allowed the landlord’s appeal, adding a repair deduction while overturning an earlier countertop award.

Tenancy and competing claims

The tenants rented a Charlottetown townhouse under a fixed-term agreement running from April 1, 2025, to March 31, 2026. They paid a $2,424 security deposit on April 1. A separate $1,200 pet deposit was returned on Jan. 12, 2026. The tenants moved out when the tenancy ended.

The landlord sought to retain the security deposit and obtain additional compensation. A replacement application filed in July put the claims at $17,779.06. The tenants also applied for the deposit’s return and additional compensation.

The Residential Tenancy Office’s Aug. 14 order allowed the landlord to retain $373.12 and required payment of $2,161.33 to the tenants. Wang appealed on Aug. 31, and the commission heard the matter by telephone on Sept. 25.

The landlord argued that photographs and an invoice proved TV-mount damage beyond ordinary wear and tear. The landlord also claimed extensive pet hair and odours required specialized cleaning, and sought replacement costs for an entry door and handle said to have been operational at move-in.

The tenants disputed the damage claims. They said there was no move-in inspection report, the unit had not been professionally cleaned before their arrival, and the countertop markings were pre-existing or ordinary wear. They denied damaging the entry door and argued that normal pet hair and odours were ordinary wear in a pet-friendly tenancy. They also considered the TV-mount damage ordinary wear.

Missing report limited proof

The commission said the landlord had to prove the damage claims on a balance of probabilities. Section 18 of the Residential Tenancy Act required a move-in inspection report, which the landlord had not completed. That left limited objective evidence of the unit’s initial condition, undermining most claims.

The remaining evidence did not establish the tenants’ responsibility for the entry door or other damage lacking a reliable baseline. The commission also removed the $200 countertop award: photographs showed only minor markings, without sufficient proof the tenants had caused damage beyond ordinary wear and tear.

The missing report did not defeat every claim. The commission found that installing the TV mounting bracket altered the wall beyond reasonable wear and tear. A $149.50 repair invoice established that claim, and the landlord was allowed that amount for drywall and painting repairs.

The $1,723.94 specialized-cleaning claim failed on the evidence. The commission considered the tenants’ video, but found no adequate proof that the claimed cleaning was needed. The cleaning company’s documentation lacked a sufficiently detailed work breakdown, and the landlord’s photographs showed only small areas of apparent uncleanliness. The reasons did not adopt a blanket rule that pet odours are ordinary wear and tear.

Payment and appeal costs

The recalculated amount began with the $2,424 security deposit and $98.26 in interest from April 1, 2025, to the date of the order. Deducting the unchanged $173.12 for water and sewer utilities and $149.50 for repairs left $2,199.64 payable to the tenants. The commission otherwise upheld the Rental Office’s findings.

The tenants argued that their success before the Rental Office and the expense of responding to the appeal justified a costs award. Section 89 of the Act gave the commission discretion to award costs. It declined after considering the outcome and circumstances, while expressly leaving costs awards available in other appropriate cases.

The order’s notice permits an appeal to the Court of Appeal within 15 days of the commission’s decision, on a question of law only. Where the commission has confirmed, reversed or varied an order of the Director, either party may file the order with the Supreme Court. If filed, the order may be enforced as a Supreme Court order.