6 September 2017

It's time to get it right

Do you understand the lessor's rights and obligations regarding a final property inspection? Does the tenant need to be present? What does the final property condition report need to contain? If you want to avoid disputes and potentially save time and money, read on.

The lessor is entitled to have the property returned in a clean and undamaged condition at the end of a tenancy. However, remember the tenant is not responsible for ‘fair wear and tear’.

As soon as possible after the end of the tenancy, and in any event within 14 days, the property manager must conduct a final inspection of the property, prepare a final property condition report describing the condition of the property and provide a copy to the tenant.

The tenant must be given a reasonable opportunity to be present at the final inspection. It is in the best interests of both parties to undertake a joint inspection at the time the tenant moves out and to arrange for the return of the keys.

Using the Property condition report - Form 1 prepared at the start of the tenancy, the property manager should compare the condition of each item with the original details and discuss any problems such as breakages, items missing etc. 

Work out any outstanding liabilities of the tenant such as:

• rent arrears;
• outstanding water, gas and electricity bills;
• cleaning costs (if the property was not left in a clean condition); or
• damage to the property and/or contents belonging to the lessor.   

Costing repairs

The tenants are liable to compensate for any wilful or neglectful damage they may have caused. However, unless the tenant has totally destroyed the fixtures or fittings, it is sometimes difficult to work out an amount to claim for damage to contents. If the damage can be reasonably repaired, only the repair costs can be charged.

It is much more difficult to assess burn marks or stains that cannot be removed.  Assessment depends on a number of factors, including the age of the property and the size and location of the damage.  In most situations, it is better to negotiate the sum of money to be deducted from the bond as compensation.

Sometimes, carpet damage is so severe it may need replacing. In such a case, the tenants would be liable to pay for replacing the damaged carpet with one of similar quality to the original. Of course, one cannot change ‘new for old’ and allowance must be made for depreciation. Contact the Australian Taxation Office to obtain help in calculating depreciation.

If the property owner is insisting that the full price for a new carpet be deducted from the bond, it may be helpful to refer them to the online publication investment property ownership, which also outlines that they should be putting money aside for the eventual replacement of all fixtures and fittings.

Make every effort to agree with the outgoing tenants the amount of any deductions from the security bond. In the event of a disagreement, parties should try to compromise if possible. Otherwise, the disposal of the bond will need to be resolved in the Magistrate’s Court.

The tenant is responsible for returning all sets of keys provided to them at the start of the tenancy. If they don’t return keys, the tenant may be held responsible for the cost of changing the locks or charge rent until the keys are returned.

Introduction of a fee for plumbing diagrams/flimsies

Real estate agents sometimes request drainage plumbing diagrams so they can advise potential buyers on the location of pipes and plumbing for a property. 

The Building Commission has introduced a fee of $10.50 for these diagrams, which can be purchased online. For more information visit the Drainage plumbing diagrams webpage.