If you’re planning to live in a rented house, you must be aware that there is a general rule of paying a bond before signing the lease. This is mainly because, the moment you sign the contract, you will be legally obliged to make all the rental payments.
Also, if you’ve been permitted to sublet a portion of the property you’re renting, you’re now considered the landlord or agent for your subtenant. Now, your subtenant will need to give you their share of the bond.
However, it may be tempting to pay the bond upfront to secure the property, but is it a good idea? Read this article to know every single thing about this bond payment.
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Putting up the bond rental
Before you decide to pay the bond before signing the lease, this is the first step you need to follow. Lodging the bond is necessary to determine the agreement.
For this, you will need to provide proof of identity. This can be done by showing the driver’s license or passport. You will also need to fill out a bond lodgement form, which must be signed by the tenant and the landlord/agent.
The landlord/agent will then lodge the bond with the Residential Tenancies Bond Authority (RTBA). The RTBA is a Victorian Government agency that holds and protects tenants’ bonds.
If you need help with the bond and rent in advance, do a little research first and speak to your local council if you’re unsure.
Does the landlord have to provide receipts for the security deposit?
Yes, once the bond has been lodged, the landlord/agent will give the tenant a receipt. This receipt must be kept safe while paying the bond before signing the lease until the end of the tenancy.
When should a rental deposit be paid?
Paying a bond before signing the lease is a common procedure. But legally, the rental bond payment should be completed before getting the keys to your home.
So, do you pay the deposit before the tenancy agreement? The answer is no. Read all the conditions before signing and then do the payment.
But, can the landlord pull out before signing the contract? Yes. This is true for both tenant and the landlord as there is no legal binding until you sign the lease.
How much bond should I pay?
The answer to the question ‘How much bond do you have to pay?’ is usually equal to four weeks’ rent. In most cases, the bond cannot be paid in installments – it must be paid in full before the tenancy can begin.
If you cannot pay the bond before signing the lease, you may be able to apply for a bond loan via the Victorian Government. This is an interest-free loan that can be used to cover the cost of the bond.
But what does the law say about rental deposits? The answer to this is that the bond for rental property can’t be more than 2 months of rent.
How to pay the bond?
There are three ways of paying the bond before signing the lease:
- Cash
- Cheque
- Bank transfer
It’s important to note that it cannot be refunded once the bond has been paid – even if you are thinking of not proceeding with the tenancy.
The moving out procedure
At the end of the tenancy, the landlord/agent will inspect the property to check for any damage. The bond will be fully refunded if the property is in good shape. If there is damage, the cost of repairs will be deducted from the bond.
The refund can only be paid to the person named on the bond receipt. This is why it is so important to keep the receipt safe. If you have lost the receipt, you can apply for a replacement from the RTBA.
2-6 weeks is about how long the landlord has to refund your bond. After that, you may wish to contact them and check in on the process.
Can my landlord keep my deposit if I leave early?
If the tenant decides to move prior to the end of the tenancy, they may be liable to pay all or just a part of the bond to the landlord/agent. This will depend on the terms of the tenancy agreement.
But in cases where the tenancy comes to a legal end, the bond amount will be refunded to you directly by your relevant state authority.
When can a landlord withhold my deposit?
This is possible in case of damage caused by your guests, cleaning charges once you move out and any unpaid rent.
What if my landlord doesn’t return my deposit in 21 days?
The tenant may submit a letter to the landlord explaining why they think they are entitled to a larger refund.
Should you pay the bond upfront?
Now that you know all about paying a bond before signing the lease, you may wonder whether it is a good idea. Let’s compare the pros and cons:
Pros of paying bond before signing the lease
Why do landlords take a deposit? This is because they need a sense of security. Thus one of the most significant advantages of paying the bond upfront is that it shows good faith on your part.
Another advantage of paying the bond upfront is that it may help you negotiate a lower rental rate. This is because the landlord/agent knows that you are serious about renting the property and are less likely to fraud on the rent.
Cons of paying a bond before signing the lease
One of the disadvantages is that you will not be able to get your money back if you are rethinking renting the property.
Another downside is that a big chunk of money is taken out of your savings.
So, should I pay a deposit before signing the tenancy agreement? Above all, this decision will depend on your personal circumstances.
Do it if you are confident that you will be able to keep up with the rent. Another scenario is if you are comfortable with the idea of losing your bond if you change your mind, then go for it.
Just remember to have a rental ledger to keep track of all the payments.
However, if you are not sure whether or not you will be able to keep up with the rent, then this is not a good idea for you. Also, if you prefer to have the flexibility to change your mind, you may want to consider other options.
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