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North Carolina Security Deposit Law

Learn the Security Deposit Limits and Regulations in North Carolina

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The state of North Carolina has certain laws that landlords must follow regarding the security deposit. Failure to follow the correct procedures can impact your ability to lawfully keep a tenant’s security deposit. In addition to this statewide law, you should always check with your local city or county to determine if there are additional laws that may apply.

Is There a Security Deposit Limit in North Carolina?

Yes, but the maximum amount you can charge as a security deposit depends on the length of tenancy.

  • For Week to Week Tenants: The maximum amount you can charge is two weeks’ rent.

  • For Month to Month Tenants: The maximum amount you can charge is one and a half month’s rent.

  • For Anything Longer than Month to Month Tenants: The maximum amount you can charge is two months’ rent.

  • Pet Deposit: Landlords in North Carolina who have pet friendly properties can also charge tenant’s a “reasonable, nonrefundable” pet deposit.

    How Must You Store the Security Deposit in North Carolina?

    In the state of North Carolina, a landlord has two options for storing a tenant’s security deposit:

    1. Trust Account- The account must be in a licensed and insured bank or financial institution which is located in North Carolina.

    2. Bond- A landlord can elect to post a bond for the amount of the security deposit. The bond must be issued by an insurance company which has a business license in North Carolina. If the landlord posts a bond for the amount of the security deposit in the state of North Carolina, they are then free to keep the security deposits in a trust account outside of the state if they so choose.

    Is Written Notice Required After Receipt of the Security Deposit in North Carolina?

    Yes, within 30 days of receiving the security deposit, the landlord must notify the tenant of the name and address of the bank or financial institution where the deposit is being held or the insurance company that posted the bond.

    What Are Some Reasons You Can Keep a Tenant’s Security Deposit in North Carolina?

    In the state of North Caroline, landlords may be able to keep all or a portion of a tenant’s security deposit for the following reasons:

    • Unpaid rent
    • Unpaid utility bills
    • Damage in excess of normal wear and tear
    • Breach of lease
    • Costs of re-renting the unit
    • Costs to remove and store tenant’s possessions after an eviction
    • Court costs
    • Any additional unpaid bills the tenant has accumulated during their tenancy that could cause a lien to be placed against the property.

    Is a Walk Through Inspection Required in North Carolina?

    No, a walk through inspection is not required in the state of North Carolina.

    When Must You Return a Tenant’s Security Deposit in North Carolina?

    A landlord in North Carolina normally has 30 days after tenant move-out to return a tenant’s security deposit, with one exception by mail or in person. If the landlord is not able to accurately calculate the charges within the 30 day window, the landlord has 60 days to return the deposit or the balance of the deposit to the tenant. Even if the landlord does have 60 days to return the deposit, the landlord must still provide the tenant with an estimate of charges within 30 days of tenant move-out.

    Along with the balance of the security deposit, the landlord must also provide an itemized list of damages or deductions. A tenant can file suit against a landlord if the landlord has not followed the proper procedures as spelled out in North Carolina's Tenant Security Deposit Act.

    If the tenant has not provided the landlord with a forwarding address, the landlord is allowed to make their legal deductions from the security deposit after 30 days and must retain the remaining portion of the deposit for six months for the tenant to collect.

    What Happens to the Security Deposit If You Sell Your Property?

    If you sell your rental property or ownership is otherwise transferred, you must do one of the following within 30 days:

    1. Transfer the security deposit, less any lawful deductions, to the new owner. You must also notify the tenant in writing by mail of the transfer along with the name and address of the new owner.

    2. Return the security deposit, less any lawful deductions, to the tenant.

    What is North Carolina's Security Deposit Law?

    For the original text governing security deposits in the state of North Carolina, please refer to North Carolina General Statutes §§ 42-50.to 42-56. otherwise known as the Tenant Security Deposit Act.
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