Avoid rental de­posit con­flict

The Rep - - PRIME PROPERTY -

WOR­RIED about how to han­dle rental de­posits? Here is some ad­vice from Leapfrog Prop­erty Group CEO Bruce Swain.

The ABC of rental de­posits

Pos­si­bly one of the big­gest sources of con­tention between land­lords and ten­ants sur­rounds the rental de­posit.

“Most ten­ants rely on get­ting their rental de­posits back when mov­ing, so they can use it to pay a de­posit on their new home. Hav­ing it with­held or even hav­ing large amounts de­ducted can lead to a lot of dis­tress,” Swain ex­plained.

What to do when pay­ing a de­posit Do a pre-oc­cu­pa­tion in­spec­tion

Ac­cord­ing to the Rental Hous­ing Act, land­lords (or the man­ag­ing agents rep­re­sent­ing them) are per­mit­ted to re­quest a ten­ant to pay a de­posit be­fore tak­ing oc­cu­pa­tion of a prop­erty – although the act does not pro­vide guid­ance as to the amount.

“It is very im­por­tant for both land­lords and ten­ants to note that a land­lord (or man­ag­ing agent) who doesn’t con­duct a pre-oc­cu­pa­tion in­spec­tion with the new ten­ant, loses the right to claim against the ten­ant’s de­posit when they move out,” said Swain.

Check that the de­posit is in­vested

Swain high­lighted the fact that land­lords are re­quired to pay their ten­ant’s de­posits into an in­ter­est-bear­ing ac­count with a fi­nan­cial in­sti­tu­tion.

Get­ting a de­posit re­turned

Ac­cord­ing to the Rental Hous­ing Act, the ten­ant and land­lord have to do a joint in­spec­tion of the prop­erty be­fore the lease ex­pires. Should the land­lord or man­ag­ing agent fail to do so, they will not be able to claim against the ten­ant’s de­posit.

Upon the end of the lease pe­riod, the land­lord may then deduct from the ac­crued in­ter­est and de­posit to ef­fect any re­pairs the ten­ant may be li­able for. The re­main­der of the com­bined sum (ac­crued in­ter­est and de­posit) must then be re­funded to the ten­ant, no later than 14 days af­ter the ten­ant moved out.

“Ten­ants are al­lowed to re­quest that the land­lord pro­vide a writ­ten re­ceipt of all pay­ments made, in­clud­ing proof of the in­ter­est earned on the de­posit.”

De­duc­tions may not be made for de­fects that ex­isted be­fore the ten­ant moved in, or that can be con­sid­ered as part of “fair wear and tear”.

“It’s im­por­tant to note that ten­ants may not be el­i­gi­ble for the ac­crued in­ter­est amount if they’re rent­ing through an es­tate agent. This is be­cause, un­less oth­er­wise in­di­cated in the lease agree­ment, the agent is re­quired to de­posit the in­ter­est earned in to the Es­tate Agents Fi­delity Fund – as per the Es­tate Agency Af­fairs Act of 1976,” ex­plained Swain.

Swain pointed out that ten­ants can ask for the rental con­tract to in­di­cate that the in­ter­est be paid to them “sub­ject to any writ­ten agree­ment in this re­gard between the agent and such party’.

“Ten­ants need to be aware that a per­cent­age of the in­ter­est may still be used to cover the agent’s ad­min­is­tra­tive ex­penses in this case.”

It is crit­i­cal that both land­lords and ten­ants read through their rental con­tracts care­fully be­fore sign­ing and fa­mil­iarise them­selves with the le­gal­i­ties around rental de­posits.

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