Everything you need to know about Rental Bonds and Disputes

What is a rental bond?

A rental bond is a security deposit paid at the start of a tenancy agreement that is held if the landlord is entitled to recover money from the tenant. It is paid directly to, and held by, the Residential Tenancies Authority (RTA). The bond is returned to the tenant at the end of the tenancy when the property is vacated if there is no money owed, there is no damage to the property, and there are no other unpaid costs. When there is money owed or damage to the property, the landlord may require that the bond be directed to them for compensation.

To initiate a bond refund, a request must be made to the RTA at the end of the tenancy. When both parties agree, the bond is then refunded generally within two to three days upon receipt of the signed form by the RTA.

Bond disputes

There are circumstances, however, where the parties may disagree on the return of the bond. The most common disputed issues include:

  • the condition of the property at handover;
  • a tenant breaking the lease; and
  • a tenant breaching the lease.

Condition of the property

A tenant’s rights and responsibilities are set out in the General tenancy agreement (Form 18a) and in the Residential Tenancies and Rooming Accommodation Act 2008 (Qld) (the Act). Section 188(4) of the 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 agreement or the Act. The ordinary meaning of the phrase relates to the consequences of ordinary, not extraordinary damage.[2] Put simply; the phrase is to be constituted as:

  • wear that occurs during normal use. For example, carpet located in an entryway would generally be used more than carpet located in other areas of the house;[3] or
  • changes that occur over time due to aging. For example, exposure to direct sunlight may cause curtains to fade over time.[4]

In the case of Griffin v Gini before the Queensland Civil and Administrative Tribunal (QCAT),[5] Judge Kingham upheld a QCAT decision that the tenant’s conduct of painting walls a mismatched colour in an attempt to repair damage 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]

If you cause damage or allow someone else to cause damage to a property in a way that is malicious or outside the scope of “fair wear and tear”, then the landlord may recover their  losses from the rental bond.[7]

Breaking the lease

If either party to a fixed-term general tenancy agreement gives notice to terminate the agreement before the 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 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 beforehand.

If a tenant breaks a lease without reasonable grounds, the landlord can seek compensation from 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 one week’s rent plus GST);[9]and
  • advertising costs.

The landlord is required by law to take all necessary steps to mitigate their loss and damage as a result of the lease being broken.[10] They are generally not entitled to compensation for any loss or expense that could have been readily avoided.[11]

Likewise, if the landlord notifies you that they wish to break lease without an order from QCAT, you may be required to vacate the property but you may be able to seek damages from the landlord such as for moving costs.[12]

Where the landlord has suffered loss because of the tenant breaking the lease, they may recover that loss by taking part or all of the rental bond.

Breaching the 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:

  • failure to pay rent;
  • making excessive noise;
  • damage to the property;
  • having a pet without permission; and
  • having an excessive number of occupants in the property.

If you have breached the tenancy agreement, the property owner may issue you with a Notice to remedy breach (Form 11) outlining the breach and allowing at least seven days to rectify the breach (this period may vary depending on the breach and/or tenancy agreement). If the breach is not remedied in the time required, the landlord can require the tenant to leave the property by issuing a Notice to leave (Form 12) and can also recover damages against the tenant from the bond. The damages can include a loss of rental income, re-letting costs and advertising costs.

Residential Tenancies Authority’s process for bond refunds

Either you or the landlord can make a claim for the bond by completing and submitting a Refund of rental bond (Form 4) to the RTA.

If the parties agree, they will ordinarily sign the form and submit it to the RTA. The refund will usually be processed in two to three business days.

If the parties do not agree:

  1. The bond-refund process will be initiated when a Refund of rental bond (Form 4) is submitted. Only one signature is required to initiate the claim;
  2. The RTA will ordinarily:
    1. release any undisputed amount of the bond as outlined on 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 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 disputing the claim, the parties will need to undertake dispute resolution through the RTA;
  5. If an agreement is reached, all parties will then 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 QCAT within seven days;
  7. If no application is made to QCAT then the bond will be paid to the party whose Refund of rental bond (Form 4) was processed first.c

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 14 days from receipt to respond.[16]

It is paramount that you respond within the 14 days. If you fail to respond, the bond could be automatically refunded to the landlord.

After dispute resolution with the RTA, if an agreement is still not reached, the party whose Refund of rental bond (Form 4) was not processed first has  7 days to apply to QCAT for a decision and notify the RTA in writing that an application has been lodged by the due date.

Frequently asked questions

If you need help

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. Contact Gibbs Wright Litigation Lawyers today for a free and confidential consultation about your legal rights and options.

References


  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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