One of the most common questions our attorneys at Hopler, Wilms, and Hanna, PLLC receives from landlord’s is “how can I utilize the security deposit when there is damage or otherwise to my property?”
North Carolina has a very specific set of rules regarding security deposits laid out in the Tenant Security Deposit Act (North Carolina General Statute 42-50 through 42-56). After the lease agreement with your tenant has expired, you must return the deposit within thirty days. If the landlord intends to keep any portion of the security deposit the landlord must account for the unreturned portion within thirty days of the tenant vacating the property. Landlords may only keep portions of the security deposit necessary to cover any actual allowable costs.
There are certain appropriate uses for the security deposit outlined in the Tenant Security Deposit Act:
(1) Nonpayment of rent or costs for utilities on the premises;
(2) Damage to the premises;
(3) Damages as a result of nonfulfillment of the rental period;
(4) Unpaid bills that have become a lien on the premises;
(5) Costs of re-renting the premises after a breach by the tenant;
(6) Costs of removal and storage of tenant’s property after summary ejectment;
(7) Court costs; and
(8) Late fees (to the extent permitted by law).
One of the most important things to remember is that as a landlord you cannot keep portions or all of the security deposit just to cover normal wear and tear on the property. Sometimes determining what normal wear and tear is may be complicated, but substantial damages to the property would be items in which you could consider damage to the premises.
Our attorneys suggest that immediately upon inspecting the premises once your tenant has vacated you take photographs of the property and any damage that may have occurred. Once this has happened, compiling an accounting of the damages along with estimates for repair is important. This information must be shared with your former tenant in order to comply with the Tenant Security Deposit Act.
Our attorneys here at Hopler, Wilms, and Hanna, PLLC will be able to assist you in determining whether there is damage to your property that is substantial enough to warrant retaining a portion of the security deposit.
We can also assess other issues you may have had with your tenant to determine any other appropriate uses of the security deposit. Tenants often are eager to have their security deposits returned so it is imperative that you consult with an attorney to understand the steps that need to be taken before proceeding with keeping or returning the tenants deposit.
