Blog

Rental bonds and how they work by Property Reviewed

Property Reviewed latest blog answers all the questions required when renting an investment property in Australia

What are rental bonds? 
Rental bonds, also called security deposits, are payments that new tenants are expected to make to the landlord, property manager or rental bond authority directly before the prospective tenant signs the lease agreement. The rental bond acts as a security for the landlord if the tenant breaks terms in the lease agreement. For instance, if the tenant causes damage to the property due to negligence, the landlord can draw from the rental bond to carry out repairs. 
 
 
Is the rental bond mandatory? 
Even though most landlords and property managers will almost always ask for a security deposit, the rental bond is not a mandatory payment in any state or territory in Australia. 
 
 
How much is the rental bond?
Typically, the amount payable as a rental bond is written in the lease. The maximum amount payable as a rental bond varies from state to state and depends on the property type. However, the rule of thumb is to expect the bond or deposit to be the equivalent of four weeks' rent of the property in question. 
 
 
How does the rental bond process work
The steps involved in properly processing rental bonds payment are detailed below. Bear in mind that this may differ depending on the state or territory you reside in. 
 
  1. A bond lodgement document is prepared and signed both by the landlord and tenant. The document contains details about the property, including its address, the names and contact details of each renter and the bond amount to be paid.
  2. The tenants named on the lease will then pay the bond money to the landlord or property manager. The bond can also be paid directly to the appropriate rental bond authority. The tenant is then issued a receipt as proof of bond payment. 
  3. The landlord then proceeds to lodge the necessary paperwork regarding the bond with the relevant state or territory government authorities. There's a timeframe within which the landlord must complete this process; otherwise, they face a fine. 
  4. The relevant authorities will continue to hold the bond payment until the expiry of the lease, and the tenant has vacated the property. 
  5. At the end of every lease agreement and once the tenant has vacated the property, the landlord or property manager will conduct a thorough inspection of the property and assess its present conditions against the original conditions report. 
  6. The tenant and landlord then discuss whether a full, partial or no refund of the bond money will be released. The amount to be refunded will be determined based on any breach of the rental agreement. 
 
What does a rental bond cover? 
The bond serves as security to cover for any damages caused by the tenant while the property is leased to them. This breach also includes any unpaid rent. The landlord can also recover all or part of the bond payment if: 
 
  • The tenant has vacated the property but still owes rent.
  • The tenant, visitor or their guests has caused damage to the property.
  • The tenant or resident has abandoned the property.
  • There are unpaid bills left by the tenant, such as utility or water.
  • The tenant has vacated the property with cleaning or repair expenses that exceed fair wear and tear.
 
Where can a tenant get help to pay the rental bonds
Once you find a suitable property, all the necessary processes are carried out, and it's time for a security deposit; the rental process will move pretty quickly from here. First, your agent will ask you to sign the lease (either over email or in person at a sign-up meeting). They will also ask you to pay the rental bond, which is usually equivalent to four weeks' rent. Finally, to secure the property, you will also need to pay rent in advance (two weeks' rent). In many cases, the agency will require this money within 24 to 48 hours after your application is accepted. 
 
If you need money to cover your rental bond, MyBond can help. MyBond is a financial service and a convenient way to pay your rental bond with an alternative fee of just one week's rent instead of applying for a loan product or paying for the entire rental bond amount. No interest, no repayments and no credit checks. You can also buy back your bond at any time -*T&Cs apply. 
 
Curious to know how Mybond works? Watch here
 
To find out more, call MyBond on 1800 342 342 or visit learn more about MyBond here.

Reblogged from original article by Property Reviewed 


Subscribe to our blog mailing list!

Never front a full rental bond again!

Start Your Application

Terms and Conditions apply.
Application subject to approval by MyBond

Our Products

MyBond - you don't have to live in a box
Available Now

Fund My Bond

Are you moving into a new rental property? For a fixed fee we will pay your bond for you. Keep that hard-earned cash in your pocket.

READ MORE

Subscribe to our blog mailing list!

MyBond House logo

Terms and Conditions of Affiliate Program

Please read and agree to our Affiliate agreement Terms and Conditions.

MyBond Affiliate Program Agreement

This MyBond Affiliate Program Agreement (Agreement) comprising the Schedule below and the attached Terms and Conditions is made on the date specified in the Schedule between MyBond Pty Ltd ABN 27 644 744 972 (MyBond) and the real estate agent specified in the Schedule (the Agency).

1. Appointment

1.1 Appointment: MyBond appoints the Agency to make Referrals to MyBond on the terms in this Agreement. The Agency accepts MyBond’s appointment on the terms of this Agreement.

1.2 No exclusivity: The appointment of the Agency is on a non-exclusive basis. The appointment does not limit other methods by which MyBond may promote its Services or to reach Prospective Customers.

1.3 Relationship: The Agency is an independent contractor to MyBond. Nothing in this Agreement has the effect of creating a relationship of employer and employee, partners, principal and agent, or joint venturers between MyBond and the Agency.

1.4 Term: This Agreement commences on the Commencement Date and continues until terminated in accordance with the terms of this Agreement.

2.1 General: The Agency must:

2. Agency’s obligations

  1. disclose to a Prospective Customer when making a Referral that it is a referrer for MyBond and will receive a commission;
  2. make Referrals with due skill and care;
  3. comply with all reasonable and lawful instructions of MyBond in relation to Referrals;
  4. comply with all applicable laws and legal obligations;
  5. not allow its interests to conflict with its obligations and duties under this Agreement;
  6. not hold itself out as having authority, or do any act that might reasonably create the impression that it has authority, to bind MyBond in any way;
  7. not make any commitments or incur any liability for or on behalf of MyBond;
  8. not make or give any representations, warranties or other promises regarding MyBond or its Services;
  9. not produce any promotional material for MyBond or its Services without the prior approval of MyBond;
  10. not charge a Prospective Customer a fee for the Referral; and
  11. not use MyBond's name, logo or trade marks without the prior approval of MyBond.

2.2 Privacy: Before providing Personal Information about a Prospective Customer who is an individual to MyBond under this Agreement, the Agency must ensure that it may do so in compliance with applicable privacy laws and the privacy policy of the Agency.

3. Commission

3.1 Entitlement: The Agency is entitled to a Commission for each Successful Referral.

3.2 Amount: The amount of Commission payable by MyBond to the Agency is set out in the Schedule.

3.3 Invoice: Within 10 Business Days after the end of each calendar quarter, MyBond will provide the Agency with a Recipient Created Tax Invoice for that calendar quarter which will specify the Commission payable in respect of that calendar quarter, together with any applicable GST. The Agency must not provide an invoice to MyBond for Commission.

3.4 Payment: MyBond must pay the Commission in respect of a calendar quarter within 20 Business Days after the end of that calendar quarter.

3.5 Clawback: If MyBond does not receive a refund of the full amount of the rental bond for which MyBond has provided the Services, the Commission paid by MyBond for that Successful Referral must be refunded to MyBond on demand. MyBond may debit the amount of any refundable Commission from any future payments of Commission under this Agreement.

3.6 Effect of termination: The ending of this Agreement does not affect MyBond's obligation to pay Commission to the Agency in relation to any Successful Referrals which have been made before the end of this Agreement.

3.7 Discount: In addition to paying the Commission, MyBond agrees that for a Successful Referral, it will discount by $20 the amount payable by the Prospective Customer to MyBond as the fee for the Services.

4. Representations and warranties

Each party represents and warrants to the other that:

  1. it has full authority to enter into this Agreement;
  2. it is not bound by any agreement with any third party that may adversely affect this Agreement;
  3. it has and will maintain all necessary powers, authority and consents to enter into and fully perform its obligations and duties under this Agreement; and
  4. it has complied and will comply with all applicable laws binding on it.

5. Confidentiality

5.1 Obligation: Each party (the Recipient) must keep confidential any information relating to the other party or the terms of this Agreement unless an exception applies.

5.2 Exceptions: The obligations of confidentiality under this Agreement do not extend to information that is (whether before or after this Agreement is signed):

  1. rightfully known to the Recipient at the time of disclosure and there is no obligation of confidentiality on the Recipient;
  2. generally and publicly available (otherwise than as a result of a breach of this Agreement);
  3. required to be disclosed by law or court order; or
  4. required to be disclosed in connection with any legal proceedings relating to this Agreement.

5.3 Consent: If the party to whom the information relates has consented in writing before the disclosure of that information, then that disclosure does not contravene clause 5.1.

6. Termination

6.1 Notice: This Agreement can be terminated by either party without cause by giving the other party not less than 7 Business Days written notice of termination.

6.3 Survival: The following clauses survive termination or expiry of this Agreement: clauses 3.7, 5, 7, 8, and 9.

6.4 Effect: The ending of this Agreement does not affect any rights, remedies, obligations or liabilities of the parties that have accrued up to the date of termination or expiry.

7. Governing law and jurisdiction

7.1 Governing law: This Agreement is governed by the law applying in New South Wales.

7.2 Jurisdiction: The parties submit to the non-exclusive jurisdiction of the courts of New South Wales with respect to any proceedings that may be brought at any time relating to this Agreement.

8. Other provisions

8.1 Notices: Any notice or other communication (Notice) given or made under this Agreement must be in writing and must be sent by email to the email address of a party specified in the Schedule, or to the email address last notified by the intended recipient to the sender. A Notice will be taken to be duly given or made on the same day of sending unless the sender receives notice that the email has not correctly been delivered.

8.2 Amendment: An amendment or a variation of any term of this Agreement must be in writing and signed by each party.

8.3 Counterparts: This Agreement may be executed in any number of counterparts. Each counterpart is an original but the counterparts together are one and the same Agreement.

8.4 Electronic execution: This Agreement may be signed electronically.

8.5 Costs: Each party must pay its own costs and expenses in respect of negotiating, preparing, signing, delivering and performing this Agreement and any other agreement or document entered into or signed under this Agreement.

8.6 Entire agreement: This Agreement is the entire agreement and understanding between the parties on everything connected with the subject matter of this Agreement, and supersedes any prior agreement or understanding on anything connected with that subject matter.

8.7 Assignment and other dealings: A party must not assign, novate or deal with any right or obligations under this Agreement without the prior written consent of the other party, whose consent must not be unreasonably withheld.

8.8 Further assurances: The parties must promptly execute and do all acts and things necessary or desirable to implement and give full effect to the provisions and purpose of this Agreement.

8.9 Severability: If anything in this Agreement is unenforceable, illegal or void, then it is severed and the rest of this Agreement remains in force.

8.10 Waiver: A single or partial exercise or waiver by a party of a right relating to this Agreement does not prevent any other exercise of that right or the exercise of any other right.

9. Definitions

In this Agreement, the following definitions apply unless the context indicates otherwise:

Agreement means this document, including the Terms and Conditions and the Schedule.

Business Day means a day that is not a Saturday, Sunday or a public or bank holiday in New South Wales.

Commencement Date means the commencement date of this Agreement specified in the Schedule.

Commission means the commission payable under clause 3.

Contact Details means the contact details of a person including name, phone number, email address and any other items specified by MyBond.

GST has the meaning given to it in the GST Act

GST Act means A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Personal Information has the meaning given to the term under the Privacy Act 1988 (Cth) and includes Contact Details.

Prospective Customer means a person who may be interested in using the Services.

Recipient Created Tax Invoice has the meaning given to it in the GST Act.

Referral means the provision to MyBond from the Agency of the Contact Details of a Prospective Customer.

Schedule means the Schedule to this Agreement.

Services means the services provided by MyBond of providing financing facilities for rental bonds.

Successful Referral means that a Prospective Customer uses MyBond for Services.