Bonds in share houses: What happens to your bond when flatmates change?
Thursday June 9 2022
Moving into or out of a new share house? Exciting times! You’ll probably have new flatmates to get to know, a new area to explore and maybe even a new life to live (get it sis). Make sure you’ve got all your paper work sorted with our handy guide.
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But don’t forget the formalities: your written rental agreement, and of course, the bond. Your bond — the money tenants pay to protect themselves and the landlord against any unexpected damage that you may cause during the tenancy — isn’t optional, so when you move in, you’ll need to pay it. And if you’re leaving a share house, you’ll want to get your old bond back too.
Tenants usually pay the bond to the Residential Tenancies Bond Authority, an independent body that holds the money until the tenancy ends. At that time, after the final inspection, the landlord or agent are allowed to make any claims on damages before the bond is returned to you.
That said, the circumstances under which you move into a share house can vary a lot, depending on your share accommodation situation - you may renting direct from the home owner, who may or may not live with you and so on, a may not have sent your bond to the RTBA. So in this article, we’ll take each case in turn to see what your best course of action is.
But first up, let’s get our heads around the legalities of rental bond that we all need to know.
Rental bond: the basics
While the payment of bond at the start of a tenancy, and its repayment at the end, are both covered by law, what happens in between those two points is not.
The key points to remember are:
All of the people who signed the lease agreement for the property have to sign the bond release form in order to get the bond back at the end of the tenancy from the RTBA. If even one person has left without transferring their portion of the bond to someone else on the lease, and they’re not around to sign the form, then no one in the household can get their bond back. Well, you can, but it’ll take an order from the Civil Administrative Tribunal and that’s a hassle you don’t need.
A property inspection and production of a final condition report usually have to happen before you get your bond back. This allows the landlord and agent, if there is one, to identify any damages that will need to be paid for out of the bond.
Whatever bond arrangement you decide on with your flatmates, put it in writing and sign it, and make sure every person who signs gets a copy of the document. This helps set the right expectations, and cover you all in the event of any disputes down the track.
Now, let’s look at common bond scenarios, and how to tackle them.
You’re all leaving your share house
If your share house is disbanding (after months or years of good times, we trust!), you’ll be wanting your bond back.
As we just saw, the first step is an inspection and condition report. If the property was rented through an agent, this will be a formalised process. And yes, everyone on the lease will need to sign the bond claim form to get that cash.
If your property was rented direct from the landlord, you may have a slightly different arrangement in terms of bond. Your best bet is to have a written agreement in place with them about how and by which date bond will be returned. If you don’t have one, then it’ll be up to you and the landlord to agree on those points at the final inspection.
You’re leaving, but your flatmates are staying
If someone else is going to take your place in the share household, and your name is listed on the bond, you’ll need to complete a transfer of bond form within 5 days of the new person moving in. You’ll need to transfer the rental agreement if you’re on it too.
If the share household has decided not to replace you, even just for now, you’ll want to have your name removed from the bond, and of course get your share of it back.
Probably the best way to handle the repayment of bond is to agree that, when you complete the transfer of bond form, and submit it, the new tenant (or your old ones) will pay your share of the bond to you directly, on the spot. That way, everything’s done and dusted and you can go your separate ways. In a household that’s not replacing you, this means that someone, or everyone, will need to stump up more for the bond so they can pay you back your bond.
You’re moving in because someone else is moving out
Before you agree to the tenancy, you’ll want to discuss with your prospective housemates whether you’ll be on a written lease with an agent, or whether you’ll just have a written agreement in place between yourself and them. You’ll also want to find out what the situation is with bond: does the landlord hold it, or has it been submitted to the RTBA?
If it’s the former, you’ll want to have a written agreement in place stating how much bond you’ve paid, on what date, and what the conditions are for its return to you, including a timeframe for the landlord to repay it to you when you leave. It’s probably best to pay the bond electronically — whether you pay it to the landlord or the tenant who you’re replacing — so that you have a record of its payment, and the date, in writing.
If the bond has been submitted to the RTBA, you’ll need to complete the transfer of bond form online or by mail. Then, you’ll need to pay the previous tenant the bond value. Again, doing this electronically will give you a neat paper trail to refer to in the event of any disputes about the bond.
Starting a whole new tenancy
When you’re heading into a new share house with all-new flatmates and a shiny new rental agreement, you’re most likely to either have to (because the agent says so), or want to, submit your bond to the RTBA. Why? Because it formalises the bond situation and provides clear-cut processes around bond claim and repayment.
If for some reason you’re not doing that, then again: create and sign a written agreement with your landlord that details the amount of the bond, when you paid it, what the conditions and timeframes are for them to repay it to you when you leave. And pay that bond electronically, so you have indisputable proof that you did!
Paying for existing damage
None of us wants to wind up footing the bill for damages that your predecessor or flatmates have already made to the property. Imagine if you didn’t sort this out before you moved in: when the time came to end the lease and get your bond back, you’d get less than you paid because of damage you didn’t cause.
But of course, this is good advice even after you move in: if your flatmate puts their frisbee through a window in six months’ time, you still won’t want it coming out of your bond.
Again, this is where a written agreement proves its worth: make sure everyone knows where they stand on paying for the damages they cause by putting it in writing and having everyone sign. The agreement should absolve all tenants from paying for damages caused by anyone but themselves, and should also cover situations in which the blame can’t be laid on any one person (for example, if no one owns up to having done the deed).
If you like, also have the agreement stipulate that damages must be fully repaired before the final inspection takes place when a tenant leaves the property, so that you can all get your bond back in full, without any hassles. That’s the dream!
