The final bond inspection - property investor rights and responsibilities

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What is a final bond inspection? 

A final bond inspection is what you carry out once your tenant has ended the tenancy and delivered a vacant property. When this inspection is carried out (either by you or your managing agent), the property should be compared against the Entry Property Condition Report.

The Property Condition Report is a report that’s carried out prior to your tenant moving into your property. It is a comprehensive document, which details the condition of your property, including any damages that were present prior to the tenant moving in. Currently in NSW this is a written report and photography is not mandatory but encouraged to be included in the report. The more detail you can provide, the better as the smallest of items can be overlooked. If you self-manage your property, make sure you carry out this report very thoroughly. It’s a common area for discrepancies.

Your rights and responsibilities as a landlord 

As a landlord, you must uphold a number of responsibilities. Of course, as with most things in the property management industry, there is state and territory-specific legislation to protect your rights and your tenant’s rights.

Property damage
You’re entitled to have your property returned to you in a clean and undamaged condition at the end of a tenancy. There is, however, a difference between deliberate damage caused by recklessness and neglect and fair wear and tear. Your tenant is not responsible for fair wear and tear on your property. 

So what is fair wear and tear?

Fair wear and tear basically means the normal deterioration of a property from ordinary, everyday use. Such factors as exposure to the elements, time and just day-to-day living can cause fair wear and tear. Although real estate and tenancy laws vary across the nation, the industry broadly accepts this definition of ‘fair wear and tear’.

Fair wear and tear

  • Faded curtains or frayed cords
  • Furniture indentations and traffic marks on the carpet
  • Scuffed wooden floors
  • Faded, chipped or cracked paint
  • Worn kitchen benchtop
  • Loose hinges or window or door handles; worn sliding tracks
  • Cracks in the walls from movement
  • Water stains on carpet resulting from leaky roof or bad plumbing
  • Worn paint near light switch


  • Curtains that are missing or torn by the tenant’s cat
  • Stains or burn marks on the carpet
  • Badly scratched or gouged wooden floors
  • Unapproved or poor-quality paint job
  • Burns or cuts in bench top
  • Broken panes from one of the tenant’s children hitting a ball through the window
  • Holes in walls from tenant hammering in nails or from removing picture hooks or shelves
  • Water stain on carpet resulting from an overflowing bath or indoor pot plants
  • Paint damage resulting from removing decorations stuck with Blu-Tack or sticky tape
  • Deep flooring scratches (not surface marks) and ripped lino from moving furniture or white-goods

Conducting the final inspection
As soon as possible, you or your property manager must:

  • Conduct a final inspection of the property. 
  • Best practice with the tenant present by way of invitation to the tenant.
  • Prepare the final exit condition report of the property, take photos and
  • Provide a copy of that report to the tenant.

You must give your tenant a reasonable opportunity to attend this final inspection. It’s in the best interests of both you and your tenant to undertake a joint inspection at the time they move out and to arrange for the return of the property keys.

Use your Property Condition Report

At the end of a tenancy, make use of the Property Condition Report you prepared at the beginning. Compare the condition of each item against the original details and discuss any issues like breakages, damages or missing items with the tenant. Doing this will let you work out what’s outstanding from your tenant, such as:

  • rent arrears owing to vacate date
  • outstanding water usage
  • cleaning costs (if the property was not left in a clean condition); or
  • Keys and security devices such as car park remotes and fobs
  • damage to the property and contents belonging to you (if applicable).

How to cost repairs

You can hold your tenant liable for any wilful or neglectful damage they cause during their tenancy. However, unless your tenant has caused total havoc on your fixtures or fittings, it can be tough to determine what amount to charge for damages to contents. If the damage can be reasonably repaired, only the repair costs can be charged.

If the damage is severe (i.e. carpet damage, which could require replacing), your tenant would be liable to pay for replacing the damaged carpet with one of similar quality to the original. However, if there is a dispute and the matter has to go to a tribunal for judgement, the tribunal members will take into consideration the age of the previous carpet to determine the depreciable value.

Helpful tool

You can download a mobile App to determine this value from our partner BMT & Associates to give you an estimation or guide to most common fixtures and fittings.

Return of the keys

At the end of the tenancy, your tenant is responsible for returning all sets of keys provided to them. If they don’t return the keys, you can hold them responsible for the cost of changing the locks or charge them rent until the keys are returned.

Keep everything civil

Where possible, make every effort to agree with your vacating tenant on deductions from the security bond. If you cannot come to an agreement, try to compromise. If this still doesn’t go to plan, the bond settlement will need to be resolved in your state tenancy tribunal. This is not always a favourable step as you then have less control over the decisions a tribunal member make and in the end depending on how good you or your property manager is at handling legal disputes like bond claims which can be complex, you may end up with nothing at all. 

It’s in times like these that an expert property manager pays dividends and are worth their weight in gold as they have probably been through these scenarios time and time again and understand the legal minefield that can be very challenging to handle. Contact Real Property Manager if you are looking for a property manager with experience.