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 is money owed or damage to the property, the property manager or the owner may require that the bond monies held be directed towards any damage or compensation owed to the landlord.

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 is then refunded generally within 2-3 days upon receipt of the signed form by the RTA.

There are circumstances, however, where the bond may be disputed and either party may not be in agreeance as to how the bond should be paid. The most common issues that can give rise to a dispute over a bond include:

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

Condition of the Property

A common dispute that arises in relation to the bond refund is the condition that the property is left in. A tenant has various rights and responsibilities when residing in a rental property. These rights are set out in a General Tenancy Agreement with the landlord as well as 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 or the standard tenancy agreement. In general, 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 the 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 curtain drapes to fade over time.4

In the case of Griffin v Gini before the Queensland Civil and Administrative Tribunal (‘QCAT’),5 Judge Kingham, Deputy President, upheld a previous QCAT decision that the tenants conduct of painting walls a mismatched colour 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 cause damage or allow someone else to cause damage to the property in a way that is malicious or outside the scope of ‘fair wear and tear’, then the landlord may recover its losses from the security bond.7

Breaking of Lease

If either of the parties 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 beforehand.

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 its loss and damage as a result of the lease being terminated.10 They are generally not entitled to compensation for any loss or expense that could have been readily avoided.11

Likewise, if the owner notifies you that they wish to break lease without an order from QCAT, you may be required to vacate the property. However, avenues are usually available to the tenant to seek damages from the landlord such as 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 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 (7) days to rectify the breach (this timeframe 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 and can also recover damages against the tenant from the bond. The damages can also include a loss of rental income, re-letting costs and advertising costs.

Residential Tenancies Authority’s process for bond payment

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 all parties are in agreeance:14

  1. You 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 when the Refund of Rental Bond (Form 4) is submitted. Only 1 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 the Tribunal within 7 days;
  7. If no application is made to the Tribunal then the bond will be paid to the party whose Refund of Rental Bond (Form 4) was processed first.

Time Limits

If the landlord has submitted a Refund of Rental Bond (Form 4) which you are not agreeable to, you will receive a Notice of Claim from the RTA. You will have fourteen (14) days after receipt to respond.16

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

Once the parties have gone through the dispute resolution process with the RTA, and if an agreement is still not reached, the party whose Refund of Rental Bond (Form 4) was not processed first has seven (7) days to apply to the Tribunal for a decision and notify the RTA in writing that an application has been lodged by the due date.

If you need Assistance

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.

[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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