The tenant may have to pay a security deposit at the commencement of a tenancy.
The maximum security deposit that a landlord can ask for is the equivalent of four weeks rent.
When a security deposit is paid by cash, cheque or credit card, the landlord must immediately give the tenant a receipt. The landlord holds the security deposit in trust for the tenant and must pay it back to the tenant at the end of the tenancy (provided there are no claims against the security deposit).
A tenant can request details of the account where the security deposit is held, such requests must be made in writing to the landlord. At the end of the tenancy agreement the landlord may claim the following from the security deposit:
- unpaid rent;
- damage to the premises or ancillary property;
- cleaning of premises left unreasonably dirty;
- replacing lost ancillary property; or
- other amounts owed to the landlord under the agreement such as electricity, gas and water.
These are the main items that can be claimed. Please refer to pg. 28 of this booklet for a complete list.
Returning the security deposit
The tenant is entitled to have the security deposit returned at the end of the tenancy. Failure to comply with the provisions of the Act relating to the return of the security deposit can jeopardise the landlord’s rights to retain any amount from the security deposit.
The landlord must return the security deposit (less any amount they are entitled to retain) to the tenant within 7 business days of the tenant vacating the premises. If there are no claims against the security deposit then the full amount is to be returned to the tenant. PENALTY OF UP TO $2,200
Notice required to retain the security deposit
For the landlord to retain any or all of the security deposit they must give a notice to the tenant within 7 business days of them leaving the premises. The notice must set out how much the landlord wishes to retain, what it is for and attach receipts and other supporting documentation.
This supporting documentation includes a statutorym declaration attesting to the truth of the claims being made and that the receipts, invoices and other documents attached to the declaration relate to the matters in respect of which part or all of the security deposit being withheld.
The landlord must also return the portion of the security deposit not being claimed. Failure to comply with section 112 of the Act will jeopardise the landlord’s right to retain amounts from the security deposit.
The landlord also faces a fine for failure to comply with section 112. PENALTY OF UP TO $2 200 If the tenant disputes the landlord’s claim they should first attempt to resolve the issue directly with the landlord.
If the dispute is not able to be resolved, either party can refer the matter to the Commissioner for the dispute to be determined. Subject to section 113(2) of the Act, if the landlord has not returned the security deposit to the tenant or made a claim against the security deposit within 7 business days of the end of the
tenancy, the landlord is required to return the security deposit to the tenant in full.
What the landlord can retain the security deposit for
The landlord is entitled to retain so much of the security deposit as is necessary to:
- make good any damage to the premises or ancillary property that was caused by the tenant, other than reasonable wear and tear;
- replace ancillary property lost or destroyed by the tenant;
- clean the premises and ancillary property left unreasonably dirty;
- replace locks which were altered, removed or added by the tenant without the landlord’s consent;
- pay for unpaid rent or for any unpaid electricity, gas or water charges payable by the tenant to the landlord;
- pay compensation to the landlord if the tenant remained in the property after they were required to hand over; and
- pay money ordered by the Commissioner or the Court to be paid by a tenant but not paid.
If a tenant breaches a fixed term agreement by abandoning the premises prior to the end of the term, the landlord can continue to hold on trust as much of the security deposit as is necessary to ensure that the deposit will be available for payment to the landlord as compensation for;
- loss of the rent that the tenant would have been liable to pay if the premises had not been abandoned; and
- loss caused to the landlord in securing new tenants for the premises.
Once the landlord has established the loss caused by the tenant breaching the agreement, they must make an application to the Commissioner for compensation under section 122. The landlord must make this claim as soon as practicable after the loss can be calculated or in any case within 3 months from the date the tenant abandoned the premises.
Security deposit between co-tenants
Where there are two or more tenants, the tenancy agreement must specify the amount of security deposit paid by each, otherwise it is taken that each tenant paid equal amounts.