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The Importance of Lodging Tenants’ Bonds

By Donna Jones

A Tauranga property management company was recently fined over $16,000 for illegal practices around bond payments and insulation. The March Tenancy Tribunal verdict came as a stark reminder of how important it is for landlords to follow Residential Tenancies Act (RTA) legislation.

What should landlords and property managers do with bond payments?

As part of their obligations as rental property accommodation providers, landlords and their property managers are required to lodge bond payments with Tenancy Services within 23 working days of receiving them from tenants.

Landlords can do this online using the Tenancy Services website.

Bond lodgements usually take around 10–15 days to process, and both the tenant and landlord should receive confirmation when the bond has been successfully lodged. If you’re a tenant and haven’t received a lodging confirmation notification within a few weeks of paying your bond, speak to your property manager or landlord.

What happens if bond payments aren’t lodged?

Landlords failing to meet their obligations around bond lodging can face fines and legal action. In the case of the Tauranga property management company found guilty of withholding over $136,000 in tenants’ bond money from the Tenancy Services’ bond centre, they were fined $16,000.

The case was taken before the Tauranga Tenancy Tribunal by the chief executive of the Ministry of Business, Innovation and Employment (MBIE). Issues with the company’s bond lodgement process saw 73 bonds not lodged within the 23-day timeframe, and five bonds not lodged at all. The Tribunal awarded exemplary damages of $150 to be paid for each breach.

Insulation statements must be included in new tenancy agreements

The Tauranga property management company (who acts as a landlord for the properties it manages) was also brought before the Tribunal to defend claims that they failed to comply with insulation legislation.

Since 1 July 2016, each new tenancy agreement requires an insulation statement, informing all parties of the condition and presence of any insulation in the rental property’s ceilings, floors and walls.

The Tribunal ruled that the property management company had failed to meet their insulation statement obligations in 53 instances, awarding exemplary damages of $75 for each.

Tenancy Tribunal sets an example

Here at McPherson Property Management, we don’t enjoy hearing news of these types of Tribunal cases because it’s a sign of misconduct and dishonest trading within our industry.

On the other hand, we are pleased to see the Tribunal awarding exemplary damages in the public interest — an act that will serve as a reminder and a deterrent to other landlords and industry members considering committing unlawful acts.

If you’re a tenant who would like to learn more about your bond or the insulation in your rental property, don’t hesitate to reach out to our team of professional property managers.

If you’re a landlord and would like to know more about lodging tenants’ bonds and the other services McPherson Property Management can provide, drop us a line.


Justice’ by Sarah Hina via CC BY-NC 2.0.

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