How to Handle Bond Deposits Properly
Managing bond deposits is a key part of being a landlord. Proper handling of these funds not only protects you financially but also helps maintain trust with your tenants. Here’s a step-by-step guide to ensure you’re handling bond deposits the right way.
1. Know the Legal Requirements
New Zealand has specific laws governing bond deposits. These laws often specify the maximum amount you can charge, how and where the funds should be stored, and the timeline for returning them. Familiarise yourself with these regulations to avoid legal trouble.
2. Set a Clear Policy in the Tenancy Agreement
Include a clear explanation of your bond deposit policy in the tenancy agreement. Outline the amount collected, how it will be held, and the conditions under which deductions may be made. Providing transparency upfront helps prevent disputes later.
3. Document the Property’s Condition
Conduct a detailed walk through with the tenant before they move in and create a condition report. Take photos or videos of every room, paying close attention to any existing damage. This documentation will be invaluable if there’s a dispute about deductions when the tenant moves out.
4. Use the Deposit for Legitimate Reasons Only
Bond deposits are meant to cover unpaid rent, property damage beyond normal wear and tear, or cleaning costs to restore the property to its original condition. You cannot use the deposit for routine maintenance or upgrades.
5. Return the Deposit on Time
Return the deposit within a reasonable time frame after the tenant moves out. If you make deductions, provide an itemised list explaining the charges and include receipts or invoices for repairs.
Properly handling bond deposits ensures a smooth rental process, protects your property, and fosters positive relationships with tenants. It’s a small but crucial part of being a successful landlord.
