North Carolina Security Deposit Act
Chapter 42, Article 6 is known collectively as the North Carolina Security Deposit Act.
Below, you will find a breakdown of the the North Carolina Security Deposit Act, which is contained in North Carolina General Statute § 42-50 thru § 42-56.
If, you would like a plain language interpretation of the North Carolina Security Deposit Act, you can read our blog on How to Handle Security Deposits at the link below, or at the end of this article.
North Carolina Security Deposit Act
North Carolina General Statute § 42-51: Permitted Uses of the Security Deposit Under the North Carolina Security Deposit Act
(a) Security deposits for residential dwelling units shall be permitted only for the
following:
(1) The tenant’s possible nonpayment of rent and costs for water or sewer services
provided pursuant to G.S. 62-110(g) and electric service pursuant to G.S.
62-110(h).
(2) Damage to the premises, including damage to or destruction of smoke alarms
or carbon monoxide alarms.
(3) Damages as the result of the nonfulfillment of the rental period, except where
the tenant terminated the rental agreement under G.S. 42-45, G.S. 42-45.1, or
because the tenant was forced to leave the property because of the landlord’s
violation of Article 2A of Chapter 42 of the General Statutes or was constructively evicted by the landlord’s violation of G.S. 42-42(a).
(4) Any unpaid bills that become a lien against the demised property due to the tenant’s occupancy.
(5) The costs of re-renting the premises after breach by the tenant, including any reasonable fees or commissions paid by the landlord to a licensed real estate broker to re-rent the premises.
(6) The costs of removal and storage of the tenant’s property after a summary ejectment proceeding.
(7) Court costs.
(8) Any fee permitted by G.S. 42-46.
(b) The security deposit shall not exceed an amount equal to two weeks’ rent if a tenancy is week to week, one and one-half months’ rent if a tenancy is month to month, and two months’ rent for terms greater than month to month.
North Carolina General Statute § 42-52: Landlord’s Obligations
Upon termination of the tenancy, money held by the landlord as security may be applied as permitted in G.S. 42-51 or, if not so applied, shall be refunded to the tenant.
In either case the NC General Statutes – Chapter 42 Article 6 2 landlord in writing shall itemize any damage and mail or deliver same to the tenant, together with the balance of the security deposit, no later than 30 days after termination of the tenancy and delivery of possession of the premises to the landlord.
If the extent of the landlord’s claim against the security deposit cannot be determined within 30 days, the landlord shall provide the tenant with an interim accounting no later than 30 days after termination of the tenancy and delivery of possession of the premises to the landlord and shall provide a final accounting within 60 days after termination of the tenancy and delivery of possession of the premises to the landlord.
If the tenant’s address is unknown the landlord shall apply the deposit as permitted in G.S. 42-51 after a period of 30 days and the landlord shall hold the balance of the deposit for collection by the tenant for at least six months. The landlord may not withhold as damages part of the security deposit for conditions that are due to normal wear and tear nor may the landlord retain an amount from the security deposit which exceeds his actual damages. (1977, c. 914, s. 1; 2009-279, s. 5.).
North Carolina General Statute § 42-53: Pet Deposits Under the North Carolina Security Deposit Act
Notwithstanding the provisions of this section, the landlord may charge a reasonable, nonrefundable fee for pets kept by the tenant on the premises.
North Carolina General Statute § 42-54. Transfer of Dwelling Units Under the Security Deposit Act
Upon termination of the landlord’s interest in the dwelling unit in question, whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or his agent shall, within 30 days, do one of the following acts, either of which shall relieve him of further liability with respect to such payment or deposit:
(1) Transfer the portion of such payment or deposit remaining after any lawful deductions made under this section to the landlord’s successor in interest and thereafter notify the tenant by mail of such transfer and of the transferee’s name and address; or
(2) Return the portion of such payment or deposit remaining after any lawful deductions made under this section to the tenant. (1977, c. 914, s. 1.)
North Carolina General Statute § 42-55. Remedies.
If the landlord or the landlord’s successor in interest fails to account for and refund the balance of the tenant’s security deposit as required by this Article, the tenant may institute a civil action to require the accounting of and the recovery of the balance of the deposit. The willful failure of a landlord to comply with the deposit, bond, or notice requirements of this Article shall void the landlord’s right to retain any portion of the tenant’s security deposit as otherwise permitted under G.S. 42-51. In addition to other remedies at law and equity, the tenant may recover damages resulting from noncompliance by the landlord; and upon a finding by the court that the party against whom judgment is rendered was in willful noncompliance with this Article, such willful noncompliance is against the public policy of this State and the court may award attorney’s fees to be taxed as part of the costs of court. (1977, c. 914, s. 1; 2009-279, s. 6.)
§ 42-56. Application of the North Carolina Security Deposit Act.
The provisions of the North Carolina Security Deposit Act shall apply to all persons, firms, or corporations engaged in the business of renting or managing residential dwelling units, excluding single rooms, on a weekly, monthly or annual basis. (1977, c. 914, s. 2.)