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When taking on a residential tenancy, typically the owner
requires the tenant to pay a security bond upfront.
By law, the maximum security
bond is four weeks rent for most properties.
The purpose of the bond is to
provide the owner with an opportunity to mitigate any losses, should they be
incurred by the tenant.
The bond is lodged with a specific Government managed trust
fund called the Government Bond Administrator and is not kept by the owner or
If landlords and property managers do not pay the bond into the
Government managed trust, they may be faced with severe penalties.
example of this resulted in the owner of self-managed rental properties being
fined $24,000 for the misuse of bond monies.
At the end of the tenancy, the managing agent will inspect
the property to ensure it is in the same condition as at commencement of the
lease (taking into consideration fair wear and tear).
This is done by comparing
the state of the property against the Property Condition Report (PCR) - a
mandatory document required to be completed at the start of a new tenancy.
completed PCR is agreed to and signed by the landlord (or the managing agent on
their behalf) and tenant at the commencement of the lease.
From here, tenants typically receive some or all of their
bond money back, depending on the condition of the property.
outgoing tenant’s view of what constitutes ‘fair’ wear and tear differs to that
of the owner’s or property manager’s view.
This can lead to a disagreement over
how the bond is disbursed.
Sometimes, the tenant will leave smaller
tasks like cleaning the oven or mowing the lawn, to the owner and give permission for the costs of rectifying them to be
deducted from their bond.
Occasionally, an agreement cannot be reached and the manner
in which the bond is disbursed remains in dispute.
In these situations, the PCR
is relied upon to determine what damage, if any, occurred during the tenancy.
For example, if the carpet is noted as being stained
at the end of the tenancy, but if not noted in the PCR, it is difficult for the
tenant to disprove responsibility.
In the event of an unresolved dispute, the
courts will ultimately decide the allocation of bond monies.
It is important tenants ensure the PCR is accurate at the
commencement of the lease.
Make sure you agree with each item listed in the PCR
and bring any items you think may have been overlooked to the attention of your
For more information about rental bonds, view the Department of Mines, Industry Regulations and Safety bonds page or speak with your REIWA property manager.