Oftentimes, security deposits are a source of conflict between landlords and tenants. This conflict mainly arises from disagreements pertaining to the cost of deposit deductions when the tenant moves out from the rental properties.
Tenants may think that they returned the property in good condition, but landlords may disagree.
To avoid these conflicts, understanding North Carolina’s Tenant Security Deposit Act is important. If you are a 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 premises within 30 days.
- They must return all or part of the security deposit to the tenant. If there are deductions to the security deposits, they must prepare an itemized list. The list must state the reason for the deduction as well as state the money used for repairing it.
- Landlords 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 from the security deposit amount 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 you and the tenant walk through the property to document the property’s condition.
During the walk-through, landlords will take note of any property damage in excess of “normal wear and tear.” If any, the landlord will deduct the appropriate costs associated with making repairs 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, landlords mustn’t make any deductions to renters security deposits. 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, it is stated in the rental agreement that 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?
North Carolina landlords can keep the security deposits of tenants in two ways:
- Post a bond for the deposits amount. An insurance company that has a business license in the state of North Carolina must issue the bond.
- 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 deposits to the tenants 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 under the security deposit laws.
If the landlord doesn’t have the renter’s forwarding address, then they must retain it until the renter provides it. If the landlord fails to contact the tenant beyond 6 months, the tenant forfeits their right to the deposit.
Under North Carolina 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
- Lack of monthly rental payment or pet deposits
- Costs to remove and store renter’s possessions after an eviction
- Costs of re-renting the unit
- Breach of lease
- Excessive property damage as well as normal wear and tear during rental period
- Unpaid utility bills
What is the security deposit limit in the state of North Carolina?
The deposit limit in North Carolina depends on the lease’s length. For a weekly lease agreement, 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 it must not exceed the rent of 2 months.
There you have it. An overview of the security deposit state law. If you have any questions, please don’t hesitate to contact us!