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How important is a Condition Report

Posted on 10 March 2016

When a tenant moves into your investment property they are given an Entry Condition Report by the property manager. This is the master document that outlines exactly the state your property is in when the tenant takes over the lease. It is a requirement under legislation.

The property manager usually completes this form, often with the landlord, signs it and gives it to the tenant to fill out. The tenant has three days to check everything on the form is acceptable to them, or make enquiries if they do not agree, and to return the form. If they do not complete it, it is taken as acceptance of the report in its entirety.

From this point onwards, the condition report is one of the most important documents for a landlord. Some will include photographs, video footage and specific details about what is on the premises.

Here are the reasons why a condition report is a critical part of the property management process:

It is a checklist at inspections

  • The condition report becomes the master sheet for the property manager to check upon a tenant's leaving the home. It determines what is and isn't in the correct condition.
  • It also allows for fairness with a tenant as it indicates any damage that already existed in a property and helps resolve disputes upfront. This check-list can be used for property managers to cross reference things they see at the property during general inspections that they weren't sure existed initially and to take appropriate action. A tenant can also use a copy of the entry report to make sure they are leaving the property in the correct manner.
  • A tenant can also use a copy of the entry report to make sure they are leaving the property in the correct manner.

It is a critical tool for efficiently returning the bond

  • At the end of a tenancy, all renters want their bond back as quickly as possible. To facilitate an efficient process in checking the premises and returning the funds, the condition report allows the property manager to thoroughly and efficiently check the premises, without any surprises appearing later on.
  • Even a walk-through without an appropriate checklist can miss crucial details that will matter to a landlord, such as plug sockets and light fittings. This is especially critical in furnished rentals, where each item needs to be accounted for to allow a bond to be returned.
  • The condition report doesn't just cover off on damages, it also considers what is clean and functioning, which helps determine whether different areas of the home reasonably need to be professionally cleaned.

It can be used as evidence

  • If a dispute does arise between the tenant and landlord, particularly surrounding the bond, the condition report is a powerful piece of evidence for proving the truth of the situation. In these instances, visual imagery of the property can be powerful for proving what occurred be sure to have footage and photographs time stamped.
  • A condition report that shows damage did not exist when a tenant commenced a lease agreement, but exists when they vacated, clearly indicates that the issue took place during their tenancy. The condition report allows a landlord to ensure their property will be returned to the state it was in prior to the tenancy.
  • Tenants can also use the condition report to prove when aspects of the home have not been adequately maintained and to argue for compensation.
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