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Landlords' bond insurance nightmare

Landlords' bond insurance nightmare

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Date Published : Thursday, June 26, 2008

Tenancy bonds are not enough protection for landlords, research has shown recently.

"Rogue tenants" are missing rent payments and causing damage worth more than the standard bond rate of four weeks' rent, leaving property owners with the bill, according to Terri Scheer Insurance Brokers.

Carolyn Majda, general manager of the brokerage firm, said bonds were not enough to cover insurance shortfalls in 59 per cent of cases where property owners had been left in debt due to tenants.

Ms Majda gave News.au.com examples of occupiers causing damages to rental properties by bricking up interior doors and having chickens living in kitchens.

However, she highlighted that "even the most fastidious tenant" may cause financial problems for landlords, through causing accidental damage or money difficulties themselves.

"[Tenants may] suffer undue hardship due to loss of job or other circumstances that leave them unable to pay the rent." she said.

Bond release forms must be signed by both the owner and tenant to return the bond at the end of a tenancy, but if either party disputes the terms they have to take further action, often by involving the state's consumer affairs department.

Cleaning costs and unpaid rent are often causes for bond disputes, said News.au.com.

According to New South Wales state law, there is no maximum bond for a furnished property costing over $250 per week. For unfurnished properties the maximum is four weeks' rent. However, charging a bond is not compulsory and both parties must come to written agreement.

The office of fair trading may get involved if a dispute is raised in NSW and it depends on the landlord to acquire proof for a claim.

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