Bond Not Collected / Lodged

D.T. I enquired with the receiver regarding making a claim and this was their reply;

"for the bond, the claim would have to be made by your tenant as they paid the bond, not you as the owner."

Interesting you say the PM has had issues with not disbursing rent. This is an issue I also have, but have been lead to believe it was the tenant being behind. Another issue to pursue...

 

Correct. Therefore the PM agent is liable to the tenants, not the owner. It appeared that people were advising that the owner is liable to the tenants which is not the case.

 

Bonds on Line
It's great, each party gets a log in and can check the status at any time
In NSW at least.....
This is how our last bond was lodged, and now i wouldnt go back, sure it means trusting Govco, but that is better than a PM with a pokies problem

 

Online bond refunds and lodgements | Residential Tenancies Authority

 

I disagree with this.

 

I'd be interested what would happen if the tenant does damage and money needs to be recouped from the bond and given to the Owner for that.

 

This is exactly what I'm worried about.

 

There's nothing really to disagree with Terry, it's just a fact. We deal with this all the time and I can assure you it's correct. There's a reason the bond and the bond form is in the tenants name only with no mention of the owner. You'll have a tough time convincing the OFT otherwise.

 

Can you explain the legal principals to support your view?

 

Firstly, it's not a view. Like I said, we deal with bonds on a daily basis with the OFT. We didn't write the legislation, we just follow it. To be absolutely clear, it's not a view.

Secondly, I've already outlined the reasons for why it's this way in my earlier post. If you would like clarification of why it's this way then you're probably best calling the Qld OFT and asking them to explain their legal principles behind it. If you'd like to look up the legislation the relevant section is Part 3 of The Residential Tenancies and Rooming Act 2008 (you can google and find it quite easily).

We can provide a more detailed response in due course but to be honest, the time taken to convince people of this isn't really productive. If you believe it's that way then the onus is on you to convince the OFT otherwise. Happy to keep an open dialogue of course.

 

I have read Part 3 of that act and there is nothing in it to support your view – your opinion which is what it is.



Above you said the bind belongs to the tenant, which it does. The agent lodged it on behalf of the tenant which is correct.



But what you fail to understand is the agent is acting under the ‘laws of agency’. That means for all intents and purposes they are the principal when dealing with the tenant. That is it is the same as the tenant dealing with the property owner directly. They are just representing the property owner. They bind the property owner as long as they act under the authority.



Their authority to act includes the act of receiving money from the tenant. If the tenant pays the agent it is the same as the tenant giving money to the owner of the property, the landlord.



In this situation the tenant has given money, which they think is bond, to the landlord.



Therefore the landlord is liable to account for this.



The landlord then has a claim against the agent for breach of their authority.



Legislation could modify this rule – which is common law. But so far I can see nothing in the act which would enable this to happen – it could be there though.

 

I agree with @Terry_w but I could see how it was open to interpretation that he was suggesting that the bond belongs to the owner.
What he was saying (I hope I'm right) is that the bond is held for the owner therefore the owner is liable possibly to ensure that it is safe and the owner impacted/affected if there is no bond as landlord insurance is probably invalid and there would be little legislation to cover getting damages from tenant as the legislation states there should be a bond used first etc

 

Does an owner have a duty of care to the tenant when selecting a PM agency to ensure that the tenant's money is appropriately looked after?

Can a tenant sue the IP owner for selecting a PM agency that doesn't follow legislation and/or loosing the tenants money?

I'll use the word 'lose' as it's not always intentional theft.

I'm talking in general terms here - very curious.

 

Nope.

 

its like this. I send you down the pub to pick up $50 from Chukka for a gambling debt.. Chukka hands you $50. You don't give it to me but spend it on fairy floss. Chukka is going to chuck a fit and who will he go after - me or you when I said he hasn't paid me?

 

Terry, the tenant hasn't given money to the landlord - it's a bond!

A bond is not a "debt" owed to the owner. It is completely different to rent, both in intent, recovery, and how it is receipted and disbursed through a trust account. This is why legislation requires a bond, if received, must be paid to the RTA. They are the only authority that can hold a bond. An owner or agent cannot, it is not their money.

The reason an agent will normally request the bond payment is made to them is to ensure that condition of the tenancy agreement is met prior to executing and commencing a lease. As already mentioned, a tenant can pay it themselves direct but that will delay the tenancy as the agent should not execute a lease until they have confirmation it is paid.

Regarding the law of agency, whilst I understand the underlying premise, it is the tenant that is the principal in that transaction. In the analogy given as it relates to bonds, I'm (the agent) not collecting a debt from Chucka (the tenant) on the owner's behalf, full stop. I'm acting as the agent for Chucka when I take that $50. Very broadly, the management agreement gives the authority to deduct fees from the owner's trust money. Trust laws in general though apply just as much to the tenant as the owner in operation. A good example of this is when a tenant overpays an invoice, even by a matter of cents. We can't just allocate it rent, it is not ours or the owners money at that point. We have to get the tenants authority to do so.

I think the point you're missing is that the bond is receipted to the tenant's folio by the PM and is immediately redirected to the bond folio - it goes no where near the owner's folio when receipted into trust. If it did and if legislation allowed for that, you would be correct. "Their authority to act includes the act of receiving money from the tenant. If the tenant pays the agent it is the same as the tenant giving money to the owner of the property, the landlord.". This isn't correct because it depends on how that money is receipted into trust. This statement is far too broad.

Despite incorrect terminology that PMs often use, the PM/owner does not "return the bond to the tenant". It was always the tenant's bond. The PM/owner can only make a claim on that money but it was never theirs in the first place which is where this misunderstanding is coming from. The overriding premise is that in the case of bonds, the agent is acting for the tenant, not the owner.

Furthermore, this is also why a form exists for change in bond ownership by the tenant's in the case of any ongoing tenancy (see here). It's because it's the tenants who own the bond, not the landlord. If it was just an amount of money receipted to the owner, there would be no need for a change in ownership to the bond monies held by the RTA.

You can keep saying it's an opinion/view all you like it appears you're trying to apply a blunt legal premise to a situation where very specific rules apply. If you want to call it a view or an opinion, then I can't stop you but what you're also missing is that you're arguing with the OFT, not with me.

It is extremely unfortunate for the tenant, as they have done nothing wrong. Recovery though is through the agent, not the owner.

 

No and we've identified where the confusion is coming from. The bond is held for the tenant to satisfy the condition of the lease. The owner can make claim to that bond when needed but it is not and never was their money in the first place. This is why the tenant cannot claim against the owner, only the agent who was acting on the tenant's behalf when they receipted the bond into trust.

 

I think we should just disagree on this one.

 

Bond belongs to tenant, and agent is not tenant's principal

 

but the tenant gave it to hte agent - in his capacity as agent