The landlord-tenant relationship always starts well. After all, neither of you would have entered into the lease if the relationship was bad. And 99% of the time, it continues that way. But sometimes, things go wrong.

People lose their jobs and have to choose between paying rent and feeding their kids. Someone drops a piece of furniture they’re carrying and makes a dent in the floor. And you know what they say: the road to ACAT is paved with good intentions.

So when does ACAT (the ACT Civil and Administrative Tribunal) get involved? And what happens there?

The two most common reasons why a tenant and landlord might end up at ACAT are:

1. A tenant doesn’t pay their rent
2. A landlord decides to withhold a bond.

Nonpayment of rent

"Carly and Josh applied for a two-bedroom apartment that was well within their budget. Carly earned $800 per week as a hairdresser, while Josh brought home $700 from his work in a local bar. At $400 per week, their rent was easily affordable.

And then Carly lost her job. Suddenly, their rent was more than half of their new income, and some weeks they struggled to pay it. When the winter electricity bill hit, they decided to skip the next fortnight’s rent and hope they could catch up later.”

Monika Minko, General Manager of Independent Property Management, explains what happens next.

“When a tenant moves into a property, they pay rent in advance. If they miss more than one payment, they’ll be in arrears. Once they’re in arrears for more than seven days, we can serve a Notice to Remedy on the 8th day of arrears. That basically tells them that they have an additional seven days to pay their missed rent and get back up to date, and if they don’t, we’ll seek advice from the lessor to issue a Notice to Vacate.

If they still don’t pay the rent arrears, then we issue a notice to vacate. That gives them 14 days to move out. On the 15th day, we’ll attend the property to make sure that they’ve vacated. If they haven’t, we’ll lodge the necessary forms to ACAT.”

Of course, your property manager won’t have been idle in the meantime. They stay in constant contact with both tenant and owner to try and find out why the rent is late and see if there’s another solution.

“Sometimes it’s just a hiccup, like a tenant’s direct debit didn’t go through”, says Monika. “By getting in contact early, we can quickly find out if that’s the case, or if it’s likely that the tenant is going to keep having difficulties.”

The process of going to ACAT

If the matter stays unresolved, your property manager will apply to ACAT for a termination and possession order. The owner must pay a filing fee, but if they’re successful, it can be claimed back from the tenant.

The matter is listed for a hearing, which might take another two weeks. The tenant is expected to attend. The owner can attend, or they can ask the property manager to attend on their behalf.

This is a formal hearing in front of a tribunal member. They hear from both sides before deciding to make the order.

The hearing itself can take as little as 2 hours and as long as half a day if the matter I'd complicated or interpreters are involved. Tenants are required to provide any supporting evidence that is relevant to the case they are making. For example, proof of financial hardship, a letter from an employer to prove that they’ve lost their job, or Centrelink details.

For non-payment of rent, the hearing is very straightforward. Unless the tenant can show that they did pay rent or there are unusual circumstances, it is likely that the ACAT member will grant the order. Of course, nothing is guaranteed!

From here, things move quickly.

ACAT can make a range of orders, which may require the tenant to do any or all of the following:

• Payback the owed rent;
• Pay the ACAT filing fee;
• Pay for any damage to the property; and
• Vacate the property. This might be the same day, or the member might give the tenant a few days to move their belongings out of the property.

ACAT can also grant the release of the bond to the landlord.

Claiming the bond

Lisa rents out her two-bedroom apartment in Dickson. The apartment has lovely hardwood floors. Her tenant Dave has always been very reliable, paying his rent on time and keeping the place tidy and clean. This is why it came as such a shock when he moved out, and Lisa discovered a huge patch of resin under the couch.

Dave had dented the floor, and instead of letting his property manager know, he had tried to fix it by pouring resin into the dent. The resulting repairs ran well over a thousand dollars.

There are a few reasons why a bond dispute might end up at ACAT.

• The landlord or property manager might identify damage to the property, which the tenant says was already there, wasn’t caused by them, or is fair wear and tear.
• The landlord and tenant might agree that there is damage, but there is a disagreement about how much it should cost to fix or who should fix it.
• As with Dave above, there may be a dispute about whether something is adequately repaired.

If there is damage at the end of a tenancy, landlords can claim the bond (or part of the bond) for the cost of the repairs. To do so, they lodge a notice of intent with the bonds portal. The tenant is issued with an s33 notice, giving them 14 days to dispute the withholding of the money.

Should the tenant dispute, it’s off to ACAT. Unlike non-payment of rent cases, ACAT will schedule a mediation before going to a hearing.

At the mediation, the tenant and property manager will attend. The owner is welcome to represent themselves or can ask the property manager to represent them. The discussion is mediated by an independent member of the Tribunal.

“We submit documentation to show what the damage is, and the condition of the property before the tenant moved in,” explains Monika. “We’ll also get quotes for fixing the damage.”

The parties see if they can come to an agreement. A common solution is for the tenant to pay part of the repair cost and the landlord to cover the difference. If the parties can agree, the member can make up orders on the spot, which are then formalised with all parties signing.

If not, the matter proceeds to a hearing. This might involve getting expert reports about what is involved in a repair, with itemised invoices that break down the cost of each step.

If there is a dispute about who caused the damage, you may also need witnesses.

The member hears the dispute and makes a ruling based on the evidence. The orders might state that the owner is entitled to keep the bond, or that it must be returned to the tenant, or each party receives a portion.

Having a good condition report right at the beginning of the tenancy can help both parties in this scenario.

What should tenants bring to the tribunal?

If you’re a tenant headed to the tribunal, here’s a checklist for what to bring.

• The tenancy agreement, the date the tenancy began, and the type of tenancy
• A receipt for the bond which shows the amount paid
• Evidence about the condition of the property at the start of the tenancy, including the condition report, if the dispute is about damage, and photographs if you have them.
• A final inspection in the ACT should be thoroughly documented with photographs, and you are entitled to a copy of this as well.
• Evidence that you have paid any relevant charges (such as water consumption) if the landlord is claiming that these are outstanding
  Preparation and good communication with your property manager can help avoid any disputes and ensure you get your bond quickly at the end of your lease.

How landlords can protect their interests

Hiring a good property manager is the best way to ensure issues are addressed quickly. Whether it’s rent or repairs, communicating early can help. Your property manager can identify the problem and suggest solutions for both parties.

The other thing Monika recommends is to always, always take out landlord insurance.

“Should the tenant not pay the owed sum on the court order, we can submit a claim to the insurance company so you are not out of pocket for loss of rent and other expenses.”

Landlord insurance also covers some property damage — making it useful when damage bills outweigh the cost of a bond.

Early communication can help tenants avoid ACAT

If you’re having trouble paying your rent, get in touch with your property manager as soon as possible. You might be able to negotiate a payment plan if it’s a temporary problem. If you won’t be able to pay going forward, it’s better to move out sooner rather than later. Otherwise, you risk a dent in your credit rating and a forcible eviction.

What about the break fee? In most cases, landlords may waive this in compelling circumstances.

“Most landlords would rather let a non-paying tenant break their lease without charging a break fee than go through the whole process of issuing notices and heading to ACAT for an eviction order,” says Monika. – I wouldn’t say this as it’s not commonly the case.

If you’ve caused some damage to the property, don’t try and cover it up. Talk to your property manager about how much it’ll cost to fix it and whether you can do it yourself. “We’ll always be open to a tenant who wants to take care of it themselves, as long as they do it to standard. It’s often cost-effective for the tenant, and easier for the landlord. Everyone wins!”.

For more information about how Independent Property Management can help with your rental needs, get in touch.