Refund of rental bonds

28/07/2017 16:52

Urban drift has caused significant pressure on residential housing in urban areas of Fiji over the years. There is an insufficient supply of houses in the market to meet the increased demand for accommodation. Consequently, housing prices have increased to such an extent that it is no longer possible for many people to purchase their own home. Instead, people resort to renting suitable accommodation, causing rental charges to also increase significantly.

The Consumer Council of Fiji has over the years recorded a high number of tenancy complaints and always appears on out top ten complaints list. One common issue, as far as landlord and tenancy is concerned, is the non-refund of bond money paid to landlords.

Rental bond is an amount of money paid by a tenant as a form of security for the landlord against any future breaches of the tenancy agreement. The maximum rental bond that is usually acceptable is a month’s rent. The amount of bond that is to be paid should be written on the agreement. The rental bond can be used by the landlords to cater for the damages done to the rented premises, unpaid utility bills by the tenants, and any rental accrues at the time of vacating the premises. Should there be damages of any sort to the premises, the landlord can deduct the costs of repairs from the bond money. However, if the flat has not been damaged in any way, the landlord must refund the full bond money to the tenant. Sadly this was not the case in Rahul’s situation.

Rahul had, through a real estate agent, secured a flat for himself. He had paid the first month’s rent to the agent together with the refundable bond money which amounted to $2000. The agent then handed the money over to the landlord after deducting his commission. Rahul soon moved into his new flat. After a few months, he decided to move out of the flat. Given that the flat was still in the same condition as to when he had first started renting in it, Rahul expected a full refund of the bond money.

Due to some misunderstanding, the landlord refused to refund the bond money stating that the bond was paid to the real estate agent and therefore, the agent should refund the bond. Rahul lodged his complaint with the Council. The Council’s investigation revealed that $2000 was paid to the real estate agent who then handed the money over to the landlord after deducting his commission. Unfortunately, the landlord was adamant that the bond money should be recovered from the real estate agent. Rahul then decided to take the matter to Small Claims Tribunal for further action.

At the end of the tenancy after the final inspection of the premises by the landlord or agent, the bond money should be refunded. If there is a dispute regarding the condition of the premises or any rental or other arrears, the refund of bond money may be a disputed matter.

There are few things a Consumer must be aware of when renting a property.

First and foremost, there should be a written agreement prepared by the landlord and signed by the new tenant. It is crucial that the tenant must be given the time to read and understand the tenancy agreement before he/she is asked to sign. Additional terms may be added to the agreement so long as they do not breach any provisions of the residential tenancy laws. Any such terms are not binding or enforceable, even though the tenant may sign the agreement.

Moreover, tenants must always take photos of the premises they intend to rent prior to its occupation. This will assist them in getting the rental bond refunded at the time of vacating the premises. If there are any repair work that needs to be done by the landlord prior to the occupation of the premises, the tenant must note down those repairs and get it signed by the landlord.

In addition, a written notice of approximately 30 calendar days must always be given to either party if a tenancy agreement is to be ended. The notice of termination must:

 Be in writing;

 State the address of the premises;

 Be signed and dated;

 Allow the required period of time;

 Give the date on which the tenant intends to, or is;

 Requested to move out; and give reasons for ending the agreement (if any).

It is important to take note that the notice period is counted from the day the notice is served. The tenant can also write to the landlord for extension of stay before the 30 days’ notice expires.

Consumers who have complaints in relation to landlord and tenancy are advised to lodge their complaints with the Council on its National Consumer Helpline Toll Free Number 155.