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A North Carolina security deposit is an amount paid by the tenant to
the landlord at the beginning of a lease to cover expenses
incurred by the landlord for which the tenant was
responsible, but did not pay. Security deposits are
governed by the 1977 Tenant Security Deposit Act (N.C.
Gen. Stat. §§ 42-50 to 56). Under this Act, if the lease
is month-to-month, the security deposit cannot exceed one
and one half months' rent, and if the lease is longer than
month-to-month, the security deposit is limited to two
months' rent. (If the lease is week-to-week, the security
deposit is limited to two weeks' rent.)
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Landlord's Obligations During the Lease:
The Act
forbids the landlord from depositing the security deposit
in his personal bank account. The landlord must establish
a separate trust account in a North Carolina bank, and
must inform the tenant of the name and address of that
bank within thirty days of the beginning of the lease. In
lieu of opening a trust account, the landlord may purchase
a security deposit bond from a North Carolina insurance
company. These requirements are designed to make it easier
for the tenant to recover her security deposit at the end
of the lease.
Landlord's Obligations at the End of the Lease:
The landlord can retain part or all of the security
deposit to cover only the following costs: (1) the
tenant's failure to pay rent; (2) damage to the premises;
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(3) expenses related to the tenant's moving out before
lease expires; (4) unpaid bills of the tenant which become
a lien against the premises; (5) costs of re-renting the
premises after a breach of the lease by the tenant; (6)
costs of removing and storing the tenant's property after
eviction; and (7) court costs in connection with
terminating a tenancy.
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RETURN OF DEPOSIT: The landlord must return the deposit within thirty days
of the end of the lease. If the landlord keep any portion
of the security deposit, for any of the reasons given
above, the landlord must explain the charges to the tenant
in writing. This is referred to as an accounting.
The landlord can only keep enough of the security
deposit to cover his actual costs of repairs, unpaid
bills, etc. For example, if the tenant paid a $600
deposit, and the landlord then paid a repair service $100
to replace a window that the tenant had broken and did not
repair before moving out, the landlord can charge no more
than $100 for that item on the accounting. If that is the
only charge against the security deposit, the landlord
must return $500. Any clause in the lease that gives the
landlord the power to withhold more than her actual costs
-- commonly called forfeiture clauses -- is not
enforceable. Conversely, if the actual costs incurred by
the landlord exceed the amount of the security deposit,
the landlord can keep the entire deposit and sue the
tenant for the difference.
Normal Wear and Tear and Damage:
The landlord
can use the security deposit to repair damage for which
the tenant is responsible. But the landlord cannot apply
the security deposit to normal wear and
tear. The question
is: What's the difference?
Normal wear and tear includes deterioration of the
premises that occurs under normal use conditions. For
example, paint may fade, electrical switches may wear out
and break, pull strings on curtains may fray and snap, and
carpet may wear down. These things happen even if the
tenant cleans regularly and cares for the premises
reasonably. Damage occurs from unreasonable use or
accidents, and includes extreme build up of dirt, mold,
etc., stains on carpets, and broken windows. Even planned
alterations to the premises are considered damage. For
example, the tenant cannot leave large holes in the walls
from shelving, and cannot repaint the walls to
significantly change the color. If the tenant wishes to
make changes to the premises that will remain after the
tenant moves out, the tenant should secure that landlord's
written permission.
The tenant can take steps to avoid disputes over
damage. At the beginning of the lease term, the tenant
should inspect the premises thoroughly and note all
problems in writing. The tenant should sign and date the
list and also have the landlord sign the list. At the end
of the lease, the tenant should again inspect the premises
with the landlord present, discuss any damage with the
landlord, and against prepare a list. See
Rentlaw.com for their Normal Wear and Tear Guide
Small
Claims Court:
If the tenant believes that the
landlord has unlawfully withheld an excessive amount of
the security deposit, and the parties cannot resolve the
dispute between themselves, small claims court is an
option. If the landlord deliberately withheld more than
his lawful share of the security deposit, or deliberately
withheld the deposit past the thirty-day period, the court
may award the tenant the cost of her attorney's fees, in
addition to any other damages.
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