Everything you need to know about Rental Bonds and Disputes

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What is a Rental Bond?

A rental bond is a security deposit that is paid at the start of a tenancy agreement. It is paid directly to, and held by, the Residential Tenancies Authority (‘RTA’) throughout the tenancy. The bond is paid back to the tenant at the end of the tenancy when the property is vacated on the proviso that there are no monies owed, there is no damage to the property, and there are no other unpaid costs.  Where there are monies owed or damage to the property, the property manager or the owner may require that the bond monies be witheld as compensation owed to the landlord or otherwise directed towards repairing any damage. 

To initiate a bond refund, a request must be completed through the RTA at the completion of the tenancy. Where both parties are in agreeance, the bond will generally be refunded within 2-3 days upon receipt of the signed form by the RTA.

There are circumstances, however, where the bond may be disputed where one of the parties may not be in agreeance with respect to how the bond should be paid, and the amount to be repaid. The most common issues that may give rise to a bond dispute  include:

  1. The condition of the property at handover;
  2. The tenant’s breaking of the lease; and/or
  3. The tenant’s breach of the lease.

Condition of the Property

A common dispute that frequently arises in relation to requests for bond refunds stems from the condition the property is left in at the end of a tenancy. A tenant takes on a number of inherent rights and responsibilities when residing at a rental property. These rights and obligations are set out in the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (‘Residential Tenancy Act’). Section 188(4) of the Residential Tenancy Act states that ‘at the end of the tenancy, the tenant must leave the premises, as far as possible, in the same condition it was in at the start of the tenancy, fair wear and tear excepted’.1

The term ‘fair wear and tear’ is not explicitly defined in the Residential Tenancy Act. The ordinary meaning of the phrase refers to the consequences of ordinary, and not extraordinary, damage.2 Put simply, the phrase is to be constituted as:

  • Wear that occurs during normal use. For example, a carpet located in the entryway would generally be used more than carpet located in other areas of the house, and as such, is epected to suffer more wear and tear;3 or
  • Changes that occur over time due to aging. For example, exposure to direct sunlight may cause curtain drapes to fade over time.4

In the case of Griffin v Gini , a 2011 case before the Queensland Civil and Administrative Tribunal (‘QCAT’),5 Judge Kingham, Deputy President, upheld a previous QCAT decision that a tenant’s conduct in painting walls in mismatching colours in an attempt to repair damage to patches in the wall was a deliberate act that did not fall within the scope of ordinary use. Additionally, deep grooves in a bench top from a knife from failure to use a chopping board also fell outside the scope of ordinary use.6

The bond is a security held in the event the landlord is entitled to recover money from the tenant. If you are a tenant and you cause damage, or allow someone else to cause damage, to the tenanted property in a way that is malicious or outside the scope of ‘fair wear and tear’,  the landlord may recover its losses from the security bond.7

Breaking of Lease

If either party to a general tenancy agreement gives notice to terminate a fixed term tenancy agreement before the lease’s end date without reasonable grounds, this is referred to as ‘breaking the lease’.8 As a tenancy agreement is legally binding, a tenant (and in rarer cases, a landlord) may be liable to pay compensation if they decide to terminate the tenancy agreement early. Breaking a fixed-term lease can have serious monetary consequences, so it is a good idea to seek the advice of a lawyer before proceeding to break a lease.

If a tenant breaks a lease without reasonable grounds, the landlord can seek compensation against them for loss or damage suffered, including but not limited to:

  • Loss of rental income until the end of the lease or until a new tenant is found;
  • Re-letting costs (generally 1 week’s rent plus GST);9 and
  • Advertising costs.

The landlord is required by law to take all necessary steps to mitigate loss and damage as a result of a lease being terminated,10  and would generally not be entitled to compensation for any loss or expenses that could readily have been avoided.11

If a landlord notifies the tenant that they wish to break lease without holding an order from QCAT, the tenant may be required to vacate the property. However, avenues are usually available to the tenant to seek damages from the landlord, including things such as compensation for moving costs.12

Where the landlord has suffered loss and damage because of the tenant vacating the premises or terminating the lease, they may recover that loss by taking part or all of the rental bond.

Breach of Lease

A breach of lease can occur where the tenant or the landlord breaches a condition of the tenancy agreement.

Common examples of tenant breaches include:13

  • Failure to pay rent;
  • Making excessive noise;
  • Damage to the property;
  • Having a pet without permission; and
  • Having an excessive number of occupants at the property.

If a tenant is found to have breached the tenancy agreement, the property owner may issue a Notice to Remedy Breach (Form 11)  to  allow a minimum of seven (7) days for the tenant to rectify the breach (the timeframe provided may vary depending on the breach and/or the particular terms of the tenancy agreement). If the breach is not remedied within the timeframe provided, the landlord may demand that the tenant leave the property by issuing a Notice to Leave. The landlord can also recover damages or other compensation from the rental bond.

Refund of Rental Bonds

Both tenants and landlords can make a claim for refund of the rental bond by completing and submitting a Refund of Rental Bond (Form 4)  to the RTA.

If all parties are in agreeance:14

  1. The tenant and the landlord will ordinarily sign a Refund of Rental Bond (Form 4) and submit same to the RTA; and
  2. The refund will usually be processed within 2 – 3 business days (although this can vary).

If the parties are not in agreeance:15

  1. The process will be initiated by the submission of the Refund of Rental Bond (Form 4) to the RTA. Only one signature is required to initiate the claim;
  2. The RTA will ordinarily:
    1. Release any undisputed amount of the bond as outlined in the form;
    2. Retain any disputed amount as outlined on the form; and
    3. Issue a Notice of Claim to any party who has not signed the form.
  3. If no response is received by the RTA to the Notice of Claim within 14 days, the bond will be paid in full to the party whose bond refund form was processed first;
  4. If a response is received by the other party disputing the claim, the parties will need to undertake dispute resolution through the RTA;
  5. If an agreement is reached, both parties will  sign the Refund of Rental Bond (Form 4) and the bond will be paid as agreed;
  6. If an agreement cannot be reached, the party whose Refund of Rental Bond (Form 4) was not processed first can apply to the Tribunal within 7 days;
  7. If no application is made to the Tribunal,  the bond will be paid to the party whose Refund of Rental Bond (Form 4) was processed first.

Time Limits

If you are a tenant and the landlord has submitted a Refund of Rental Bond (Form 4) that you do not agree with and have not signed, you will receive a Notice of Claim from the RTA shortly after the submission of the form 4. You will then have fourteen (14) days from receipt to respond.16

It is paramount that you respond within the 14-day time limit. If you fail to respond, the bond may be automatically refunded to the landlord.

If you do respond to the Form 4 and proceed to go through the dispute resolution process with the RTA, and an agreement still cannot be reached between yourself and the landlord, you will have seven (7) days to apply to the Tribunal for a decision and notify the RTA in writing that an application has been lodged.

Contact Gibbs Wright Litigation Lawyers today

If you are a tenant or a landlord in a rental dispute involving a rental bond, we can fight to have the other party release the disputed bond amount and assist you in understanding your rights and obligations. Contact Gibbs Wright Litigation Lawyers today for a free and confidential consultation discussing your legal rights and options.

[1] Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 188(4).

[2] Griffin v Gini [2011] QCATA 325 [12].

[3] Moving on fairly | Residential Tenancies Authority (rta.qld.gov.au)

[4] Moving on fairly | Residential Tenancies Authority (rta.qld.gov.au)

[5] Griffin v Gini [2011] QCATA 325

[6] Griffin v Gini [2011] QCATA 325 [16]

[7] Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 188(3).

[8] Ending an agreement early (breaking a lease) | Residential Tenancies Authority (rta.qld.gov.au)

[9] Ending an agreement early (breaking a lease) | Residential Tenancies Authority (rta.qld.gov.au)

[10] Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 362(1), (3)

[11] Residential Tenancies and Rooming Accommodation Act 2008 (Qld) s 362(3)(a)

[12] Ending an agreement early (breaking a lease) | Residential Tenancies Authority (rta.qld.gov.au)

[13] Repeated breaches of an agreement | Residential Tenancies Authority (rta.qld.gov.au)

[14] Bond refunds | Residential Tenancies Authority (rta.qld.gov.au)

[15] Bond refunds | Residential Tenancies Authority (rta.qld.gov.au)

[16] Bond refunds | Residential Tenancies Authority (rta.qld.gov.au)

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The content of this publication is intended as general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal advice. You can contact us at our Brisbane Office for a free consultation on a range of litigation matters on (07) 3088 6364.

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