Part 4Security

Part 4—Security 19—Security bond (1) A person must not— (a) require more than one security bond for the same retail shop lease; or (b) require the payment of an amount by way of security under a security bond if the total amount paid by way of security exceeds 3 months' rent (exclusive of GST) under the lease. (1a) In connection with subsection (1)(b), the maximum amount of the security bond is to be calculated by reference to the rent payable during the first year of the lease (expressed as a monthly rent) but if a lease provides rent concessions, such as a rent‑free period or a period of rent at concessional rates, the concession will be disregarded. (2) However, if the rent payable under a retail shop lease increases, and at least two years have elapsed since the security under a security bond was given or last increased, the lessor may by written notice to the lessee require the lessee to increase the security by a specified additional amount but not so that the total amount of the security exceeds 3 months' rent (exclusive of GST) under the lease. (3) A notice requiring an increase in the amount of the security must fix the date by which the additional amount must be paid to the lessor and the date so fixed must be at least 60 days from when the notice is given. (4) A requirement to increase the security has effect as if it were a term of the lease. (5) A person who receives an amount by way of security must— (a) give, within seven days of the payment, the person who has made the payment a receipt stating the date payment was received, the name of the person from whom the payment was received, the amount paid, and the address of the premises to which the payment relates; and (b) pay the amount of the security to the Commission— (i) if the person is a registered agent—within 28 days of the date of receipt; (ii) in any other case—within seven days of the date of the receipt. 20—Repayment of security (1) An application may be made to the Commission for— (a) payment of the whole amount of the security either to the lessor or the lessee; or (b) payment of a specified amount of the security to the lessor and the balance to the lessee. (2) The application— (a) must be in a form approved by the Commission; and (b) may be made jointly by the lessor and the lessee or by either the lessor or the lessee. (3) If the application is undisputed, the Commission must pay out the amount of the bond as specified in the application. An application is undisputed if it is a joint application by the lessor and the lessee; or an application by the lessor that the whole of the amount of the security be paid to the lessee; or an application by the lessee that the whole of the amount of the security be paid to the lessor. An application that does not fall into any of those categories, is liable to be disputed. (4) If an application is liable to be disputed, the Commission must give the respondent written notice of the application (in a form the Commission thinks appropriate) and inform the respondent that, if the respondent wants to dispute the application, a written notice of dispute must be lodged with the Commission within 14 days after service of the notice on the respondent. If the application was made by the lessor, the lessee is the respondent; if the application was made by the lessee, the lessor is the respondent. (5) If the respondent does not give the Commission written notice of dispute within 14 days after the date of the Commission's notice (ie the notice under subsection (4)), the Commission may pay out the amount of the security as proposed in the application. (6) If the Commission receives a written notice of dispute before the amount of the security bond is paid out under subsection (5), the Commission must refer the dispute to the Magistrates Court for determination. (7) A payment under this section will be made from the Fund. 20AA—Return of bank guarantees (1) A lessor who receives a bank guarantee for a lease must return the original bank guarantee to the lessee within 2 months (the maximum return period) after the lessee completes performance of the obligations under the lease for which the bank guarantee is provided as security. (2) A lessor is not required to return a bank guarantee if it has expired or been cancelled. (3) The maximum return period does not run for any period during which the matter of the lessor's entitlement to claim or realise the bank guarantee is the subject of proceedings pending in a court. (4) A lessor who is unable to return an original bank guarantee is able to satisfy the requirement under this section, or an order of a court to return the bank guarantee, by providing any consent or release necessary to have the bank guarantee cancelled. (5) A lessor is liable to pay to the lessee compensation for— (a) any loss or damage suffered by the lessee as a result of any failure by the lessor to return a bank guarantee in compliance with this section, or an order of a court; and (b) reasonable costs incurred by the lessee in connection with the cancellation of a bank guarantee because the lessor was unable to return the original bank guarantee in compliance with this section, or an order of a court. (6) This section applies to a bank guarantee whether given in respect of a lease entered into or renewed before or after the commencement of this section. (7) In this section— bank guarantee means a guarantee from an ADI for the performance of the lessee's obligations under the lease.