{"id":210991,"date":"2021-10-13T14:06:49","date_gmt":"2021-10-13T01:06:49","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=210991"},"modified":"2021-10-13T16:43:49","modified_gmt":"2021-10-13T03:43:49","slug":"nz-bonds-bank-guarantees","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/property-and-leasing\/nz-bonds-bank-guarantees\/","title":{"rendered":"What Is the Difference Between Bonds and Bank Guarantees in NZ?"},"content":{"rendered":"

Are you a small business that is looking to enter into a commercial or retail lease? If so, you will likely need either a bond or bank guarantee. These are both financial safety nets for landlords. Specifically, they guarantee a landlord\u2019s rental income if a tenant cannot pay their rent. However, bonds and bank guarantees have differences that might make one more attractive for landlords or tenants. This article will explain what those differences are.<\/span><\/p>\n

What Is a Bond?<\/span><\/h2>\n

A bond is a sum of money that a tenant must pay before entering into a lease agreement<\/a>. Tenancy Services in New Zealand usually holds the bond to prevent the landlord from using this money fraudulently. The bond, calculated by a certain number of weeks’ rent, functions as a safety net for the landlord. For instance, a tenant may not pay their rent or damage the rental property. A landlord may then have the right to claim money from the bond to cover their costs. Specifically, a landlord can make a claim through an application with Tenancy Services at the end of the lease. If Tenancy Services approves their application, they will grant either part or the whole of the bond back to the landlord. Additionally, the tenant will receive any remaining funds from the bond at the end of the tenancy. Therefore, bonds encourage you to comply with your lease\u2019s obligations<\/a>. They also protect your landlord from financial loss if you do not meet those obligations.<\/span><\/p>\n

What Is a Bank Guarantee?<\/span><\/h2>\n

A bank guarantee is another type of security that ensures you meet the rental obligations you undertake. As the name suggests, your bank can offer a guarantee to the landlord. A bank guarantee is a form of third party security. It allows landlords to draw funds from your bank if you do not meet your lease agreement obligations. Most commonly, landlords use bank guarantees when tenants do not pay their rent or damage the property. <\/span><\/p>\n

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A landlord can call upon bank guarantees at any time. They also do not need to advise you before calling upon a bank guarantee.\u00a0<\/span><\/p>\n<\/div>\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

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