Understanding the Return of a Commercial Lease Bond in Queensland
When a commercial lease ends, one of the final matters to resolve is the return of the bond or other lease security. In Queensland, there’s no central authority for holding commercial or retail lease bonds — unlike South Australia, where bonds are lodged with the Small Business Commissioner, or New South Wales, which operates a Retail Bond Scheme. Instead, how lease securities are held and returned in Queensland is determined by the lease agreement between the landlord and tenant.
Where and How Are Bonds Held?
The storage and management of commercial and retail shop lease bonds in Queensland vary based on the arrangements specified in the lease agreement and may include:
- Held by the Landlord Directly –
- In private lease arrangements, landlords may hold the bond themselves.
- While there is no legal requirement for landlords to place these funds in a separate account it is considered best practice to keep bond monies distinct from personal or business funds.
- Held in a Trust Account by Real Estate Agents or Legal Practitioners –
Licensed real estate agents who receive bond monies on behalf of landlords are typically required to:
- Deposit these funds into a trust account.
- Maintain accurate transaction records, subject to regular audits under the Agents Financial Administration Regulation 2014.
- Use trust monies solely for their intended purpose or face serious penalties
The Property Occupations Act 2014 (POA) and the Agents Financial Administration Act 2014 (AFAA) aims to protect consumers from financial loss in dealings with agents and the AFAA regulates the way agents establish, manage and audit trust their trust accounts.
For legal practitioners considering holding commercial or retail shop lease binds, the Legal Profession Regulation 2017 has relevance to trust accounting. The Queensland Law Society operates the Trust Account Consultancy, a complimentary (limits apply) service for newly established practices across Queensland and a list of FAQs on this topic.
- Bank Guarantees –
- Tenants may provide a bank guarantee, which is a commitment from their bank to pay the landlord a specified amount if the tenant breaches the lease or if other conditions are met. The original document is typically held by the landlord or agent.
Considerations for Landlords Holding Bonds
When landlords hold bond monies directly:
- Form of Holding – Bonds can be held in cash, cheque, or electronic transfer. It’s advisable to deposit these into a separate account. Bank Guarantees should be stored securely because they can essentially be cashed and fees may apply to replace a lost bank guarantee.
- Usage of Funds – Bond monies are by nature refundable and landlords should have them available to be returned when they are rightfully sought by a tenant. Using bond monies for personal or business purposes may jeopardise the ability for the bond to be refunded in accordance with the lease, which in turn may raise claims to damages.
- Return of Bond – If all obligations are met, the bond should be returned promptly to the tenant or within timeframes specified in the lease (if a timeframe exists).
Is there a timeframe for the bond to be returned?
There’s no legislated timeframe in Queensland for returning commercial lease bonds. However, the lease agreement may specify a timeframe or process. In general, the bond should be returned promptly once:
– The lease has ended,
– The tenant has vacated the premises, and
– All obligations in the lease have been met.
If there are delays, tenants are encouraged to follow up in writing with the landlord or agent and try to establish if there is some dispute over the return.
If no time frames exist but all the conditions for the return of the bond are met, the tenant could apply for mediation through the QSBC or seek legal advice about how to pursue the return as a debt dispute (for instance in QCAT if the debt is less than $25,000) or how to make a claim (for instance in court) that the withholding of the bond is unconscionable conduct.
What is the process for the bond to be returned?
At the end of the lease:
1. The tenant should ensure they’ve met all their lease obligations – such as making final rent payments, removing their fit-out (if required), and leaving the premises in the agreed condition. Take photos or keep receipts of any works or cleaning completed.
2. The landlord or agent will usually inspect the premises to check for damage or any outstanding matters.
3. If both parties agree, the bond can be returned in full.
4. If there’s a dispute (for example, about damage or unpaid rent), the parties should try to negotiate a resolution. If that’s not successful, the QSBC offers mediation to help resolve commercial and retail leasing disputes and avoid costly litigation.
What if the landlord has changed?
If ownership of the property changes during the lease term, the outgoing landlord is generally required to transfer the bond or security (or equivalent value) to the incoming landlord. This might be documented in the sale or some other assignment process.
If the lease is still in effect, the terms around the bond remain binding – even if the landlord changes. If a tenant is unsure who currently holds the bond or how to recover it, they should:
– Check their lease for contact details,
– Request clarification in writing from the new property owner or managing agent, and
– Seek independent legal advice if needed.
The QSBC can also assist with dispute resolution where there is uncertainty or disagreement around who is holding the bond.
Tips
Make an entry condition report or take photos or video when you the lease begins.
Always keep copies of your lease, bond receipt or guarantee, and correspondence throughout the tenancy – it helps avoid delays and misunderstandings at the end of the lease.
Additional Resources
To discuss your situation, and get connected with people that can help, reach out to our Assistance team.
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Understanding the Return of a Commercial Lease Bond in Queensland
When a commercial lease ends, one of the final matters to resolve is the return of the bond or other lease security. In Queensland, there’s no central authority for holding commercial or retail lease bonds — unlike South Australia, where bonds are lodged with the Small Business Commissioner, or New South Wales, which operates a Retail Bond Scheme. Instead, how lease securities are held and returned in Queensland is determined by the lease agreement between the landlord and tenant.
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