Guide to rental bond money

Pilbara News - - Property - Hay­den Groves

When tak­ing on a res­i­den­tial tenancy, typ­i­cally the owner re­quires the ten­ant to pay a se­cu­rity bond up­front which equates to about four weeks rent.

The pur­pose of the bond is to pro­vide the owner with an op­por­tu­nity to mit­i­gate any losses, should they be in­curred by the ten­ant. These losses may in­clude dam­age to the prop­erty (in­side and out) or the non-pay­ment of rent.

The bond is not kept by the owner or man­ag­ing agent; in­stead it is paid to the govern­ment bond ad­min­is­tra­tor, which is a spe­cific govern­ment-man­aged trust ac­count.

Land­lords and prop­erty man­agers who fail to com­ply with this pro­vi­sion, and pay the bond into the govern­ment-man­aged trust, face se­vere penal­ties.

Typ­i­cally, tenants re­ceive their bond money back at the end of the tenancy, once the man­ag­ing agent has in­spected the prop­erty to en­sure it is in the same con­di­tion as at the start of the lease (tak­ing into ac­count fair wear and tear).

The state of the prop­erty is checked against the prop­erty con­di­tion re­port — a manda­tory doc­u­ment re­quired to be com­pleted at the start of a new tenancy. The com­pleted PCR is agreed to and signed by the land­lord (or the man­ag­ing agent on their be­half) and ten­ant at the start of the lease.

Some­times, an out­go­ing ten­ant’s view of what con­sti­tutes “fair” de­pre­ci­a­tion dif­fers to that of the owner’s, which can lead to a dis­agree­ment over how the bond is dis­bursed. If a bond in­spec­tion re­veals the ten­ant failed to, for ex­am­ple, clean the oven or mow the grass, the ten­ant should be given the op­por­tu­nity to cor­rect this. Some­times, the ten­ant will leave these smaller tasks to the owner and give per­mis­sion for the costs of rec­ti­fy­ing them to be de­ducted from their bond.

Oc­ca­sion­ally, how­ever, an agree­ment can­not be reached and the man­ner in which the bond is dis­bursed re­mains in dis­pute. In these sit­u­a­tions, the PCR is re­lied upon to de­ter­mine whether, for ex­am­ple, the car­pet was stained dur­ing the term of the tenancy.

It may have been stained prior, but if not noted in the PCR, it is dif­fi­cult for the ten­ant to dis­prove re­spon­si­bil­ity. In the event of an un­re­solved dis­pute, the courts will ul­ti­mately de­cide the al­lo­ca­tion of bond monies.

It is im­por­tant tenants en­sure the PCR is ac­cu­rate at the start of the lease. Make sure you agree with each item listed in the PCR and bring any items you think may have been over­looked to the at­ten­tion of your prop­erty man­ager.

If you make ev­ery ef­fort to re­turn the prop­erty to the owner in the best pos­si­ble man­ner at the end of the tenancy, you are in a good po­si­tion to have your bond re­funded in full. Hay­den Groves is the pres­i­dent of the Real Es­tate In­sti­tute of WA.

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