Property Management

Persistent failure to lodge bonds: First ever court case

A Tauranga landlord has been taken to court for breaching a restraining order in relation to repeatedly failing to lodge bonds in the first case of its type in New Zealand.

Tuesday, March 30th 2021

MBIE’s tenancy compliance and investigations team (TCIT) took the case against Kevin Bustard, a director of two property management companies in the Bay of Plenty area, who had traded under three different property management names.

He was found guilty and fined $1,350 by the Tauranga District Court for failing to lodge two bonds within the required time.

It is the first such case under section 109A of the Residential Tenancies Act 1986 that has been brought before the district court.

Bustard was originally issued with a restraining order by the Tenancy Tribunal in 2019 following action taken by previous tenants.

The order was for up to six years. He was later investigated by TCIT and found to have breached the order by failing to lodge multiple tenants’ bonds within the required timeframe.

Because of continual breaches he was this time charged with a criminal offence rather than the fines levied by the Tenancy Tribunal.

Tenancy compliance and investigations national manager Steve Watson says the way in which Bustard handled the receipt and lodgement of bonds was concerning, unlawful and unprofessional. This was particularly so given his career as a property manager.

“Landlords and property managers need to remember they are running a business and with this comes the obligation and responsibility to comply with the Residential Tenancies Act.

“There is no justification for Bustard’s poor behaviour. Particularly given his previous experience with the Tenancy Tribunal, he should have known better,” says Watson.

“The lodgement of bonds is fundamental to the integrity of the tenancy system.”

He says TCIT will always try to work with landlords first to help them understand and comply with the requirements of tenancy law. However, where there is a serious or ongoing breach of the RTA, it will use the enforcement tools available to it as the regulator.

Where TCIT has noted a restraining order against a landlord or property manager, the team often monitors the landlord’s subsequent behaviour to ensure they are not committing further breaches of the RTA.

Where breaches are identified, the team will make contact with the landlord and encourage voluntary compliance with the RTA. Where the landlord is unwilling to comply, more punitive action can be taken.

Under the Residential Tenancies Amendment Act 2020 which became law earlier this year, new provisions were introduced which strengthened the enforcement measures available to MBIE.

TCIT can now issue improvement notices to correct a breach of the RTA and these carry a penalty if not complied with.

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