Frequently Asked Questions About North Carolina's Security Deposit Law

Oftentimes, security deposits are a source of conflict between landlords and tenants in North Carolina. This conflict mainly arises from disagreements pertaining to the cost of deposit deductions when the tenant moves out.

The tenant may think that they returned the property in good condition, but the landlord may disagree.

To avoid these conflicts, understanding North Carolina’s Tenant Security Deposit Act is important. If you are a North Carolina landlord or tenant, the following guide should help you in this regard.

What happens to the security deposit when the property changes ownership?

If the landlord sells the property or transfers its ownership, they must do either of the following within 30 days.

  1. They must return all or part of the security deposit to the tenant. If there are deductions, they must prepare an itemized list. The list must state the reason for the deduction as well as state the cost of repairing it.
  2. The landlord must transfer all or part of the deposit to the new owner. If there are deductions, the landlord must also prepare an itemized list highlighting the deductions as well as their costs.

In addition, the outgoing landlord must also notify the tenant of doing so. This can be done with a Notice of Change of Ownership. The notice must also state the new owner’s name and address.

Is a walk-through inspection necessary in the state of North Carolina?

First things first – what is a walk-through inspection? A walk-through inspection is when both the landlord and the renter walk through the property to document the property’s condition.

During the walk-through, the landlord will take note of any property damage in excess of “normal wear and tear.” If any, the landlord will deduct the appropriate costs of fixing them from the renter’s security deposit.

But what exactly is property damage in excess of normal wear and tear? This is where the tenant causes property damage as a result of negligence or carelessness. The following are good examples of such damages.

  • Damaged disposal due to metal, glass, or stones being placed inside.
  • Broken refrigerator shelf or dented front panels.
  • A dryer that won’t turn at all because it’s been overloaded.
  • Mirrors caked with lipstick and makeup.
  • Missing or broken mini-blinds or curtain.
  • Missing or bent shower rod or plumbing fixtures.

However, when the damage occurs naturally due to aging, the landlord mustn’t make any deductions to the tenant’s deposit. Good examples of such property damage include:

  • Scratched or worn enamel in old bathtubs, sinks, or toilets.
  • Loose grouting and bathroom tiles.
  • Shower mold due to lack of proper ventilation.
  • Cracked window pane from a faulty foundation or building settling.
  • Warped cabinet doors that won’t close.
  • Doors sticking from humidity.

So, back to the question – is a walk-through inspection necessary? No, North Carolina landlord-tenant laws regarding security deposits do not make it obligatory.

Is a written notice required after collecting security deposit in North Carolina?

In North Carolina, security deposit laws require the landlord to notify the tenant upon receiving their deposit. In the notice, the landlord must also state the institution holding the deposit.

How can a landlord store a tenant’s security deposit in North Carolina?

A North Carolina landlord can keep the security deposit of a renter in two ways:

  1. Post a bond for the security deposit amount. An insurance company that has a business license in the state of North Carolina must issue the bond.
  2. Keep the security deposit in a trust account. The trust account must be in a licensed and insured bank or financial institution located in North Carolina.

In North Carolina, when should a landlord return a tenant’s security deposit?

The North Carolina rental laws state, that a landlord normally has 30 days to return the deposit to the tenant when they move out. They can do so either in person or by mail.

If the landlord makes deductions, then they must send a written itemized list alongside the remaining deposit.

If the landlord doesn’t have the renter’s forwarding address, then they must retain it until the renter provides it. Beyond 6 months, the tenant forfeits their right to the deposit.

Under NC security deposit laws, what are acceptable reasons to keep a tenant’s deposit?

North Carolina landlords can keep a tenant’s security deposit for any of the following reasons:

  • Court costs
  • Costs to remove and store renter’s possessions after an eviction
  • Costs of re-renting the unit
  • Breach of lease
  • Damage in excess of normal wear and tear
  • Unpaid utility bills

What is the security deposit limit in the state of North Carolina?

The security deposit limit depends on the lease’s length. For weekly tenancies, the deposit must not exceed the rent of 2 weeks.

For monthly leases, the deposit must not exceed the rent of 1 ½ month’s rent. For longer leases, the deposit must not exceed the rent of 2 months.

There you have it. An overview of North Carolina’s security deposit law. If you have any questions, please don’t hesitate to contact us!

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