Bond clause in a lease: amount, lodgement and return

Sample clause

a residential rental agreement in Victoria between Kingfisher Lane Rentals, a fictional private rental provider in Geelong, and two renters paying $620 a week for a townhouse

4. Bond 4.1 The Renters must pay a Bond of $2,480, being 4 weeks rent, on or before signing this agreement. 4.2 The Rental Provider will lodge the Bond with the Residential Tenancies Bond Authority within the time required by the Residential Tenancies Act 1997, and the Authority will send each Renter a receipt. 4.3 Before the Renters move in, the Rental Provider will complete a Condition Report and give the Renters a copy. The Renters may return a signed copy with their comments within the time the Act allows. 4.4 The Bond is security for the Renters' obligations under this agreement. It is not rent in advance and may not be used to pay rent during the tenancy. 4.5 At the end of the agreement the Bond is repaid through the Authority in the amounts the parties agree in a bond claim or, if they do not agree, as determined under the Act.

Sample wording, not legal advice.

Variants

What to negotiate

• The amount against the rent

  In a Victorian residential tenancy the bond generally cannot exceed one month's rent, so the only negotiation is whether to take less. For a commercial lease the amount is agreed freely and is usually expressed as a number of months of rent, and a tenant with a strong trading record can ask for a smaller figure.

• Cash or a bank guarantee

  A bank guarantee keeps the tenant's cash in its business but costs a fee and uses borrowing capacity. Landlords prefer guarantees that are unconditional, run past the end of the lease and can be called on without the tenant's consent. Tenants ask for the guarantee to be returned promptly once the lease ends and make good is complete.

The risk of leaving it out

Without a bond clause a Victorian rental provider has no right to a bond at all, because a bond is only payable if the rental agreement asks for one. In a commercial lease the landlord holds no security for unpaid rent or make good costs, and the tenant has no agreed timetable for getting its money back.

The Victorian rules in brief

Most Victorian residential bonds cannot be more than one month's rent. A higher bond is possible only where the weekly rent is more than $900 or the Victorian Civil and Administrative Tribunal has set a higher bond for the property. The bond is lodged with the Residential Tenancies Bond Authority, which gives a receipt to the rental provider and every renter, and a rental provider who takes a bond must complete a condition report and give the renter a copy before moving in. Extra bond can be requested only in limited cases, such as a rental agreement longer than 5 years.

How the rules differ elsewhere

In New South Wales a residential bond cannot be more than 4 weeks rent and is managed through NSW Fair Trading's Rental Bonds Online service. Victorian retail leases work differently again: the legislation does not cap a security deposit, nothing is lodged with a government body, and the landlord must hold a cash deposit in an interest bearing account and return it with the interest within 30 days after the lease ends if the tenant has met its obligations. Rooming houses and caravan parks have their own limits.

Where it sits in a generated document

A generated lease writes the bond as a short numbered clause beside rent, so the make good and default clauses can refer to it by number. The generated text never cites the Residential Tenancies Act or the bond authority's guidance, so the cap and the lodgement steps in a draft are checked against Consumer Affairs Victoria before the agreement is signed.

Documents that carry this clause

Residential lease agreement template for a New South Wales fixed termA residential tenancy is the one agreement where most of the terms are set by statute rather than by the parties, so the useful part of a template is the additional terms and the numbers. This one is a 12 month New South Wales fixed term at $560 a week, with the bond, the entry notice periods and the break fee written out exactly as the Act sets them.Room rental agreement template for one room in a shared homeRenting a room is not the same as renting a house, and most templates copy a residential lease and hope. This one is written for one room with shared kitchen and bathroom, prices the bills split, lists the rules that matter, and says plainly that the occupant is a boarder or lodger and what that changes.Holiday rental agreement template with house rules and a damage bondA short stay booking is a contract that lasts a week and is argued about for a month afterwards. This agreement prices the seven nights line by line, sets the damage bond as a pre authorisation with a seven day claim window, and puts the house rules where the guest signs rather than on a laminated card in the kitchen.

Questions people ask