Basics of North Carolina's Security Deposit Law

Property in North Carolina
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The state of North Carolina has basic laws landlords must follow when it comes to security deposits. Violations can result in forfeiture of security deposits. As is the case in most states, a security deposit is a sum of money that belongs to a tenant but may be held in trust by a landlord to cover expenses incurred by a tenant that go beyond normal wear and tear.

It's common for tenants an landlords to perform walk-through inspections when tenants move in and when they move out, but these are not required in the state of North Carolina.

Security Deposit Limits

The maximum amount a landlord can charge as a security deposit in North Carolina depends on the length of the lease in question:

  • Week-to-week lease: Two weeks’ rent.
  • Month-to-month lease: One and one-half months' rent.
  • Leases longer than month-to-month: Two months’ rent.
  • Pet deposits: This standard is less specific and defined as a “reasonable, nonrefundable” deposit.

Keeping Security Deposits

Landlords may be able to keep all or a portion of a tenant’s security deposit for:

  • 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 a tenant has accumulated during tenancy that could cause a lien to be placed against a property

Time Limits

Landlords in North Carolina normally have 30 days after a tenant moves out to return a security deposit by mail or in person. Landlords unable to accurately calculate the charges within the 30-day window have 60 days to return the deposit or the balance of the deposit. If taking 60 days, landlords still must provide tenants with an estimate of charges within 30 days. Landlords also must provide an itemized list of damages or deductions.

Tenants can file lawsuits against landlords who do not follow proper procedures as spelled out in North Carolina's Tenant Security Deposit Act.

When tenants do not provide forwarding addresses, landlords may use as much of the balance as necessary to pay for damages or other deductions. Tenants have six months to claim any remaining portions of a deposit.

Storing Deposits 

Landlords in North Carolina have two options for storing security deposits:

  1. Trust accounts: The account must be in a licensed and insured bank or financial institution located in North Carolina.
  2. Bonds: Landlords can post a bond for the amount of the security deposit if it is issued by an insurance company with a business license in North Carolina. They are then to keep such security deposits in a trust account outside of the state.

Within 30 days of receiving a security deposit, landlords must notify tenants 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.

When Selling a Property

Landlords who sell a rental property or otherwise transfer ownership must do one of the following within 30 days:

  1. Transfer the security deposit, minus any lawful deductions, to the new owner. They also must notify tenants in writing by mail of the transfer along with the name and address of the new owner.
  2. Return security deposits, minus any lawful deductions, to tenants.