How to Arrange a Rental Bond

It's the big ticket item when moving into new accommodation – the bond.

Ask about the legal arrangements in the new house/apartment. Who will you be paying your bond and rent to and who is responsible for dealing with the landlord?

The answers to these questions will determine if you are a co-tenant, sub-tenant, boarder or lodger and each has different legal responsibilities and rights.

Purpose of the bond

The bond's purpose is to act as surety that you will protect the landlord's property from wilful damage and neglect. It will usually be equivalent to four weeks rent (unless the place is furnished, in which case it can be more).

Bond essentials

Be sure to get receipts for any money paid at the beginning of your tenancy and make sure the receipt itemises exactly what you are paying for.

Bond rules

If you are a co-tenant (that is, your name is on the lease) your bond needs to be formally lodged with the relevant bond board within 14 days of payment.

If you are a sub-tenant (that is, someone who pays your bond and rent to head tenants who hold the lease) it is unlikely that your bond will be lodged with a board, although it is possible to do so.

That's because in practise, flatmates tend to come and go in share houses without the formality of new tenancy agreements with each change.

Also, sub tenants may find that their bond calculation includes a proportion of the connection fees and holding deposit for utilities such as power and telephone.

For this reason, it is crucial that sub-tenants get a receipt from head tenants for their bond at the time the bond is paid. It is also the reason we strongly recommend that sub-tenants do their own condition report on their rooms.

Another fairly common method of handling bonds is for an incoming flatmate to pay their bond to an outgoing flatmate whose name is registered with a bond board. In this instance the outgoing person needs to give a signed letter to the new flatmate stating that the new person has paid their share of the bond to them (noting the amount) and that the lodged bond (or portion thereof) now belongs to the new person.

Check the relevant residential tenancy agencies and advisory services in your home state – they will have lots of local information and standard forms for changes in shared bond arrangements for those who go the formal route, plus helpful hints for those that opt for other arrangements.

Generally speaking, wherever you are, it is important to be aware that the more informal the arrangement, the more careful you need to be about your documentation as it can prove harder to make claims in the event of a dispute.

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