Commercial Guarantees for Residential Tenancies in the ACT


Residential Tenancies Amendment Act 2017 (ACT); Residential Tenancies Amendment Regulation 2018 (ACT)

Relevant provisions of the Residential Tenancies Amendment Act 2017 No. 32 (ACT) (the Amending Act) which has amended the Residential Tenancies Act 1997 (ACT) (the RTA) and the Residential Tenancies Amendment Regulation 2018 (No 1) 2018 No. 5 (ACT) (the Amending Regulation) which has amended the Residential Tenancies Regulation 1997 (ACT) (the Regulation) commenced on 7 May 2018.

The relevant provisions have principally amended the ACT residential tenancies legislation as part of stage 2 of the commercial guarantees amendments set out in the Amending Act. Additionally, schedule 3 of the Amending Act includes amendments to support the electronic lodgement of rental bonds.

Commercial Guarantees – Stage 2

Stage 2 of the Commercial Guarantees, set out in schedule 2 of the Amending Act, has amended the RTA to allow a lessor to accept a commercial guarantee as an alternative to a bond if the standard guarantee contract is registered.

The new section 15(4)(b) of the RTA has amended the previous definition of ‘bond’ set out in section 15 of the RTA. The amended definition establishes that a ‘bond’ for a residential tenancy agreement still includes a guarantee or indemnity. Previously section 15(4)(b) of the RTA prohibited the acceptance of a commercial guarantee as bond, however, the new section 15(4)(b) provides that a commercial guarantee can now be accepted as a bond, but only if the guarantee is consistent with a registered standard guarantee contract.

In support of the above amendment, the Amending Act has inserted the new Part 8 of the RTA, which provides for the registration of commercial guarantees with the Commissioner of Fair Trading.

Additionally, the Amending Regulation has amended the Regulation to provide that certain matters must not be included in a commercial guarantee, including:

  • a provision that allows a tenant or lessor to subrogate the party’s rights or remedies to another party; and
  • a provision that allows the provider to be party to a tenancy dispute; and
  • a provision that allows the provider to recover an amount from the tenant that could not be deducted from a bond under the Act, section 31.

The prohibited items ensure that any standard guarantee contract is aligned with the requirements set out in the RTA in terms of protections for parties.

Rental Bond Amendments

The Amending Act has substituted section 24 of the RTA to reflect the new process that will be introduced with the electronic lodgement system. The new section 24(1)(b) now allows a lessor to lodge with the Territory a notice about deposit on behalf the tenant.

Conclusion

Organisation should ensure that relevant staff are aware of the changes outlined above, and as set out in the ACT – Residential Tenancy Agreements module.