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tenancy

Disputing a bond refund: Steps to take

Key Takeaway

Disputing a residential tenancy bond refund in New Zealand involves initial communication between parties. If unresolved, an application can be made to Tenancy Services for facilitation or mediation. Failing that, the Tenancy Tribunal can make a binding decision regarding the bond's release, considering evidence like tenancy agreements and photos.

Disputing a Residential Tenancy Bond Refund in New Zealand

When a residential tenancy ends in New Zealand, the process of refunding the bond involves specific legal steps. If a landlord and tenant disagree on how the bond should be disbursed, there are formal procedures for resolving the dispute.

Understanding the Residential Tenancy Bond

A bond is a sum of money paid by a tenant to a landlord at the start of a tenancy. It serves as security against any damage to the property (beyond fair wear and tear), unpaid rent, or other breaches of the tenancy agreement [Source: Residential Tenancies Act 1986, s 18(1)(a)]. Landlords are legally required to lodge the bond money with the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE), operating through Tenancy Services, within 23 working days of receiving it [Source: Residential Tenancies Act 1986, s 19(1)]. Failure to do so is an unlawful act [Source: Residential Tenancies Act 1986, s 137(1)(c)].

The Bond Refund Process

At the end of a tenancy, both the landlord and tenant must agree on how the bond should be refunded. They typically complete and sign a bond refund form, indicating the agreed amounts to be returned to the tenant and/or paid to the landlord. This form is then submitted to Tenancy Services [Source: Residential Tenancies Act 1986, s 22]. Upon receiving a properly completed and signed bond refund form, Tenancy Services is required to pay out the bond money as directed within 5 working days [Source: Residential Tenancies Act 1986, s 21(1)(b), (c)].

Disputing a Bond Refund: Initial Steps

If the landlord and tenant cannot agree on the refund amount, a dispute arises. The first recommended step is for the parties to communicate directly to attempt to reach a mutual agreement [Source: This is a practical step encouraged by Tenancy Services, though not specifically mandated by a single RTA section for initial communication]. This might involve discussing specific deductions proposed by the landlord and providing evidence to support or refute those claims.

Applying for Dispute Resolution through Tenancy Services

If an agreement cannot be reached directly, either the landlord or the tenant can apply to Tenancy Services for assistance in resolving the dispute. This is done by completing a bond refund application form, which indicates that an agreement could not be reached [Source: Residential Tenancies Act 1986, s 22(3)].

Once an application for bond dispute resolution is received, Tenancy Services may offer services such as:

  • Facilitation: An informal process where a Tenancy Services staff member may contact both parties to try and help them reach an agreement.
  • Mediation: A formal, confidential process where an independent mediator assists the landlord and tenant in negotiating a resolution to their dispute [Source: Residential Tenancies Act 1986, s 86(1)]. Agreements reached through mediation are legally binding and enforceable.

The Tenancy Tribunal: Formal Resolution

If mediation is unsuccessful or if either party opts not to mediate, the dispute may proceed to the Tenancy Tribunal. The Tenancy Tribunal is a judicial body that hears and decides disputes between landlords and tenants [Source: Residential Tenancies Act 1986, s 77(1)]. An application can be made directly to the Tribunal if mediation is not pursued, or if the mediated outcome is not satisfactory or cannot be enforced.

At a Tenancy Tribunal hearing, an adjudicator will consider the evidence presented by both parties and make a binding decision regarding the bond refund [Source: Residential Tenancies Act 1986, s 88(1)]. The Tribunal has the power to order the payment of the bond, in whole or in part, to either the landlord or the tenant [Source: Residential Tenancies Act 1986, s 85].

Grounds for Disputing a Bond Refund

Common reasons for a landlord to claim part or all of the bond include:

  • Unpaid Rent: Any rent arrears accumulated by the tenant [Source: Residential Tenancies Act 1986, s 40(1)(a)].
  • Damage beyond Fair Wear and Tear: Damage to the property caused by the tenant or their guests that goes beyond normal deterioration expected from ordinary use of the premises [Source: Residential Tenancies Act 1986, s 40(2)(b)]. Tenants are liable for damage caused intentionally or negligently [Source: Residential Tenancies Act 1986, s 49B].
  • Cleaning: If the property is not left in a reasonably clean and tidy condition, having regard to the condition of the premises at the commencement of the tenancy [Source: Residential Tenancies Act 1986, s 40(1)(e)].
  • Other Breaches of the Tenancy Agreement: This could include failure to maintain the grounds as agreed, or removal of landlord's chattels [Source: Residential Tenancies Act 1986, s 40].

Evidence in a Bond Dispute

For any bond dispute before the Tenancy Tribunal, strong evidence is crucial. This may include:

  • The signed tenancy agreement [Source: Residential Tenancies Act 1986, s 13(1)].
  • The bond lodgement form and bond refund form [Source: Residential Tenancies Act 1986, s 19(1), s 22].
  • Entry and exit condition reports, ideally signed by both parties [Source: Not specifically mandated by RTA sections, but highly recommended for evidence in disputes].
  • Dated photographs or videos of the property's condition at the start and end of the tenancy.
  • Correspondence (emails, letters, text messages) between the landlord and tenant.
  • Receipts or invoices for cleaning, repairs, or unpaid rent.
  • Bank statements showing rent payments.

Unlawful Withholding of Bond

A landlord who fails to release the bond as required by an agreement or Tenancy Tribunal order, or makes an unlawful claim on the bond, may be subject to penalties for committing an unlawful act [Source: Residential Tenancies Act 1986, s 137].

When to Seek Independent Legal Advice

If navigating bond disputes becomes complex, particularly when significant amounts are involved, or if there are concerns about the application of specific legal provisions, seeking independent legal advice is recommended. Community Law Centres provide free legal assistance and information. The Tenancy Services website also offers comprehensive guides and resources for landlords and tenants.

Key Resources