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Bond

Last updated: 29 Mar 2021

What is a bond?

A bond is defined in the Residential Tenancies Act 1997 (Vic) (RTA) as an amount paid or payable by a renter, resident or site tenant to secure their performance and observance of the residential rental, residency or site agreement (as the case may be) and the RTA: s 3 RTA

What does the RTA require?

Renters

If a bond is required, the following steps must be taken at the start of the tenancy:

  • A Bond Lodgment Form must be completed and signed by the residential rental provider: s 405.The form must then be signed by the renter. If the Director of Housing has paid a bond amount on behalf of the renter, the Bond Lodgment Form should reflect this: s 405(2).

Important 

Renters should never sign a blank bond lodgment form, as this would enable the provider/operator to potentially give incorrect information to the RTBA and would be ultimately very difficult to challenge.

 

  • The residential rental provider has 10 business days to give the bond and completed bond lodgement form to the Residential Tenancies Bond Authority (RTBA): s 406. The RTBA will issue a receipt to the renter within 7 days of receiving the Bond: s 407.
  • If the weekly rent is less than $900, the maximum bond about is the equivalent of 4 weeks’ rent applies: ss 31(1), (3) RTA; Residential Tenancies Regulations 2021 (Vic) (Regulations) reg 17. The Tribunal can order a higher maximum bond amount on application by the residential rental provider: ss 32, 33. 
  • If the weekly rent is less than $900, a residential rental provider must not demand or accept a bond for a subsequent residential rental agreement where a renter is simply continuing their occupation of the rented premises: s 34(1) RTA. Note that section 34(1) does not apply if the residential rental agreement is for a term of more than 5 years or if an additional bond is payable in respect of a renter’s obligation to restore any modification the renter has made to the rented premises under s 64 RTA: s 34(3) RTA.
  • For a fixed term residential rental agreement of more than five years, the residential rental provider may require the renter to pay an additional bond after the expiry of the initial term: s 34A RTA. To be eligible to demand an additional bond, the fixed term must be extended by at least five years, have an unexpired period of five years or more, or commence after a periodic residential rental agreement or the expiry of a fixed term residential rental agreement: s 34A(2)(c) RTA. The amount of bond payable under s 34A is determined on a proportionate basis based on the increase in the rate of rent under the new fixed term agreement: s 34A(3).
  • Where the weekly rent is less than $900, the renter cannot be required to obtain a guarantee for the performance of their duties under the residential rental agreement if they have paid a bond: s 37. 
  • If the renter fails to pay a required bond, the residential rental provider may give a notice to vacate: s 91ZN. The termination date must be at least 14 days from the date of the notice being given. For more information see Checking Notices to Vacate.
  • A renter must not attempt to use the bond as rent or refuse to pay rent on this basis: s 428. 

Rooming house and caravan park residents and Part 4A site tenants

The same bond lodgment and payment rules apply to rooming house and caravan park residents and site tenants: s 404 RTA. 

Rooming house operators, caravan park owners and caravan owners may require a resident or site tenant to pay a bond before commencing occupation: ss 95, 146 RTA. 

For rooming house residents, the bond cannot exceed 14 days rent, or for a fixed term rooming house agreement 28 days rent: s 96 RTA. For caravan park residents and Part 4A site tenants the bond cannot exceed one month’s rent: ss 147, 206K RTA. The maximum bond does not apply for site tenants if the site tenant pays more than $900 per week in rent or if the Tribunal has made an order under s 206M: s 206K(1)(b), (2); reg 78 Regulations.

For Part 4A site tenants only, a further bond cannot be demanded if a person enters a subsequent site agreement and remained in continuous occupation: s 206N and it is prohibited to demand a guarantee if a bond has been paid and the rent is less than $900 per week: s 206Q. 

Bonds are prohibited for specialist disability accommodation enrolled dwellings: s 498ZL.

What happens to the bond at the end of the tenancy?

Return of bond by agreement

In this part residential rental provider includes rooming house operators, caravan park owners, caravan owners, and site owners and renter includes residents and site tenants: s 404 RTA. 

At the end of a residential rental agreement, a renter or residential rental provider may apply to the RTBA for the repayment of a bond either to the renter or to the residential rental provider, or to be apportioned between them: s 411.

A bond claim form should be completed, signed and lodged with the RTBA in order to secure the bond’s repayment: s 411(2) RTA. Residential rental providers are prohibited from requiring renters to sign a blank claim form: s 411(5) RTA.

In limited circumstances a claim for bond repayment can be made before the termination of a residential rental agreement, including where the claim is made jointly by or on behalf of the residential provider and all the renters, where the residential rental provider makes the application and directs that all the money be returned to the renters, or where the renters make the application and direct that all the bond be paid to the residential rental provider: s 411(4) RTA.

The RTBA must repay the bond where there is no dispute between the parties: s 411AC.

Note that special rules apply regarding the repayment of bonds paid by the Director of Housing under the Director of Housing bond loan scheme for low-income renters: ss 411B, 413 RTA.

Bond claims

If a claim for the whole or part of a bond is made by a residential rental provider or renter without the consent of all of the parties to the residential rental agreement, the RTBA must give written notice to all other parties to the residential rental agreement: s 411A(2).

The notice must state, amongst other things, that the RTBA will pay the claim unless within 14 days after receiving notice, the party gives written notice to the Authority that the claim is subject to an application to the Tribunal: s 411A(3)(c).

The residential rental provider can make a claim for, without limitation, the following matters (s 411AB):

  • the reasonable repair or restoration costs for the rented premises or goods leased with the premises as a result of the renter’s damage (excluding fair wear and tear);
  • any rent or charges owing and payable under the residential rental agreement;
  • reasonable cleaning costs where the renter did not leave the premises reasonably clean, taking into account their condition at the beginning of the tenancy; and
  • reasonable costs of replacing locks or other security devices altered, removed or installed by the renter without the consent of the residential rental provider.

 

Disputed bond claims

If a party notifies the RTBA that the bond claim is the subject of an application to the Tribunal, the RTBA must not pay the claim until the proceeding is finally determined, including any appeal, unless:

  • the party who disputes the claim consents;
  • the Tribunal orders otherwise; or
  • the RTBA is notified by the Tribunal that the application is withdrawn or dismissed;

s 411AD(2).

 

Applications to the Tribunal

Any person with an interest in a bond claim may apply to the Tribunal for an order requiring the RTBA to repay the bond: s 419A.

This includes residential rental providers, renters and other interested persons (for example, previous co-renters). The Tribunal can make an order requiring repayment of the bond to any party.

 

Important

Applications to the Tribunal must be made within 14 days of the residential rental agreement being terminated: s 419A(2).

 

Family violence considerations

In Tribunal applications under s 420A, special rules apply about bond returns where a renter is a victim-survivor of family or personal violence.

Family violence perpetrator is a renter

Under s 420A, if the Tribunal is hearing an application for repayment of a bond involving two or more renters, and the Tribunal is satisfied that one of the renters is a victim of personal violence or family violence, it may order that:

  • liability is apportioned between the renters, including making the renter who committed the violence responsible for all of the residential rental provider’s loss and damage (including any unpaid rent); and
  • the portion of the bond paid by the renter who experienced the violence is to be excluded from the bond available to compensate the residential rental provider for any loss and damage.

For the purposes of this section, the applicant is not required to prove that the alleged perpetrator of family violence has been convicted of an offence, or is subject to any form of safety notice or intervention order.

 

Family violence perpetrator is not a renter

Under s 420B, if the Tribunal is hearing an application for repayment of a bond where the alleged perpetrator of the violence is not a renter under the residential rental agreement, the Tribunal may find that the victim of personal violence or family violence is not liable for any loss or damage suffered by the residential rental provider, if it is satisfied that:

  • the loss or damage was caused by the alleged perpetrator of the family violence or personal violence; and
  • a family violence safety notice, family violence intervention order, recognised non-local DVO or personal safety intervention order is in force.

 

Checklist – In relation to bond, the key issues are:

  1. Renters, residents and site tenants should never sign a blank bond lodgement form or bond claim form.
  2. A residential rental provider cannot charge more than 4 weeks rent for bond and cannot ask for more than one bond (subject to some exceptions).
  3. At the end of the residential rental agreement, if a renter cannot get the residential rental provider to agree to payment of the bond, the renter must apply to the Tribunal within 14 days of the residential rental agreement being terminated.
  4. Family violence considerations are relevant to bond repayment applications at the Tribunal. Consider whether the residential rental provider’s bond claim relates to loss or damage caused by an alleged perpetrator of family or personal violence.

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