Investing in property is a great way to build wealth over time, but it’s not risk-free.
One way for landlords to protect their property is by leveraging a detailed entry condition report prepared by property managers at the start of each tenancy. This important document sets the baseline for the property’s condition before the tenant moves in so they can avoid costly disputes later on.
However, while the report is assumed to mostly be beneficial for the property owner to have, it can also provide protection for tenants.
What is an Entry Condition Report?
It’s a visual inspection of the property conducted by the landlord or property manager that documents the condition of the premises at the start of a residential tenancy agreement. Condition reports are important, as they serve as evidence in disputes over bond claims, cleaning, or property damage.
Tenants typically have 5 to 7 business days from the move-in date to complete and return the report, ensuring the property’s condition is accurately documented at the beginning of the tenancy. The report includes detailed comments and photos of each room and item, from walls and floors to appliances and outdoor areas.
How An Entry Condition Report Benefits Property Owners
A thorough entry condition report provides several key benefits for landlords:
- Protects your investment: By documenting the condition of the property prior to the start of the tenancy, property owners have clear evidence if any damage occurs during the lease period. This helps landlords recoup costs from the tenant’s bond or through insurance claims.
- Reduces disputes: With a detailed record of the property’s condition upon the tenant moving in agreed upon by both parties, there is little room for argument about whether the damage is pre-existing or caused by the tenant. This saves the landlord time and legal expenses.
- Assists with insurance claims: If landlords need to make an insurance claim for tenant damage, the entry condition report serves as evidence of the property’s original condition. Many insurers require this documentation.
- Streamlines bond refunds: When tenants vacate the property, landlords can compare its condition to the entry report. If no damage has occurred, they can refund the bond promptly, reducing disputes.
In Australia, the entry condition report is mandatory for all rental properties. According to the Residential Tenancies Act, the landlord or property manager must complete the report and give it to the tenant to review and sign.
Both parties must keep the signed and completed report throughout the rental agreement. Not following this process can put landlords at risk.
How An Entry Condition Report Benefits Tenants
While entry condition reports are crucial for protecting a property owner’s investment, they also provide important benefits and protections for tenants, such as:
- Documentation for pre-existing damage: The report notes any damage present before move-in, so the tenant isn’t held responsible for issues they didn’t cause.
- Support for bond refund claims: A detailed entry condition report helps tenants get their full bond back by proving they returned the property in the same condition as when they moved in, minus normal wear and tear.
- Avoiding unfair damage claims: Without a thorough report, landlords could try to claim the tenant caused damage that was actually pre-existing. The entry condition report protects tenants from false accusations.
- Peace of mind: Knowing the property’s exact move-in condition as documented in the report gives tenants confidence and security throughout the tenancy.
Avoid Denied Insurance Claims With an Entry Condition Report
Consider a situation wherein a tenant moves into a rental property two weeks ago, but the property manager has not yet provided them with an entry condition report to document the property’s state at move-in.
During the tenancy, damage occurs to the property. When the tenant moves out, determining liability for these damages may become problematic. In the absence of a completed entry condition report, disputes over property damage can become a matter of conflicting accounts without clear evidence to support either party’s claims.
This could go to a tribunal, where, without any evidence from an entry condition report, it can be difficult to determine the liability. For this scenario, landlord insurance may not cover the damages without an entry condition report to provide the property’s condition at the start of the lease.
Without an entry condition report, landlords may struggle to prove to the insurer that the damage did not exist before the tenant moved in. This lack of baseline documentation can lead to denied or delayed insurance claims, as the insurer may not have sufficient evidence to determine when the damage occurred.
To avoid these complications, property managers need to complete the entry condition report as soon as possible and get it signed by the tenant at the very beginning of the lease. This sets a clear agreement on the property’s condition from day one.
Most insurance companies prefer an entry condition report to be in place to make the claims process smoother if needed.
What is Included in an Entry Condition Report?
So, what should be included in a detailed entry condition report? The report should cover everything about the property, including:
- Interior: doors, walls, ceilings, windows, blinds, curtains, light fittings, power points
- Flooring: carpets, floorboards, tiles, skirting boards
- Kitchen: benchtops, cupboards, drawers, oven, stovetop, rangehood, sink, dishwasher
- Bathroom: bathtub, shower, vanity, basin, mirrors, exhaust fan, towel rails
- Laundry: washing machine taps, dryer, laundry tub
- Outdoor areas: fences, deck, patio, garage, garden beds
You should also add your own comments about the property’s condition and have the option to attach a separate page for additional notes if needed.
When documenting the condition of each item, be specific. Instead of just noting “working” or “undamaged”, include details like “small scuff mark on bedroom door” or “cracked tile near kitchen sink”. The more details, the better – you’ll be protected if issues arise.
The Entry Condition Report Process
The entry condition report process are as follows:
- The landlord/property manager conducts a detailed inspection and completes the report, including photos.
- The tenant is given the report to review, add comments, sign and return within the required timeframe (usually 3 business days).
- The landlord/property manager reviews the tenant’s comments and meets with them to resolve any disputes.
- The tenant should be allowed to participate in the inspection to ensure fairness and accuracy in recording the property’s condition.
- Both parties sign the final report, and the copies are given to the landlord/property manager and tenant.
Completing a proper entry condition report may seem like a hassle, but it is one of the most important things you can do to protect your investment property. However, it can be a complex and time-consuming process, which is where an experienced property manager can help.
The Benefits of a Good Property Manager
A good property manager will take a thorough and systematic approach to the entry condition inspection. With a keen eye for detail, they’ll know what to look for and document. They’ll also handle the back-and-forth with the tenant professionally, working to resolve any disputes and reach an agreement on the final report.
The rental provider responsible for maintaining the property must ensure that tasks such as completing and returning condition reports, safety checks, and recording repairs are diligently performed.
Importantly, the property manager will store the entry condition report securely and refer it back to it during routine inspections throughout the tenancy. This allows them to quickly identify any new damage and take action to fix it, protecting the landlord’s investment.
Key Takeaways
The entry condition report is an essential tool for any smart investor. It’s the basis for a successful tenancy that protects your assets. By documenting the property’s condition at the start of each tenancy, you’ll save yourself from disputes and damage down the track.
- The entry condition report sets the baseline for your investment property at the start of the tenancy.
- The report includes detailed descriptions and photos of every area of the property, inside and out, to document the property’s condition thoroughly.
- The report helps prevent disputes by showing what damage has occurred during the tenancy.
- An entry condition report can also benefit tenants by letting them avoid unfair damage claims.
- Landlords must complete an entry condition report for all tenancies.
- A good property manager will ensure the report is thorough and the process is followed.
- The entry condition report is the foundation for a landlord’s investment property and is crucial for complying with rental agreements.
Frequently Asked Questions
Is an entry condition report a legal requirement in Australia?
Yes, it’s a requirement under each state’s Residential Tenancies Act. The landlord or property manager must complete the report and give it to the tenant to sign and return. Both parties must keep a copy.
What if the tenant disagrees with the entry condition report?
The tenant can add comments to the report and return a signed copy to the landlord/property manager. Then, the landlord/property manager must meet with the tenant to view the property together and settle any disputes before finalising the report.
Who does the entry condition inspection?
The landlord or property manager must inspect the property thoroughly and document its condition in the entry condition report. They must give the tenant a copy to sign.
How long does the tenant have to review and return the entry condition report?
Timeframes vary slightly between states, but the tenant usually has 3 business days from receiving the report to review it, add comments, sign and return a copy to the landlord/property manager.
What if the tenant damages my property during the tenancy?
This is where the entry condition report comes in handy. You can refer to the report to prove the condition of the items at the start of the tenancy and use this to claim against the tenant’s bond for the cost of repairs.