Tenancy Disputes

Can tenants defend a compensation claim by their landlord?

A very common compensation claim occurs at the conclusion or termination of a lease. In Australia, leases and tenancy disputes are generally governed by the relevant Residential Tenancies Act applicable in your State. Under these laws, tenants are required to provide a “bond” at the commencement of the lease, against which a landlord may claim compensation if a tenant terminates the lease, damages the leased premise, or is otherwise in breach of the lease contract.

Some common compensation claims made by landlords against tenants include:

1. Where a tenant vacates a tenancy early, and a landlord is entitled to a “break lease” fee
2. Where a tenant vacates a tenancy early and fails to provide the proper notice
3. Where a tenant damages the leased property, or any other goods/fixtures owned by the landlord which was supplied as part of the lease
4. Where a tenant fails to properly clean and/or repair the leased premises prior to vacating at the end of the lease
5. Where a tenant fails to pay rent.

The claims process in these circumstances will generally depend on whether the compensation claim exceeds the amount of the bond provided at the commencement of the lease, and whether the lease remains current. In NSW, bonds are required to be held with the Rental Bond Board, and any claims against the bond money (including the tenant’s claim for return of the bond) are to be made through the RBB. Where a claimant landlord claims an amount less than the total bond money held, a tenant will need to contact NSW Fair Trading, and likely apply to the NSW Civil and Administrative Tribunal (NCAT) to challenge the claim against the bond.

Where the compensation claim exceeds the total bond money, then the landlord will be responsible for applying to NCAT for the amount of compensation they seek that exceeds the total amount held in bond. This procedure will also differ depending on whether the tenant is still residing in the lease premises, or has vacated.

If you wish to challenge a compensation claim, it is important to provide as much evidence and reasoning as to why the landlord is not entitled to the compensation. Such evidence might include photographs, condition reports or bank statements showing rental payments. Ultimately, your success in defending the compensation claim will likely depend on the strength of your reasoning and evidence in support of your defence, including having a firm legal basis.

Generally, where an application is made to NCAT (or the equivalent Tribunal in your State jurisdiction), is is highly recommended that you seek legal advice on your rights and any options available in defending the compensation claim made against you. This is not only because compensation claims are often complex and confusing, but also because of the short timeframes available to those defending claims and the very specific procedures involved in formal claims processes such as tribunal hearings.