When it comes to the security deposit, North Carolina landlords must strictly adhere to the tenants security deposit laws. North Carolina security deposit laws stipulate how landlords should handle a tenant’s security deposit.
If a security deposit is handled incorrectly, North Carolina landlords may forfeit their right to keep the tenants deposit, even if it is for unpaid bills or rental payment. If you are a North Carolina landlord, here are the basics of the North Carolina security deposit laws you need to know about.
According to North Carolina's security deposit laws, a North Carolina landlord is permitted to keep a tenants North Carolina security deposit for any of the following reasons:
Importantly, the damages to the North Carolina premises made by tenants must be considered excessive in order to make deductions from the security deposit a tenant paid per North Carolina laws. These damages from tenants are beyond “normal wear and tear”. The following table summarizes the difference between excessive damage by a tenant and damage due to “normal wear and tear” during a tenants' time living on your property per North Carolina laws.
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Damage due to normal wear and tear: |
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Under North Carolina rental law , landlords are limited to the amount they can make a tenant pay for North Carolina security deposits. For a month-to-month tenancy, North Carolina landlords can ask a tenant for the equivalent of one and one half months rent as a security deposit in North Carolina.
According to the North Carolina security deposit laws, for a tenancy longer than two months, a North Carolina landlord can make a tenant pay the equivalent of two months’ rent as a security deposit. Furthermore, if needed, North Carolina landlords can also ask for non-refundable pet deposits from their tenants. The amount a landlord charges their tenant should be reasonable.
According to North Carolina security deposit laws, after receiving their security deposit, a landlord has 30 days to notify the tenant that they received the security deposit from the tenant. Per North Carolina security deposit law, a landlord must indicate in the notice where they have stored the tenant's deposit.
According to the North Carolina law, a landlord has two options when it comes to storing a tenant’s security deposit. Under the law, one way of storing security deposits is through a bond. The insurance company storing the security deposits as a bond must have a business license in the state.
Another way of storing security deposits for landlords in North Carolina is through a trust account. Similarly, according to the North Carolina law, landlord should ensure that the financial institution with the trust account must be located in North Carolina. The financial institution chosen by the landlords must be insured by an insurance company and licensed.
A walk-through inspection helps document excessive property damage to your rental property. If there are any, a landlord has a right to make appropriate security deposit deductions. In North Carolina, a walk-through inspection by the landlord is not necessary.
In North Carolina, after the lease expires, landlords have 30 days to return the tenant’s security deposit. If landlords miscalculate the deductions, North Carolina’s landlord tenant law gives them an additional 30 days to return security deposits.
Even with the additional 30 days, landlords are still required to immediately give the tenants an itemized list of the security deposits' deductions after they move out under the North Carolina security deposit laws.
Security deposits oftentimes are a source of conflict between landlords and tenants. Under Noth Carolina Law a tenant may sue even the most meticulous landlord over the return of their security deposit.
However, if possible, it’s best to do it together with the tenant. This may help prevent a lot of confusion. The tenants may assume they left the premises in excellent condition, but you may disagree.
Ideally, lanlords should have a move-in checklist to reference. The checklist will help you check for any damages resulting from the tenant’s carelessness of negligence that will affect deposit returns.
Importantly, deductions to the North Carolina renter’s security deposit amount can only be made if the damage is beyond normal wear and tear. For others, they are just for general upkeep.
The list should also contain the costs needed to repair the damage. For example, missing door handles – $150. If a landlord has already done the repair work, they should make sure to attach the receipts to the deposit deduction document.
If not satisfied with the deductions from the tenant's deposit made for back rent or repairs, a tenant may sue you in a small claims court. In North Carolina, the amounts sought shouldn’t exceed $5,000.
This generally results when a landlord fails to return the deposit on time. In such a case, if the renter sues and is successful, you may incur hefty penalties. Aside from settling the renter’s court costs, you may be forced to return the full security deposit to them.
When the tenant's property changes hands, landlords must do either of the following with the deposit within thirty days:
With these tips, you will now be able to minimize tenant issues arising from security deposits. If you have more questions, about these security deposit laws, your property, or your rental agreement, consider hiring the services of a competent North Carolina attorney.
