Tenancy Agreement Sinking Fund
2022年3月10日
As a tenant, it’s important to understand all the terms and conditions present in your tenancy agreement. One of the clauses that often leave tenants confused is the sinking fund. Unlike the rent deposit, which is the amount you pay as a security deposit for the property, the sinking fund is set up to cover major repairs and maintenance for the property. Here is everything you need to know about the tenancy agreement sinking fund.
What is a sinking fund?
A sinking fund is a separate account maintained by the landlord or property manager for the purpose of covering major capital expenses for the property. These expenses may include repairs or replacements for major appliances, plumbing or electrical equipment, painting, or any other unforeseen costs that may arise during the tenancy. The sinking fund is typically funded by the tenants, with contributions calculated based on the rental amount.
How is the sinking fund calculated?
The amount of the sinking fund varies depending on the landlord or property manager. Some landlords may require a fixed amount to be paid monthly, while others may calculate the percentage of the monthly rental rate. The sinking fund is usually part of the monthly rental payment or paid as a separate amount in addition to the monthly rent. It’s important to clarify with the landlord or property manager how the sinking fund is calculated and how much is due.
How is the sinking fund used?
The sinking fund is used solely for the purpose of covering major repairs and maintenance for the property. Any costs incurred for this purpose are charged against the sinking fund account. The amount charged against the sinking fund is ultimately deducted from the total amount present in the account.
What happens to the sinking fund at the end of the tenancy?
At the end of the tenancy, the landlord or property manager is required to refund the sinking fund to the tenants. This is after any expenses incurred have been settled, and the property is in good condition. It’s important to document any payments made to the sinking fund and ensure that you receive a receipt of payment for every contribution made.
What happens if the sinking fund is depleted?
If the sinking fund is depleted, the landlord or property manager may require tenants to contribute an additional amount to replenish the fund. This may be done by increasing the sinking fund amount or by increasing the rental rate.
In conclusion, the sinking fund is an important aspect of the tenancy agreement that ensures that the property is maintained in good condition throughout the tenancy. As a tenant, it’s crucial to understand the terms and conditions for the sinking fund and what is expected of you. Don’t hesitate to seek clarification from your landlord or property manager if you have any questions.