The continued failure to pay bonds will cost a Tauranga property management company nearly $ 23,500, after the rental court ruled he was a willful repeat offender.
Prime Rentals was found to have defaulted on its obligation payments from 23 different rentals.
In 18 cases, the bonds were not deposited, and in five cases, the bonds were deposited months after the start of the tenancies.
This led to the court ordering Prime Rentals to pay $ 23,470 in damages to the Department of Business, Innovation and Employment (MBIE), which took the case to court.
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The court also issued an order prohibiting Prime Rentals from making any further breach of its obligation to send bonds to the Bond Center within the required time frame.
Although there is no legal obligation to charge a deposit for a rental, it is considered good practice to do so. If a deposit is charged, the Residential Tenancies Act requires the landlord or property manager to post it with the Rental Services Surety Center within 23 working days of receipt by the tenant.
In the decision, the tribunal’s arbitrator JP Smith said the evidence provided by MBIE showed that in each of the 23 cases the tenant had paid the deposit to Prime Rentals at or around the start of the tenancy. .
Also, in most cases where the bond was eventually posted, this only happened after the tenants actively pursued the matter.
MBIE told the court that Prime Rentals explained the failure to file tenant bonds as an administrative error.
There had been four previous cases between 2016 and 2021 where the court had awarded exemplary damages to Prime Rentals for failing to file bonds within 23 business days.
Smith said previous decisions and pending cases show a persistent pattern of illegal behavior on the part of Prime Rentals.
This meant that Smith did not accept that an “administrative error” was a plausible explanation for the current failures and concluded that the failure to file bonds was intentional.
“If a lessor keeps a deposit rather than posting it, it potentially places them in a dominant position when negotiating the refund of the deposit at the end of the tenancy. The bond system is designed to avoid that, ”Smith said.
“There is a great public interest in maintaining the integrity of the bond system. Deterring other owners from circumventing the system is a legitimate consideration in calculating exemplary damages. “
In issuing the restraining order, Smith said it was clear that previous court orders had not led Prime Rentals to fix its tracks and meet its legal obligations.
That story, along with the fact that MBIE had now received three more complaints about uncoded obligations, meant there was no denying that stronger action was taken against Prime Rentals to ensure future compliance, Smith said.
“Prime Rentals should understand that any other violation will potentially result in prosecution as well as exemplary damages proceedings in court. He must also keep in mind the increased level of exemplary damages available. “
The inability of owners, property managers and pension operators to pay obligations is a recurring problem, with MBIE regularly bringing cases against him to court.
In March, MBIE’s Tenancy Investigations and Compliance Team (TCIT) filed a complaint against a property manager in Tauranga, who violated a court restraining order and continued not to post a bond, before the District Court of Tauranga.
Property manager Kevin Bustard was convicted and fined $ 1,350. TCIT National Director Steve Watson said there was no justification for Bustard’s bad behavior.
Property owners and managers need to remember that they are running a business and that comes with the obligation to comply with the Residential Tenancies Act, he said.
“Bonding is fundamental to the integrity of the rental system; by posting the deposit, the money is kept by rental services until the end of the rental, when the tenant or landlord can request a refund of the money. ”
His team would always try to work with landlords first to help them understand and comply with rental law requirements, Watson said.
“However, in the event of a serious or continuing violation of the ACR, we will use the enforcement tools available to us as a regulator.”
Reforms to the government’s tenancy law, which took effect earlier this year, have strengthened enforcement measures and gave MBIE new tools to deal with people who fail to meet their legal obligations.