Landlord's Failure to Lodge a Residential Tenancy Bond in New Zealand
When a tenant pays a bond for a residential tenancy in New Zealand, specific legal obligations arise for the landlord regarding the handling of that bond. These obligations are primarily governed by the Residential Tenancies Act 1986 (RTA 1986).
What is a Bond?
A bond is a sum of money paid by a tenant to a landlord at the beginning of a tenancy. It serves as a security against potential breaches of the tenancy agreement by the tenant, such as unpaid rent, property damage beyond fair wear and tear, or cleaning costs. This money is then required to be lodged with the Chief Executive of the Ministry of Business, Innovation and Employment (MBIE), who operates the Tenancy Services Bond Centre [Source: Residential Tenancies Act 1986, s 2].
Landlord's Obligation to Lodge the Bond
Upon receiving a bond payment from a tenant, a landlord has a clear legal obligation to ensure it is lodged correctly and promptly. Specifically, the landlord must:
- Provide a Receipt: Give the tenant a receipt for the bond money received [Source: Residential Tenancies Act 1986, s 18(4)].
- Pay to Chief Executive: Pay the bond money to the Chief Executive of MBIE (i.e., lodge it with the Tenancy Services Bond Centre) [Source: Residential Tenancies Act 1986, s 18(1)].
- Adhere to Timeframe: Lodge the bond within 23 working days of receiving it from the tenant [Source: Residential Tenancies Act 1986, s 18A(1)].
Consequences for Landlords Failing to Lodge the Bond
Failing to comply with the bond lodging requirements is considered an unlawful act under the RTA 1986 [Source: Residential Tenancies Act 1986, s 21(1)(c)]. The Tenancy Tribunal (a specialist judicial body that resolves disputes between landlords and tenants) has the power to address such breaches.
Orders the Tribunal Can Make
If a landlord fails to lodge a bond, the Tenancy Tribunal may make several orders, including:
- Order to Lodge: Direct the landlord to pay the bond money to the Chief Executive [Source: Residential Tenancies Act 1986, s 85(1)(d)].
- Order to Provide Receipt: Require the landlord to provide the tenant with a receipt for the bond money [Source: Residential Tenancies Act 1986, s 85(1)(c)].
- Exemplary Damages: Order the landlord to pay exemplary damages (a financial penalty intended to punish the wrongdoer and deter similar conduct) to the tenant [Source: Residential Tenancies Act 1986, s 109(3)(a)]. For failing to pay a bond to the Chief Executive, the maximum amount of exemplary damages is $1,000 [Source: Residential Tenancies Act 1986, Schedule 1A, Clause 2(1)(cb)].
Tribunal's Discretion Regarding Damages
When considering whether to award exemplary damages, and the amount, the Tenancy Tribunal takes into account the nature and extent of the unlawful act, the loss or damage suffered by any person, and the landlord's intent [Source: Residential Tenancies Act 1986, s 109(4)].
Tenant's Rights and Remedies
If a tenant believes their landlord has failed to lodge the bond, they can take action by applying to the Tenancy Tribunal. The Tribunal application process allows tenants to seek orders for the landlord to fulfil their obligations, including lodging the bond and potentially paying exemplary damages [Source: Residential Tenancies Act 1986, s 85, s 109].
When to Seek Independent Legal Advice
Navigating residential tenancy disputes can be complex. Persons involved in such situations are encouraged to seek independent legal advice. Information about rights and obligations is available from official sources such as Tenancy Services, and free advice may be obtained from Community Law Centres throughout New Zealand.