Failure to lodge bonds earns major penalty

Friday 6 March 2020

A Tauranga property management company has been ordered to pay $16,417 for failing to lodge bonds within the required timeframe on multiple occasions.

By The Landlord

MBIE’s Tenancy Compliance and Investigations Team (TCIT) took Bay City Rentals to the Tenancy Tribunal for its repeated failure to lodge bonds with the Tenancy Bond Centre within 23 days.

There was a delay in lodging bonds in 73 cases and the delays ranged from 31 to 701 working days, with an average of 266 working days.

Further, Bay City Rentals failed to provide insulation statements, which were compliant with regulations under the Residential Tenancies Act, in 53 cases.

In many cases, the tenancy agreement stated that insulation would be assessed later. In other cases the statement said there was compliant insulation but did not specify its type or condition to demonstrate it was sufficient to keep the property warm and dry.

The Tenancy Tribunal found that Bay City Rentals was fully aware bonds were continually not being lodged and the adjudicator said they had previously dealt with a claim against the company for late lodgement of bonds.

Following that, it did not start lodging bonds till six months later and the adjudicator said this was unacceptable.

While the adjudicator accepted evidence that the company had changed ownership and the new owner has corrected the bond lodging process, they said there is strong public interest in maintaining the integrity of the bond system.

For that reason, the Tribunal awarded exemplary damages of $150 for each of the 73 counts of failing to lodge bonds.

The Tribunal also found the failure to provide accurate insulation statements was intentional. It said there is a strong public interest in ensuring that landlords comply with their obligations and do not seek to write their own rules.

This led the Tribunal to award $75 for each count of failing to provide compliant insulation statements.

In total, Bay City Rentals were ordered to $16,4167.12 as well as an additional $1,492.12 in associated costs.

Housing & Tenancy Services national manager compliance and investigation, Steve Watson, says the Tribunal’s ruling sends a strong message to landlords about the importance of meeting their minimum legal requirements.

The most concerning aspect about this case was the number and frequency of breaches committed by this property management company, he says.

“There is no justification for this behaviour and, particularly with their previous experience at the Tenancy Tribunal, the company should have known better.

“The fact that TCIT had discovered 126 breaches of the RTA shows a massive failing in the company’s business operations and lack of understanding of their obligations.”

Watson says the lodgement of bonds is fundamental to the integrity of the tenancy system, while compliant insulation statements give tenants reassurance about the state of the insulation in their rental home when they start a tenancy.

“These orders serve as a timely reminder of the upcoming Healthy Home Standards which will require landlords to ensure they meet all required standards and provide a compliance statement with every new, varied or renewed tenancy from 1 July 2020.”

Read more:

Serial failure to lodge bonds earns massive fine 

Lodge bonds or expect a penalty 

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