Is a new landlord responsible for paying accumulated interest on a tenant's last month's rent deposit?

Yes. The Residential Tenancies Act, 2006 requires a landlord holding a last month's rent deposit to pay the tenant annual interest on it, calculated using a rate tied to the guideline the province sets, and this obligation transfers along with the deposit itself when the property is sold. As the new owner, you take over responsibility for the deposit going forward, including the ongoing duty to credit interest on it.

Because you also generally receive a credit for the deposit amount itself through the closing adjustments, it is worth confirming with your lawyer, before closing, exactly how much deposit is being transferred, whether any interest already accrued has been accounted for, and how the ongoing interest obligation will be tracked once you take over. Tenants are entitled to ask about this over the life of the tenancy, so keeping clear records from day one as the new landlord avoids disputes later about how much interest is actually owed and when it was last paid.