Once the potential tenant has applied, been approved, accepted the approval and signed a lease, they will then pay the bond and in most cases, pay rent in advance (usually two weeks).
A bond acts as a security deposit for the property and the landlord.
For example, if a tenant vacates the property in such a way that cleaning or repair work is required to re-lease the property, the landlord or agency can claim money out of the bond to pay for the required work to re-lease the property.
Tip – Bond money can only be claimed for damage beyond reasonable ‘wear and tear’. The way landlords and agencies can claim bond money varies state to state.
In NSW, the maximum amount payable as a bond is four weeks’ rent.
At the end of a lease, most tenants want to get their bond back and will usually reasonably comply to have it returned.
It’s best that either the agent or yourself meet with the tenant for a final inspection and address any issues or concerns that you have.
Hopefully everything can be dealt with then and there and everyone walks away happy.
If the property however is left in a state that is beyond reasonable wear and tear, a claim against the tenants bond can be made to fix or rectify any issues.
There are numerous instances where you or the agent can claim against the tenants bond.
This could include some things like;
If the tenant has any outstanding bills or owes any money
If the tenant broke a lease early
If the tenant didn’t return keys
If the tenant damaged, broke, removed or misplaced items that belonged to the property
For reasons like this and others, you or the agent can claim against the tenants bond.
Wear and tear has come up a few times now, so what exactly is defined as fair wear and tear?
Fair wear and tear means deterioration that occurs over time with the use of the property.
Any negligent, irresponsible or intentional actions that cause damage to the property means the tenant may be liable.
For example,
Furniture indentations on the carpet is usually fair wear and tear. Stains on the carpet that weren’t there before the tenant moved in could mean they may be liable.
Traffic marks on floorboards is usually fair wear and tear. Badly scratched floorboards could mean the tenant may be liable.
Faded, cracked or chipped paint is usually fair wear and tear. Unapproved painting could mean the tenant may be liable.
The way bonds are handled vary from state to state but in NSW, all bonds are lodged online through Rental Bonds Online (RBO) – part of the Fair Trading website.
For bonds that are not lodged using RBO, landlords / agents can claim bond money using the Fair Trading claim for refund of bond money form. If you can’t get the tenant to agree and sign the form, according to fairtrading.nsw.gov.au, then;
You should lodge it without the tenant’s signature
Fair Trading will send a notice to the tenant, giving them 14 days to either settle the matter with you or contest your claim by applying to the tribunal
If the tenant does not apply to the Tribunal, the bond will be paid out as per your claim
If they apply to the Tribunal, the bond will be held by Fair Trading until the dispute is settled
If the tenant lodges a claim for a refund first without your signature, Fair Trading will send you a notice advising of the claim
You can either try to resolve it with the tenant or apply to the Tribunal within 14 days if you disagree
Make sure to notify Fair Trading that you have applied to the Tribunal, so that the bond can be held until after the hearing
If you and the tenant reach a different agreement after one of you has lodged a claim, then a new claim form will need to be lodged with Fair Trading with both of your signatures.
Otherwise, the first claim lodged will be paid out after 14 days. Once the bond has been paid out, either you or the tenant can still apply to the Tribunal. There is a six month time limit to do this.
Providing evidence to the tenant
If you lodge a claim without the tenant’s signature, you must send copies of the following to the tenant within seven days;
The final condition report, and
Estimates, quotes, invoices or receipts for the work
Copies of these documents also need to be sent to Housing NSW if that Department paid all or part of the bond. Failure to provide these documents within the time period required can lead to penalties.
Only send the claim form to NSW Fair Trading.
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This information is of a general nature only and does not take into account your objectives, financial situation or needs. We are not financial, legal or tax advisers. You should seek appropriate professional advice specific to you before acting on this information.
