Lodging a Tenancy Bond with Tenancy Services
When a residential tenancy agreement begins in New Zealand, a tenant often pays a bond to their landlord. This bond is a security deposit to protect the landlord against potential breaches of the tenancy agreement, such as unpaid rent or property damage beyond fair wear and tear. The Residential Tenancies Act 1986 (RTA) outlines clear rules and obligations for landlords regarding the handling and lodging of these bonds with Tenancy Services.
Key Terms
- Bond: A sum of money paid by the tenant to the landlord, which the landlord must then pay to the Chief Executive of Tenancy Services to be held in trust as security against any breach of the tenancy agreement [Source: Residential Tenancies Act 1986, s 18(1)].
- Landlord: The owner of the premises or the person who grants a tenancy of the premises, and includes their agent [Source: Residential Tenancies Act 1986, s 2(1)].
- Tenant: The person to whom a tenancy is granted, and includes their personal representatives [Source: Residential Tenancies Act 1986, s 2(1)].
- Tenancy Services: A New Zealand government service that administers the Residential Tenancies Act 1986, including holding tenancy bonds.
- Working day: Any day of the week other than a Saturday, Sunday, public holiday, or a day in the period between 25 December and 15 January (inclusive) [Source: Residential Tenancies Act 1986, s 2(1)].
Maximum Bond Amount
A landlord is prohibited from requiring a tenant to pay a bond that exceeds the equivalent of four weeks' rent [Source: Residential Tenancies Act 1986, s 19(1)].
Landlord's Obligations Regarding the Bond
1. Provide a Receipt:
A landlord must provide the tenant with a written receipt for any bond payment received within 5 working days of receiving it [Source: Residential Tenancies Act 1986, s 18(2)].
2. Lodge the Bond with Tenancy Services:
A landlord must pay any bond received from a tenant to the Chief Executive of Tenancy Services. This must be done within 23 working days of receiving the bond payment [Source: Residential Tenancies Act 1986, s 18(3)(a)]. If the bond payment was received more than 23 working days before the tenancy began, the landlord must pay it to the Chief Executive within 23 working days after the tenancy began [Source: Residential Tenancies Act 1986, s 18(3)(b)].
Tenant's Rights Regarding the Bond
1. Receive a Receipt:
The tenant has a right to receive a written receipt for their bond payment from the landlord within 5 working days of payment [Source: Residential Tenancies Act 1986, s 18(2)].
2. Confirmation of Lodgement:
Once the Chief Executive of Tenancy Services receives the bond, they must acknowledge receipt by sending a notice to both the landlord and the tenant [Source: Residential Tenancies Act 1986, s 18(3A)]. This provides the tenant with confirmation that their bond has been lodged correctly.
The Bond Lodgement Process
To lodge a bond, a landlord typically completes an official Bond Lodgement form (or its electronic equivalent). This form requires details of the tenancy, the bond amount, and signatures from both the landlord and all tenants [Source: Residential Tenancies Act 1986, s 18(1), s 18A]. The completed form and the bond payment are then submitted to Tenancy Services.
Consequences of Non-Lodgement
A landlord who fails to comply with the requirements to provide a bond receipt or to lodge the bond with Tenancy Services within the specified timeframes commits an unlawful act [Source: Residential Tenancies Act 1986, s 18(4)]. The Tenancy Tribunal may order the landlord to pay exemplary damages for this unlawful act. The maximum amount of exemplary damages that can be awarded for failing to lodge a bond with the Chief Executive is $1,000 [Source: Residential Tenancies Act 1986, Schedule 1A, Part A, clause 1A(1)].
When to Seek Independent Legal Advice
When facing issues related to bond payments, lodgement, or disputes, it is advisable for individuals to seek independent legal advice. Information about rights and obligations under the Residential Tenancies Act 1986 is available from Tenancy Services, and free legal assistance may be accessible through Community Law Centres.