Bond payments, transfers and refunds

Credits: The Checkout and Redfern Legal Centre Tenants’ Advocate Tom McDonald (Published 5 June 2014)

There are strict laws the landlord MUST follow if they ask you to pay a bond.

If you are asked to pay a bond, the landlord MUST:

• complete and sign a Bond Lodgement form from the Residential Tenancies Bond Authority (RTBA) and give it to you to sign at the same time you are paying the bond
• give you a copy of the form after you have signed it, which you should keep as a record of your bond payment. (You can also ask for a receipt, especially if you have paid in cash.)
• lodge the form and your bond money with the RTBA within 10 business days of you paying it. (You should receive confirmation from the RTBA that your bond has been lodged. If you do not receive a receipt within 15 business days you should contact the RTBA on 1300 137 164.)
• give you 2 copies of a Condition Report signed by the landlord (this must be given to you before you move in – see starting a tenancy).

If the landlord does not follow these laws you can report them to Consumer Affairs Victoria who can fine the landlord for breaking the law. You can also apply to the Victorian Civil and Administrative Tribunal (VCAT) for an order requiring the landlord to lodge your bond.

Generally, it is best practice not to pay a bond until after you have signed the lease agreement and received 2 copies of the Condition Report.

Bond loans

If you need help to pay the bond, you may be able to borrow the money from the government with a RentAssist bond loan. They will provide you with a bond loan voucher, which acts as a lodgement form. You need to then give the voucher to the landlord, or agent, who will use it to lodge the bond with the RTBA. The bond lodgement form needs to state who has paid the bond (the Director of Housing, and you if you are paying part), and the amounts paid.

Note: If the landlord or their agent are registered with the RTBA to deal with bond transactions online the Bond Lodgement form may be submitted electronically.

Bond limits

If your rent is $350 or less per week, the landlord cannot ask you to pay a bond that is more than one month’s rent.

And in most cases, you cannot be asked for both a bond and a guarantee. If you are, contact us, your local TAAP service, Tenancy Plus provider, or Community Legal Centre for advice.

Pet bonds

Some landlords ask tenants to pay a “pet bond” if they have a pet. It is often explained to tenants that it is to cover costs if the pet causes damage to the property.

There is nothing under the law requiring you to pay a “pet bond” if you have a pet.

If you pay a bond at the start of your tenancy that bond is held as a security in case there is a dispute at the end of the tenancy over cleaning, damage or unpaid rent. If you have a pet and your pet causes any damage while you are at the property, the landlord can make a claim on your bond. A second “pet bond” is not required and does not need to be paid.

At the end of your tenancy the landlord may try and claim some or all of your bond as compensation for damage, for cleaning, for unpaid rent, or for costs they paid that are your responsibility.

You should take steps at the start of your tenancy to protect yourself from potential claims at the end of your tenancy.

The condition report and photos

It is important to be really detailed when you complete your condition report. If the landlord makes a claim on your bond at the end of your tenancy, you can use the condition report as evidence of what the property looked like when you moved in. Taking plenty of photos, both when you move in and then again when you move out, can be really helpful too. For more information about filling in the condition report, see starting a tenancy.

The Bond Authority will only release bond money when all tenants who paid the bond move out. So if you move out and the landlord and other tenants have agreed for someone else to take over your tenancy, it’s up to you to collect your share of the bond money from the incoming tenant.

You must notify the Bond Authority within 5 days that your share of the bond has been transferred to the new tenant. You can do this by filling in a Tenant Transfer form (which must be signed by you, other tenants, the new tenant and the landlord or agent) and sending it to the Bond Authority. Make sure you collect the payment from the incoming tenant before signing the Tenant Transfer form.

Note: If the landlord or their agent are registered with the RTBA to deal with bond transactions online the Tenant Transfer form may be submitted electronically.

The law requires you to take care to avoid causing damage (section 61) and to keep your rented home reasonably clean (section 63).

Note: Damage does not include fair wear and tear, for example a worn carpet in a high-traffic area that has simply worn down with normal use.

TIP: When you are getting ready to move out, it is a good idea to compare the condition of the property to the Condition Report you completed at the start of your tenancy. You should also compare the condition with any photos taken at that time and take new photos of how the property looks before you move out and return the keys. Because if the landlord has a problem with how you’ve left it, you may not get a chance to go back to assess the property after returning your keys.

If you believe you have taken care of the property and are leaving it reasonably clean, and you are not transferring your bond to a new tenant, you should ask your landlord or agent to prepare a Bond Claim form to allow your bond to be returned to you by the RTBA.

You, other tenants (if any) and your landlord or agent must sign a Bond Claim form, and on the form you must provide details of the bank account/s that you want the money to be paid into. This form then needs to be lodged with the RTBA, who will usually pay out the bond within 24 hours of your claim being processed.

Note: If the landlord or their agent are registered with the RTBA to deal with bond transactions online the Bond Claim form may be submitted electronically.

It is an offence for the landlord to give you an incomplete Bond Claim form to sign. If the bond is to be paid to you in full, make sure the full amount of the bond is recorded in the ‘Tenant payment details’ section before you sign it and make sure you keep a copy. If the landlord asks you to sign an incomplete Bond Claim form you can report them to Consumer Affairs Victoria who can fine the landlord for breaking the law.

Bond loans

If your bond was paid with a RentAssist bond loan, you, other tenants (if any) and your landlord or agent will need to complete a Bond Claim form and the bond money will be paid back directly to the government.

At the end of your tenancy the landlord may try and claim part or all of your bond as compensation for damage, for cleaning, for unpaid rent, or for costs they have paid that are your responsibility.

If the landlord wants part or all of your bond you have three options:

• you agree with the landlord about the amount to be paid to them
• you disagree with the landlord and apply for free to VCAT to get your bond back
• the landlord applies to VCAT and you go to defend your case.

You agree with the landlord

If you agree that the landlord is entitled to some or all of your bond money, you can agree to have that amount paid out to them. You, other tenants (if any) and the landlord or agent must fill out the Bond Claim form, stating how much of the bond is to be paid to the landlord and how much is to be paid to you.

TIP: Before you agree to the landlord having part or all of your bond make sure you are happy with the amount and that it is reasonable.

See examples at how to prepare your bond case for VCAT.

TIP: If the bond is to be divided between you and the landlord, make sure you write the appropriate amounts in the ‘Tenant payment details’ section and the ‘Total amount payable to Landlord/Agent if applicable’ section. Check that these amounts add up to the total amount of the bond.

The Bond Claim form should not be completed before the last week of your tenancy, and preferably not before the tenancy has ended. If the form is dated more than 7 days before the end of your tenancy, the Bond Authority won’t accept it.

Bond loans

If your bond was paid with a RentAssist bond loan, you cannot agree to have part of it paid out to the landlord. The landlord or agent must apply to VCAT for an order that they receive all or part of the bond.

You do not agree with the landlord

If you do not agree that the landlord should have part or all of your bond, you or the landlord can apply to VCAT for orders as to how the bond should be paid out.

Applying for your bond through VCAT is free and there is generally no threat of legal fees when attending the Tribunal. You can apply any time after you have moved out. All you need to do is complete a general VCAT application form asking for your bond back and attach your bond receipt.

Note: If you want to also apply for compensation orders for problems during your tenancy you can make that application at the same time, but you may have to pay an application fee for your compensation application. You have 6 years from the loss or damage to apply for compensation. See compensation for tenants.

Step 1. Fill in the VCAT application form

Use the General Application form [VCAT website].

At “claim details” you will need to include the section or sections of the law your claim relates to. For bonds it is section 416 of the Residential Tenancies Act 1997.

You then need to provide complete details about your claim. You should include details about:

• your tenancy, such as the date it started, the date it ended, and the date you moved out and returned the keys
• how you left the property, for example that you met your duties under the RTA and left the property reasonably clean and took care to avoid damage
• any attachments/evidence you will be providing to support your claim, for example, a copy of your RTBA bond receipt, your tenancy agreement, and/or photos or other evidence you want to include showing how you received the property and how you left it.

If you need more space to provide all of the details of your claim, you may use separate pages to complete your details, then attach those to the application form.

Fees – there is no fee for bond applications to VCAT.

Step 2. Get your evidence together

Collect all the evidence you have to support your application, such as:

• a copy of the RTBA bond receipt (this must be attached for all bond applications)*
• a copy of your tenancy agreement
• any relevant communication with the landlord or agent about moving out, for example your letter or email giving your notice or the landlord’s notice to vacate
• any evidence supporting your application, such as photos taken at the start and end of your tenancy, entry and exit condition reports, photos, receipts for cleaning, statutory declarations from any witnesses

*You should have received a receipt for your bond payment from the RTBA at the start of your tenancy. If you cannot find your receipt you can call the RTBA on 1300 137 164 and ask them to send you a copy, or you can print another one out online at https://rentalbonds.vic.gov.au/.

Step 3. Make two copies

Make two copies of the filled in application form and all the evidence. You can copy, scan or take photos but make sure the copies are good enough that you can read everything clearly. You will have three sets in total – one for VCAT, one for the landlord and one for you.

Step 4. Keep copies for yourself

Make sure you keep a copy of the application form and all the evidence for yourself. Keep this safe as you will need it at the hearing.

Step 5. Give your application to VCAT

Give these things to VCAT:

• the application form, and
• copies of all the evidence

If taking it in person, write down the date, time and name of the person you handed it to. Details of where to take it are on the form.

If sending it by post, keep your receipt and tracking number.

Or you can submit your application online [VCAT website].

Step 6. Give a copy to the landlord

The law requires you to give a copy of the application and evidence to the landlord or agent. This is called “service” and VCAT might ask you to prove it has been done.

TIP: The safest way to prove service is to deliver the application and evidence in person, keeping a note of the date, time and name of the person you handed it to.

But if you can’t do it in person you can:

• send it by post. We recommend registered post so you can prove they received it (keep your receipt and tracking number).
• email it. Note: some agents do not check their emails very often or might have put something in your tenancy agreement saying they won’t accept emails, even though the law says you can send a VCAT application by email. So it’s a good idea to check that your email has been received.

Step 7. Get the hearing details from VCAT

VCAT will send you a Notice of hearing to let you know when and where the hearing will be.

If you don’t hear from VCAT after a few days, give them a call to find out if they have set a hearing date.

Step 8. Get ready for VCAT

Find information and tips:

The Tribunal (VCAT)
‘A Day at the Bench’ (videos and handbook on how to apply and prepare for a VCAT hearing)

What happens next?

If VCAT agrees your bond should be returned to you in full it will make an order authorising the RTBA to release your bond to you.

You can then complete a Bond Claim form without the landlord or agent’s signature, attach a copy of the VCAT order and lodge it with the RTBA. The bond will be released as directed by the VCAT order.

When more than one tenant is named on the bond receipt (e.g. in a shared household), you and the other tenants will need to agree as to how the bond should be paid out to each person.

The only way the bond can be paid to the landlord is if you agree and sign a Bond Claim form giving the landlord all or part of your bond, or if VCAT makes an order that the landlord can have all or part of your bond.

So, if the landlord wants to make a claim on your bond and you disagree, they must apply to VCAT. It is up to them to prove why they should have all or part of your bond and to show their claim is reasonable.

If you do not agree with the landlord making a claim on your bond you need to attend the VCAT hearing to defend your bond.

Step 1. Get a copy of the landlord’s application

If the landlord applies to VCAT they must give you a copy of their application and any evidence they intend to use to support their application. If you do not receive the evidence with their application you should ask the landlord or agent to send this to you before the hearing. And let them know you will ask for the hearing to be adjourned (postponed) if you have not received this or if you have not been given time enough time before the hearing to assess it or get advice. You should put the request in writing so you can present it at the hearing to support a request for adjournment if the landlord produces evidence at the hearing you have not seen or had an opportunity to assess.

TIP: It is important that you provide the landlord or agent with a forwarding address. If they don’t have one, they (and VCAT) might deliver notices and documents to the rental property where you used to live. And you may not find out about the landlord’s application until after the hearing has happened. A good way to make sure you don’t miss out on getting any of your mail is to arrange to have it redirected by Australia Post from your old address to your new address at the time you are moving.

Note: If an application against you is decided by VCAT without you knowing about it, you can apply to VCAT to reopen the order. You need to make the application within 14 days of finding out about the order. If the bond has already been paid out to the landlord, you can ask VCAT to make an order that the landlord repay you the amount they have received from your bond.

Step 2. Get the hearing details from VCAT

If the landlord makes an application to VCAT, you will be sent a Notice of Hearing telling you where and when to turn up to defend the claim against your bond.

What if you can’t attend?

If you do not turn up, the landlord could get what they ask for. VCAT can make an order even if you don’t go to the hearing.

If you cannot go to the hearing you might be able to change the hearing date or attend by phone or video conference.

Step 3: Get your evidence together

VCAT will give you a chance to tell your side of the story. If you do not agree that you are responsible for the landlord’s loss, you should state your reasons and provide whatever evidence you can to support your claim.

This can include evidence about the condition of the property at the start and end of the tenancy such as:

• the Condition Report,
• photos
• receipts for any cleaning
• quotes for cleaning, repairing or replacing things
• any witnesses.

Also see how to prepare your bond case for VCAT.

Step 4. Make two copies

Make two copies of all the evidence you want to use. Make sure the copies are good enough that you can read everything clearly. You will have three sets in total – one for VCAT, one for the landlord and one for you.

Step 5. Collect things to take to the hearing

Take all three sets of evidence with you to the hearing so you can give a copy to the landlord, a copy to the VCAT Member and keep one for yourself.

You should also take these things with you to the VCAT hearing:

1. a copy of the landlord’s application and evidence
2. details of your tenancy, such as the date you started and if you have a fixed term (for example 12 months) or periodic (month-to-month) agreement
3. the amount of bond paid and your bond receipt
4. the amount of notice given to end the tenancy, either by you or the landlord

Step 6: Get ready for VCAT

Find information and tips on attending a VCAT hearing:

The Tribunal (VCAT)

‘A Day at the Bench’ (videos and handbook on how to apply and prepare for a VCAT hearing)

What happens next?

At the end of the hearing the VCAT Member will make an order about how the bond is to be released by the RTBA.

If all or part of the bond is to be returned to you, you can then complete a Bond Claim form without the landlord or agent’s signature, attach a copy of the VCAT order and send it to the RTBA. The bond will be released as directed by the VCAT order.

When more than one tenant is named on the bond receipt, you and the other tenants will need to agree how much of the bond should be paid out to each person.

Bond loans

If your bond was paid with a RentAssist bond loan and the landlord succeeds in making a claim against it, you may still need to repay the bond loan to the Director of Housing. Note: If you have an unpaid debt to the Director of Housing this will not affect any future applications that you make for public housing, however you may be required to enter into an agreement to repay the debt.

If the landlord wants your bond, it is up to them to prove their claim. They need to prove to VCAT that:

• they have suffered financial loss or property damage, and
• the loss or damage resulted from your breach of the lease or the Residential Tenancies Act 1997 (RTA), and
• the amount they are claiming is reasonable.

When preparing your case, you should look at those three things the landlord has to prove. Three other things to consider are:

• time limits for landlord applications
• fair wear and tear, and
• depreciation.

Time limits for landlord applications

If the landlord wants to apply to VCAT for your bond they are supposed to lodge their application within 10 business days of your tenancy ending. VCAT can sometimes extend this time if there is a good reason. If you do not believe there is any good reason why the application wasn’t made in time, at the hearing you should object to any extension being given.

Fair wear and tear

If the landlord claims there is property damage, VCAT must decide whether it is damage or just ‘fair wear and tear’. For example, if the carpet has worn down over time by people walking on it, it is fair wear and tear, not damage. The best way to check if something is fair wear and tear, is to think about normal use. If things wear out with normal use it is most likely fair wear and tear. If the landlord wants to replace things that have worn out through fair wear and tear, they have to pay for it themselves. It should not come out of your bond.

Depreciation

The landlord also cannot claim the full cost of replacing something that was not new when it was damaged. VCAT will allow for ‘depreciation’ which means the older something gets, the less it is worth.

The Australian Taxation Office produces an annual guide for rental property owners with information on how rental properties depreciate over time, including a table of common household items and their depreciation life span (see Rental properties 2020 [ATO website]). You can use this information to work out how long something is worth any money. For example, carpets have a life span of 10 years. So the carpet declines in value by 10% every year. If the carpet is over 10 years old, the value is zero.

Cleaning claims

If the landlord is claiming costs for cleaning, can they prove these things?

1. Have they suffered financial loss? Can they prove they have actually spent the money they are asking for on cleaning the property?
2. If they have, is it because you breached the law or your lease?
3. Is the amount reasonable?

The law says you only need to leave a property ‘reasonably clean’. The landlord or agent cannot ask you to do more than the law says, even if it’s in your tenancy agreement. For example, even if your tenancy agreement says you need to steam clean your carpets when moving out, the law does not require you to do this. If you have a steam cleaning term in your lease, you can argue that it is not valid under the law.

You should also look at your condition report and any photos showing how clean the property was when you moved in. By law the landlord has to make sure the property is reasonably clean on the day you are to move in, so if they want it returned cleaner than it was when you moved in you can argue that it is not reasonable.

And you should look at any exit photos or reports you have in case the cleaning the landlord is asking for happened after you moved out and returned the keys.

If you agree that the landlord is entitled to part or all of your bond for cleaning but believe the amount they are claiming is unreasonable, you will need to provide evidence of this. For example, you could contact cleaning companies to see how their rates compare to the landlord’s claim and if the cleaning could have been done for less.

Damage claims

If the landlord is claiming costs for property damage, can they prove these things:

1. Have they suffered financial loss or property damage? Can they prove they have actually spent the money they are asking for on repairing property damage?
2. If they have, is it because you breached your lease or the law?
3. Is the amount reasonable?

The law says you need to take care to avoid damaging the property and reasonable care to avoid damage to common areas, if any. If the damage is simply due to fair wear and tear through normal use, this is not your responsibility. It is the landlord’s responsibility to pay for repairs.

It is also not your responsibility to pay for damage caused before you moved in or after you moved out. If the landlord is making a claim on your bond for damage you did not cause, you should provide evidence of the state of the property at the start and end of your lease (eg Condition Report, photographs, witness statements).

If you agree that the landlord should get part or all of your bond for damage that you caused, but believe that the amount they are claiming is unreasonable, you will need to show evidence of this. If the landlord is claiming the cost of repairs or replacement of property or fixtures, you should get quotes from shops or tradespeople to show that the landlord is trying to claim too much.

You should also check the age of the item the landlord is claiming for to make sure depreciation is included to get its true current value. The landlord cannot claim the full cost of replacing something that was not new when it was damaged.

The landlord’s claim must be in proportion to the damage caused. For example, they cannot claim for the cost of repainting the entire house when the paintwork is damaged in just one room.

Example: claim for damage

The landlord applies for the full replacement cost of brand new, high quality carpets throughout the entire house because there is a small stain on the carpet in one of the rooms, which was caused during the tenancy. The landlord is trying to justify their claim by saying if they have to replace the carpet in the one room where the stain is, the new carpet in that room won’t match the carpet in the rest of the house, so the entire house needs to be re-carpeted.

At the time the tenants moved in:

• the property was about 20 years old
• the carpets were the original carpets from the time the property was built
• the carpets did not appear to be of a very high quality as they showed signs of wear in high traffic areas and were even worn through in some places
• there were also several small existing stains on the carpets throughout the house
• the condition report makes reference to the stains and wear marks that were there before the tenants moved in
• photos taken by the tenants and the agent also show the stains and wear marks were there before the tenants moved in.

At the time of the landlord’s application:

• the original carpet is still in the property, nothing has been replaced
• the property has been relet at the same price

To prepare their case, the tenants need to answer these questions:

1. Has the landlord suffered property damage? Or is it fair wear and tear?
2. Has the landlord suffered financial loss?
3. Is it because the tenants breached their lease or the law?
4. Is the amount reasonable?
5. Has depreciation been included to get the true current value?

Property damage

The small stain caused during the tenancy could be considered property damage if it is not wear and tear from normal use. For example, it might be wear and tear if it is not really a stain, but more of a mark visible due to the carpet wearing through from normal use.

Financial loss

But even if there is property damage, the tenants can argue the landlord has not suffered any financial loss as a result of the stain because:

• they have not spent any money changing the carpets
• they have been able to relet the property for the same price, and
• the carpets have no financial value due to their age as they have fully depreciated (the ATO guide lists carpets as having a 10-year life (see Rental properties 2020 [ATO website]).

Is the amount reasonable?

The tenants can also argue that the landlord’s claim, is not reasonable because:

• the claim is not in proportion to the damage caused and that it is unreasonable to ask for the carpets to be replaced throughout the entire property for a small stain in one room
• there are methods other than replacing the carpet that could be taken to deal with the stain, such as cleaning or repairing
• the quality of the existing carpet is less than the quality of the carpet the landlord is claiming for
• that the carpets were old, stained and worn before they moved in, and should be replaced as part of the landlord’s duty to maintain the property in good repair, regardless of any stain left during their tenancy.

The tenants should collect evidence to support their defence, such as the Condition Report, entry and exit photos, quotes for cleaning or repairing the carpet. They can even include quotes for new carpets of a similar quality to the existing carpets to show what the landlord is asking for is excessive and not reasonable.

It will be up to VCAT to decide if any of the bond should be paid to the landlord. But even if VCAT does decide that the tenants have some liability for property damage, a well prepared defence can help reduce the amount the landlord is claiming to an amount that is reasonable.

The information on this page relates to existing periodic tenancy agreements and short fixed-term tenancy agreements (for fixed term periods of less than 5 years). The information is current as of the date of publication, but may be subject to change with future amendments to the laws relating to rental properties. If you are unsure what laws apply to you, you should seek legal advice.

The law

Residential Tenancies Act 1997 (AustLII website)
Section 406 – Bond must be lodged by landlord
Section 416 – Application to VCAT for bond by tenant
Section 417 – Application to VCAT for bond by landlord
Section 418 – Application to VCAT for bond by landlord (rent unpaid)
Section 419 – Application to VCAT for bond by landlord (reasonably clean, fair wear and tear)
Section 425 – Notice must be given to RTBA of tenant transfer

Victorian Civil and Administrative Tribunal (VCAT) Act 1998
Section 120 – Re-opening a VCAT order

Victorian Civil and Administrative Tribunal (VCAT) Rules 2018
Reg 8.07 – Documents required to be included with certain applications

Resources

Your step-by-step guide to bond recovery [pdf, 54kb]
Rental properties 2020: Guide for rental property owners [ATO website]
This guide explains how to treat rental income and expenses, including how to treat more than 230 residential rental property items

Related pages

Starting a tenancy
Lease transfers and subletting
Shared households
Compensation for tenants
Defending a compensation claim by your landlord