The excitement in securing an apartment or a room can cloud even the most diligent minds. However, it is important that both parties formally lodge the bond deposit with your state or territory’s bond authority. In New South Wales, this is NSW Fair Trading. If you are a landlord or an agent, it is essential you comply with the bond rules. This article will explain the responsibilities of both tenants and landlords in relation to paying a rental bond in NSW.

What is a Bond Deposit?

A rental bond is money that the tenant pays before they move into a place. A bond is a form of security in case the tenant breaches the tenancy agreement. Both the tenant and the landlord must take steps to make sure the bond is lodged with Fair Trading. In limited circumstances, and for specific reasons, a landlord or agent can make a claim against returning the bond after the tenancy ends. You should receive a receipt when lodged with the State’s bond authority.

How Much is a Bond Deposit?

A tenant can be required to pay the first two weeks rent at the beginning of the tenancy. But, the rental bond cannot be an amount more than four weeks rent. If you are a landlord, you cannot ask the tenant to pay any other money at the beginning of their tenancy. You also cannot request or receive additional bond payments during the tenancy. The rental bond must be money and cannot be a written guarantee from, for example, the tenant’s friends or relatives. The tenant can also pay the rental bond before signing their tenancy agreement, however, they are not obliged to do so.

If you are the landlord, you may also allow the tenant to pay the rental bond in instalments. If so, you can request the tenant pay bond instalments using the Rental Bonds Online page. An email will be sent to the tenant, which will prompt them to log onto their account and pay the instalment. You would then receive a notification when the tenant pays the instalment.

If you are a self-managing landlord, you are responsible for lodging the bond with NSW Fair Trading. When you take a bond from a tenant, they must receive a receipt or record of the payment details on the tenancy agreement. You cannot keep the money or put it into an account in the tenant’s name.

If you, as a landlord, take more than four weeks rent as a bond or do not lodge a bond on time, you may be breaching the bond rules. Consequences for non-compliance include Fair Trading issuing a fine or taking you to court.

Claiming for a Refund of Your Bond Money

If you are a tenant, before you leave and hand back your keys, you will contact the landlord or agent to complete a final inspection. They will inspect the property to see if there is any damage or any necessary cleaning. An official condition report needs to be completed at this inspection. If you agree with the landlord’s agent on how the bond is to be paid out, you will ask them to fill out and sign a Claim for Refund of Bond Money form. You should lodge it immediately with Fair Trading and the bond will be paid out straight away.

Lodging a Claim against a Tenant’s Bond

There are specific circumstances for landlords where you can lodge a claim against a tenant’s bond. These include if the tenant:

  • still owes rent or has unpaid water usage bills;
  • broke the lease early and has not paid the break fee;
  • did not return all the copies of the keys given; and
  • caused damage or did not leave the premises in a reasonably clean condition.

Tenants are not, however, responsible for fair wear and tear to the premises. This could be caused by exposure, time or just ordinary use. Tenants are only liable for negligent, irresponsible or intentional actions that cause damage to the premises. This can include:

  • tenants leaving holes in the walls by installing picture hooks or shelves;
  • unapproved paint jobs; or
  • burns or cuts in the bench top.

Key Takeaways

Looking for a rental can feel like looking for love. Each inspection brings with it the same nervous butterflies as a first date. It can be easy to get caught up in the rollercoaster of emotions. However, it is important whether you are the tenant or the landlord, that you exercise diligence and ensure you comply with the bond rules. If you have any questions about rental bonds, contact LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

Claudette Yazbek
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