What condition must the premises be in when the resident leaves?
Before handing back a premises, a non-owner resident must leave it, as far as practicable:
- reasonably clean
- in the same condition as when the resident moved in, taking into account fair wear and tear
- with any fixture or fitting the resident added or altered in the same condition as immediately after it was added or altered, taking into account fair wear and tear.
A fixture or fitting the resident removed with the consent of the operator does not need to be reinstated (unless this was a condition of the consent).
These departure conditions do not apply where the resident and operator have entered into a renovation cost-sharing agreement before the resident vacates.
What counts as fair wear and tear?
Fair wear and tear means deterioration caused by the reasonable use of the premises, fixtures or fittings, or by natural environmental forces.
Fair wear and tear does not need to be repaired by the resident. An operator cannot include fair wear and tear in a reinstatement notice, and VCAT will not order a resident to pay for it.
What is the condition report and why does it matter?
The condition report completed when the resident moved in is evidence of the state of the premises on the day it was completed. Neither party can claim the premises were in a different condition to what is recorded in the report.
Within 10 business days of the resident handing back the premises, the operator must complete the departure condition report. This should be done with the resident present so both parties can agree on the condition of the premises at that point. If the resident has been given a reasonable opportunity to attend and does not, the operator may complete the report without them.
What can an operator do if the premises are not in the required condition?
If the premises have not been left in the required condition and works are needed to reinstate them, the operator can serve the resident with a written reinstatement notice. The notice must specify:
- that the resident did not comply with their departure obligations
- the specific works required to reinstate the premises
- the estimated cost of those works.
The operator must serve the reinstatement notice within 21 days of the resident handing back the premises. A notice served after 21 days has no legal effect and the operator cannot recover reinstatement costs from the resident.
Once served, the works must be completed within 90 days of the resident handing back the premises, or within any longer period agreed in writing.
What can a resident do if they receive a reinstatement notice?
On receiving a reinstatement notice, a resident should check:
- whether the notice was served within 21 days of handing back the premises; if it was not, it has no legal effect and the resident does not need to respond
- whether the damage claimed was already present when the resident moved in, by comparing with the entry condition report
- whether the claimed damage is fair wear and tear rather than actual damage
- whether the estimated cost is reasonable compared to market rates for the work.
If the resident disagrees with the notice, the resident must give the operator a written disagreement notice within 21 days of receiving the reinstatement notice. The disagreement notice can state that:
- the resident did comply with their departure obligations
- the works specified are not required
- the estimated cost is excessive.
If the resident does not send a written disagreement notice within 21 days of receiving the reinstatement notice, the operator may carry out the works. The resident must then pay the reasonable cost of the works, which is the actual cost incurred and may differ from the estimate in the notice.
What happens if the resident disputes the notice?
Is a resident ever required to renovate the premises on leaving?
A resident is not required to renovate or pay for renovation when leaving.
However, the resident may voluntarily agree to share renovation costs with the operator to attract a higher sale price. A renovation cost-sharing agreement must specify:
- the proportion each party will contribute to the renovation cost
- that the same proportion applies to any capital gain or capital loss on the subsequent sale or re-letting of the premises
- the date by which the renovation will be completed.
A renovation agreement entered into before the resident vacates means the requirement to leave the premises in the same condition as at the start of the occupancy does not apply.