The North Carolina Tenant Security Deposit Act sets out rights and responsibilities of tenants, landlord, and their agents regarding tenant security deposits. The Act applies to all persons or firms that rent residential properties whether on a weekly, monthly, or annual basis. The Act does not require landlords (or agents) to collect deposits, but they usually do in order to assure that they will be reimbursed for losses caused by tenants.
Q. How much security deposit can a landlord charge?
A. If you are renting on a month-to-month basis, your deposit cannot be more than 1 ½ months’ rent. If your rental period is greater than month-to-month, your deposit cannot be more than 2 months’ rent.
Q. Can my landlord charge me a pet fee?
A. Yes. In addition to the security deposit, your landlord may also charge you a non-refundable fee if you plan to keep a pet in his property or on the grounds. The “pet fee” can be any “reasonable” amount that the landlord wishes to charge. If your pet damages the property, the landlord may keep the amount of the pet fee and security deposit necessary to repair the damage.
Q. What happens to my security deposit while I’m a tenant?
A. To assure that your deposit is safe during your tenancy; State law requires that it be kept in a “trust account.” A trust account is simply a bank account that does not contain any of the landlord’s personal funds. The trust account must be maintained in a licensed and insured NC bank or savings and loan institution. Within 30 days following the beginning of your lease term, the landlord or his agent must notify you in writing where your deposit has been placed. Typically, this notification is given in the lease.
Q. Can my security deposit be placed in an interest-bearing account?
A. Yes. If a real estate agent is managing property for the owner, he may place your deposit in an interest-bearing account if he has your written permission and the written permission of the owner. If your lease authorizes the agent to put your deposit in an interest-bearing account, it must be stated in a clear manner. The interest may be paid to you, to the landlord, or to the agent, depending on your agreement with the landlord.
Q. What will happen to my deposit if I vacate the property before my lease ends?
A. Security deposit may not be used as last month’s rent! In addition to any physical damage you may have caused to the property, the landlord may also deduct from your deposit his actual damages caused by your moving out of his property before the end of your lease term. However, he may not charge you a “termination fee” or impose any other penalty or forfeiture of deposit for your early termination. For example, your rent is $600 and you move out 2 months before the end of your lease. If it takes the landlord 1 month to re-rent the property, he may deduct $600 from your deposit as lost rent for the period during which his property was vacant.
Q. What will happen to my security deposit at the end of my lease term?
A. If you stay for the entire lease term and you have paid all rent due, the landlord (or agent) may deduct from your deposit only the actual cost of repairing any damage that you have done to the property. He cannot charge you for damage caused by ordinary wear-and-tear. What constitutes “ordinary wear-and-tear” must be determined on a case-by-case basis. The landlord cannot charge you to replace such items as carpet, plumbing and appliances which need replacement because they are old and worn out. On the other hand, if you caused the item to wear out because of your mistreatment, you may be charged for the amount of “unusual wear” which you caused (but not the entire cost of replacement). Ordinarily, costs for routine cleaning and maintenance (painting, carpet cleaning, etc.) may not be deducted from your deposit. However, if you leave the property so filthy that unusual measures are necessary to clean or restore the premises, the landlord may deduct from your deposit the cost of such cleaning or repairs.
Q. What will happen to my security deposit if I am unable to pay rent?
A. If you fail to fulfill your obligations under the lease (including your obligation to pay rent), the landlord may evict you from the property. In addition to having you removed from the property, the landlord may recover from you any unpaid rent and the cost of repairing any physical damage you may have caused to the property beyond normal wear-and-tear. If your deposit will not cover the damages and unpaid rent, you will be liable for any remaining costs.
Q. Is there a deadline by which the landlord must return my security deposit?
A. Within 30 days after the termination of your tenancy, the landlord must either send a full refund of your deposit, or, if the deposit is not to be refunded in full, itemize in writing any allowable deductions. So, it is important to give your landlord your forwarding address. If the landlord cannot locate you, he must hold in his trust account for at least 6 months any amount of your deposit after the proper damages have been deducted.
Q. What will happen to my security deposit if the ownership or management of the property is transferred to someone else?
A. If the landlord who collected your deposit transfers ownership of the property during the term of your lease, he must either refund your deposit to you (after making any allowable deductions) or transfer your deposit to the new owner and notify you in writing of the new owner’s name and address. Likewise, if you have paid your deposit to the landlord’s agent and the management is transferred to another agent, the previous agent must transfer your deposit either to the property owner or to the new agent.