The owner/agent is allowed to charge an Option Fee while they consider your Application for Tenancy . You are under no obligation to pay the fee but if you refuse, it may disadvantage your application.
If your application is successful, the owner/agent must deduct the money you paid from your first rent payment or return the money to you (s. 27(2)(a)). If you choose not to enter into a tenancy agreement, there is no rent payable so the owner/agent should refund the Option Fee. The Residential Tenancies Act (1987) only allows the owner/agent to apply the Option Fee to rent owing or refund it.
If you leave an option fee and your application isn't accepted the owner/agent must return your money (s.27). See section 2.6 The Application for Tenancy for more information.
If the owner/agent will not refund the Option Fee you may apply to the Local Court for an Order that it be returned. The application is made to the Small Disputes Division of the Local Court on a Form 12. See sections 3.8 When the Owner is in Breach of the Agreement and 6.2 Going to Court for more information.
A deposit or holding fee is not the same as an Option Fee. Do not leave a deposit until you have entered into a tenancy agreement. If you leave a holding fee it could be argued that you have already committed yourself to the tenancy and it is being held for you. The owner/agent can only ask for an Option Fee.
Make certain you know what you are paying and what will happen to the money if you decide not to move in. Always ask for a receipt for the money showing how much you paid and what it was for.
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