Property Damage and Rental Bonds

property damageAccidents happen no matter how careful you are.

Even if you won’t be leasing out a property that furnished with delicate china and expensive paintings, it’s still going to be a bummer when things become damaged.

Hence to protect your assets, Queensland’s property law outlines a set of rights and responsibilities that both tenants and home owners have. Under its many policies is a section dedicated specifically to rental bonds.

Rental bonds ensure that you can always get a refund for any damage your tenant is responsible for

Rental Bonds

A rental bond is often paid at the start of a tenancy and it is a payment separate from rent.

You may have heard of them under its other guises through names such as a security deposit, linen deposit, key deposit or pet bond. But no matter what you call it, it serves the same purpose by acting as a financial cushion for landlords. Should they ever suffer losses caused by a tenant’s failure to pay rent or negligence leading to property damage, at least there is money for them to fall back on.

Unlike rent, the rental bond is cannot be kept by the landlord. In fact, Queensland property law clearly states that the bond needs to be turned over to the residential tenancies authority (RTA). The value is returned to the tenant at the end of the tenancy period – after the money owed due to missed rent or property damage has been collected by the home owner.

It may sound like that the rental bond only exists to protect the interests of the home owner, however, there are several other measures put in place to ensure that the tenant’s interests are also protected. Below are the key regulations in property law that have established to protect the tenant from potential exploitation:


1.You can only charge so much for rental bond

The Residential Tenancies and Rooming Accommodation Act 2008 (RTRAA 2008) states that the tenant can only pay up to a certain amount as their rental bond.

Although the laws vary for each state, for non-moveable dwellings in Queensland, the maximum you can charge for a rental bond is the total value of rent that an individual tenant would pay in the span of 4 weeks. For example, if you leased out your property to six individuals. The total rental bond you can collect from each person is how much EACH individual would pay in a month.

Of course if the rent increases, the bond may also increase.


bond lodgement2.There is a set of procedures to be followed when collecting a rental bond

Evidently you cannot ask your tenant to hand over $800 to be used as their bond just likethat. Below are the general legal steps you must follow when collecting this bond (refer to the RTA website for more details!).

Step 1: Give a copy of the proposed tenancy agreement, as well as copies of relevant legal documents (e.g: body corporate by-laws) to your tenant.

Step 2: Collect the bond.

Step 3: Immediately give your tenant a receipt of payment.

Step 4: Fill in a bond lodgement with your tenant’s signature on it.

Step 5: Send the rental bond off to the authorities


3.Home owners do not keep the rental bond

As stated above, the rental bond must be handed over promptly to the RTA.

According to Queensland law, the rental deposit must be paid to the authority within 10 days of receiving it. This is done to prevent the home owner from trying to invest the rental bond, or deducting money from the bond without valid reason. In other words, the RTA ensures that the rental bond is used appropriately which should help ease a tenant’s fears of tenants of being exploited.

In return, the RTA will give the tenant a receipt called an “acknowledgement of rental bond” so that they know that their rental deposit has been received and is in safe hands.


4.What the RTA decides to do with the money is none of your business

This is not something you necessarily need to know, but I thought it might be interesting to point out that in the RTRAA 2008, under section 121, it is stated that the RTA can invest any rental bond they receive. However, if they do earn money from it, you are not entitled to any part of the profit!

Again, it’s not an important fact but just thought it would be interesting to know!

Now, say that your tenant decides to move out. What will happen to the rental bond? There are two main things that can be done. You can either transfer the bond, or refund it.


Option 1: Transferring the bond

If both home owners agree, the bond can be transferred from one property to another after a transfer of bond has been filled. The home owner of the new property must then complete a new bond lodgement form and send it to the RTA.


Option 2: Refunding the bond

There are two scenarios that can occur when it comes to refunding…

If both parties agree to the refund amount, a simple refund of rental bond can be completed. The method of refund can also be decided on the form, and the RTA will send it over as directed.

If there is a dispute on the refund amount, the same refund of rental bond form can be completed – no signature from the other party is required. The other party then has 14 days to take action. If no action is taken within these 14 days, the RTA will refund the bond according to the value stated on the first form. But if you dispute the claim during this time period, the RTA will step in and mediate.


In summary, the rental deposit is not another method for owners to receive more money for their property. It really is a “just in case” pile of cash for when things go wrong. Although it is a convenient safety net, please don’t ever forget all the regulations and responsibility that each party has when it comes to creating a rental bond.


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