bond
📖 What is bond? Meaning and definition
In New Zealand tenancy law, a bond is a financial safeguard for landlords. It is a payment made by the tenant, often at the beginning of the tenancy, and is intended to cover costs like rent arrears or damage to the property that might occur during the tenancy. The Tenancy Tribunal frequently deals with claims related to bonds, including orders for their payment or disputes over their return.
For example, the Tribunal can order a landlord to pay a bond to a tenant, especially if the landlord failed to lodge it correctly or if the tenancy has ended and the bond is due back to the tenant. Conversely, a tenant might be ordered to pay the bond to the landlord if there are outstanding amounts, such as rent arrears, that the bond is intended to cover. The bond amount is typically subtracted from the total amount owed by one party to the other.
It's important for tenants to understand that while they pay the bond, it is often held by a third party (though one case showed a landlord ordered to pay it directly). Disputes can arise if a landlord fails to lodge the bond as required, which can lead to exemplary damages being awarded against them. The handling of the bond, especially at the end of a tenancy, can also be a point of contention, sometimes involving communication with third parties who initially paid the bond on the tenant's behalf.
📋 Requirements
- A bond is paid by the tenant at the commencement of a tenancy.
- The bond serves as security for potential breaches of the tenancy agreement, such as rent arrears.
- The landlord has an obligation to lodge the bond (though one case showed a landlord ordered to pay it directly to the tenant).
- Claims regarding the bond must be established on the balance of probabilities by the party bringing the claim to the Tenancy Tribunal.
📝 Procedure
- The tenant pays the bond, sometimes through a third party, at the start of the tenancy.
- The landlord is expected to lodge the bond.
- At the end of the tenancy, or in case of a dispute, either the landlord or tenant may apply to the Tenancy Tribunal regarding the bond.
- The Tenancy Tribunal will consider the claim, potentially ordering the bond to be paid to the tenant or applied against amounts owed by the tenant to the landlord.
💡 Examples
- A company was ordered by the Tenancy Tribunal to pay a bond of $4,600.00 directly to a tenant immediately, alongside other compensation.
- A tenant was ordered to pay a landlord $8,819.86, which was calculated by subtracting the $3,300.00 bond from the total rent arrears and filing fee.
- A tenant claimed exemplary damages because the landlord failed to lodge the bond, indicating a breach of landlord obligations.
- A landlord discussed the handling of the bond at the end of a tenancy with an ex-partner who had paid the bond on behalf of the tenant at the start.
❓ Frequently asked questions
What is the purpose of a bond in a New Zealand tenancy?
The bond is a sum of money paid by the tenant to the landlord, held as security to cover potential costs like unpaid rent or property damage that might occur during the tenancy.
Who holds the bond money during a tenancy?
While the tenant pays the bond, it is typically held by a third party, though one case showed a landlord being ordered to pay the bond directly to the tenant.
What happens if a landlord doesn't lodge the bond?
If a landlord fails to lodge the bond as required, they may be ordered by the Tenancy Tribunal to pay exemplary damages to the tenant, in addition to potentially being ordered to pay the bond itself.
Can a bond be used to cover rent arrears?
Yes, the Tenancy Tribunal can order that the bond be applied against amounts owed by the tenant to the landlord, such as rent arrears, effectively reducing the tenant's total payable amount.
Who decides how the bond is paid out at the end of a tenancy?
If there's a dispute, the Tenancy Tribunal will decide how the bond is paid out, based on the evidence presented by both the landlord and the tenant regarding any outstanding amounts or breaches of the tenancy agreement.
What if someone else paid my bond for me?
If a third party, such as an ex-partner, paid the bond on your behalf, this linkage may be considered by the Tenancy Tribunal, particularly in discussions about the bond's handling at the end of the tenancy.