As part of a rental agreement an owner may require a security bond in advance to cover any costs that the tenant may have to pay at the end of a tenancy, eg; damage or cleaning.

Generally, a bond must not be more than four weeks rent but there are exceptions. Where the weekly rent exceeds $500 or where the owner was living in the property for the three months prior to letting it, any amount of bond can be charged. Where a cat or dog is allowed at the property, an additional pet bond of $100 can be charged.

When a tenant pays a bond, they must receive a receipt immediately. The bond must then be placed into a Tenancy Bond Account with the Bond Administrator or an authorised financial institution within 14 days. Interest earned on this money is automatically transferred to the State Government for the First Homebuyers Assistance Scheme and Education and the Fidelity Guarantee Fund.

A bond is not refunded until the property has been inspected and all final water readings and accounts have been received. Rent in not to be left unpaid with the intent that it be deducted from the bond. This is an offence under the Residential Tenancies Act of 1987 and is subject to a penalty to a maximum of $1000.

A tenant must be given a bond statement and a bond disposal form to sign at the end of a tenancy. If they do not agree with the deductions from the bond or refuse to sign the form, a court order will be required to release the bond.

Source: Ministry of Fair Trading "Tenancy Notes"