The Residential Tenancies Amendment Act 2019 was introduced on 30 July 2019. It has a number of implications for tenants including that it limits their liability for careless damage to their rental property and prohibits insurance companies from pursuing them for the cost of damages, unless the damages were intentional or as a result of criminal activity.
The question of who has liability for damage to a rental property has been under issue since 2009 following the decision by the Courts about a case in which a fire had caused considerable damage to a rental property. The original Court decision was successfully appealed, resulting in a ruling that the owner’s insurer was unable to recover the cost of the damage from the tenant, thereby effectively resulting in liability for damaging resting solely on the property owner (see my previous blog articles, A Question of Law and Osaki Case Appeal Ruling).
One of the changes introduced by the Residential Tenancies Amendment Act 2019 has been to give clarity to the question of liability.
Under the new Act, tenants (or their guests) who cause damage to property through carelessness are liable for the cost of the damage for an amount equal to up to four weeks’ rent or the owner’s insurance excess, whichever is the lesser.
Owners must provide insurance information to tenants so new tenancy agreements must include information about the property’s insurance including:
• whether the property is insured,
• how much it is insured for, and
• the amount of the excess.
Tenancy agreements must also state that the insurance information is available to the tenants on request.
Where the tenancy is an existing one, under the new Act tenants may ask for the owner to provide insurance information and it must be provided within a reasonable time.
The intent of the new Act is to encourage tenants to take care of rental properties while ensuring they do not become liable for excessive costs, and to ensure that owners are not out of pocket for careless damage to their rental property. It also aims to encourage owners to have appropriate property insurance.
Owners who do not provide the insurance information, or if they do not notify tenants in writing within a reasonable time of any changes to this information, may be liable for a fine of up to $500.