Recovering bond money

 

Disputes over repayment of bonds may be ruled on by VCAT. Landlords wanting to claim a portion of bond money must do so within 10 days of the tenant vacating.

Landlord and tenant in agreement

At the end of the tenancy, if the landlord and tenant agree on the amount of bond to be paid to each of them, they may jointly apply to the RTBA on a bond claim form. This form allows the landlord and tenant to specify how much of the bond should be paid to each party. It is an offence for a landlord to request or obtain a tenant’s signature on a bond claim form that does not state the amount of money to be paid to each party (s 412). Further, if part of the bond is to be paid to the landlord, the tenant must not have signed the form more than seven days before the tenancy agreement ended (s 412).

It is recommended that parties make a note as to why any amount of the bond is to be paid to the landlord. Parties may also wish to consider whether such an agreement is in full and final settlement of all claims in relation to the property, as both parties may still may subsequent compensation claims for various reasons, up to six years after the tenancy has ended.

Once the RTBA receives the signed bond claim form it will usually pay the bond into the tenant’s nominated bank account by the next working day.


NOTE

It is an offence for a landlord to request a tenant to sign a bond claim form that does not have the amounts to be refunded already completed (s 412(5A)).


Director of Housing bonds

If the Director of Housing paid the bond, the landlord and tenant can only apply together if the full amount is to be refunded to the director. If some of the bond is to be paid to the landlord, the landlord must obtain a VCAT order.

Disagreements

Landlord’s application to VCAT

If the landlord wants to retain some, or all, of the bond and the tenant disputes the landlord’s entitlement to do so, the landlord must make a claim to VCAT against the bond. Such a claim must be made within 10 business days of the tenant vacating the premises (s 417).

If 10 days has passed, the landlord may still make a general compensation claim against the tenant, however they cannot rely on the security of the bond to ensure payment of any claim.

If the landlord makes an application against the bond out of time, the tenant should point this out to VCAT. However, the tenant should also be prepared for the possibility that VCAT may grant the landlord an extension of time under section 126 of VCAT Act and allow them to argue their case.

The sorts of things the landlord may claim against a bond are:

rent arrears;

damage to the premises or common areas;

loss of goods belonging to the landlord;

failure to keep the premises in a reasonably clean condition;

loss caused by the abandonment of the premises by the tenant; and

any charges payable by the tenant for which the landlord may be liable (ss 418, 419).

It is paramount that tenants realise that the bond is their money, and that in order for the landlord to be entitled to any money, they must prove on the balance of probabilities that the tenant has caused loss of damage in breach of the RT Act or the valid terms of the agreement.

Where the landlord’s application is for loss or damage other than rent arrears, the landlord must attach a copy of the condition report to the application (order 7A.07(14), 7A.10(2) VCAT Rules).

The tenant is not liable of damage that was pre-existing, or which was caused by a third party (not a visitor to them) such as a break-in or flooding in a neighbouring apartment, providing these were reported at the time (s 62).

The tenant is not liable for any damage that can be described as fair wear and tear, such as worn carpet or other damage caused by ordinary use of the premises.

If the tenant is liable for any item, it should be appropriate depreciated according to the age of item.

The landlord also has a duty to mitigate loss or damage. The landlord may make an application for compensation over and above the amount of the bond.

VCAT may hear applications for bond and compensation at the same time.

Tenant’s application to VCAT

A tenant is lawfully entitled to make their own application to recover their bond. This is done by completing the general application form and citing section 416 of the RT Act. This can be done as soon as the keys are returned to the landlord. The only requirement is that the landlord’s consent has not been able to be obtained. If the landlord has neither applied to VCAT nor agreed to the payment of the bond to the tenant within 10 business days, the tenant generally should apply to VCAT for an order that the RTBA pay the bond to the tenant. It is free for tenants to apply to recover their bond.

Recovery of bonds not lodged with the RBTA

If the tenant has paid bond and the landlord or real estate agent has not lodged the bond with the RTBA (in breach of s 406), and is refusing to return all or part of the bond to the tenant at the end of the tenancy, the tenant may make an application to VCAT. An application should be made under section 452 of the RT Act. The landlord’s failure to lodge the bond should be reported to CAV for investigation/prosecution.