Residential Tenancy Bonds in New Zealand
A residential tenancy bond, often simply called a bond, is a security deposit paid by a tenant to a landlord at the beginning of a tenancy. Its purpose is to provide financial security to the landlord against potential breaches of the tenancy agreement by the tenant, such as unpaid rent, property damage, or cleaning costs at the end of the tenancy.
Maximum Bond Amount
New Zealand law specifies a maximum amount that can be charged for a residential tenancy bond. A landlord must not require a bond payment that exceeds an amount equivalent to four weeks' rent [Source: Residential Tenancies Act 1986, s 18(2)].
Lodging the Bond with Tenancy Services
After receiving a bond payment, the landlord is legally required to forward the bond money to the Chief Executive of the Ministry of Business, Innovation and Employment (which operates as Tenancy Services) [Source: Residential Tenancies Act 1986, s 18(1)]. This must be done within 23 working days of receiving the bond money from the tenant [Source: Residential Tenancies Act 1986, s 18(3)].
The landlord must also provide specific information when lodging the bond, including the names and contact details of the landlord and tenant, the address of the tenancy, and the amount of the bond [Source: Residential Tenancies Act 1986, s 18A]. Once the bond is lodged, Tenancy Services is required to send written confirmation of receipt to both the landlord and the tenant [Source: Residential Tenancies Act 1986, s 18B]. This ensures the bond is held securely by an independent third party.
How and When the Bond is Refunded
The bond is typically refunded at the end of the tenancy once the property has been vacated and final inspections completed. The process for bond refund involves an application to Tenancy Services. Bond money can only be paid out by the Chief Executive in certain circumstances, which include:
- When an application for payment is signed by both the landlord and the tenant, agreeing on how the bond should be disbursed [Source: Residential Tenancies Act 1986, s 22(1)(a)].
- When the Tenancy Tribunal issues an order for the payment of the bond money [Source: Residential Tenancies Act 1986, s 22(1)(b)].
If the landlord and tenant agree on how the bond should be refunded, they complete and sign a bond refund form, which is then submitted to Tenancy Services. If there is no agreement, either party can apply to the Tenancy Tribunal for an order to determine the distribution of the bond [Source: Residential Tenancies Act 1986, s 22(2)].
Resolving Bond Disputes
If the landlord and tenant cannot agree on the refund of the bond, either party can apply to the Tenancy Tribunal to resolve the dispute [Source: Residential Tenancies Act 1986, s 77(1)(b)]. The Tenancy Tribunal is an independent judicial body that hears and decides disputes between landlords and tenants. The Tribunal has the authority to make orders regarding the payment of bond money, including orders for the full or partial payment of the bond to either the landlord or the tenant [Source: Residential Tenancies Act 1986, s 78(1)(d)].
When to Seek Independent Legal Advice
Navigating tenancy disputes or understanding specific obligations can be complex. Parties involved in a residential tenancy dispute, particularly concerning bond refunds or interpretation of the Residential Tenancies Act 1986, may find it beneficial to seek independent legal advice. Information and assistance can be obtained from official bodies like Tenancy Services and from legal professionals, including Community Law Centres which offer free legal advice.
Key Resources
- Tenancy Services - Bonds: https://www.tenancy.govt.nz/rent-bond-and-bills/bond/
- Tenancy Services - Tenancy Tribunal: https://www.tenancy.govt.nz/disputes/tenancy-tribunal/
- Legislation New Zealand - Residential Tenancies Act 1986: https://www.legislation.govt.nz/act/public/1986/0120/latest/whole.html