Whether you are renting an apartment near UNCW, a house in Monkey Junction or a condo downtown, the security deposit is often the biggest check you write at move-in. North Carolina has a specific law that governs how much a landlord can collect, where the money must be held, what it can be used for and how fast it must be returned. Here is a plain-English guide for Wilmington-area renters and the landlords who serve them.
This article is general information, not legal advice. For a specific dispute, talk with a North Carolina attorney.
The Law: North Carolina’s Tenant Security Deposit Act
The rules come from the Tenant Security Deposit Act, Article 6 of Chapter 42 of the North Carolina General Statutes. Under G.S. 42-56, it applies to anyone in the business of renting or managing residential dwelling units, excluding single rooms, on a weekly, monthly or annual basis.
How Much Can a Landlord Charge?
G.S. 42-51(b) caps the deposit based on the type of tenancy:
- Week-to-week: no more than two weeks’ rent.
- Month-to-month: no more than one and one-half months’ rent.
- Terms longer than month-to-month (such as a typical 12-month lease): no more than two months’ rent.
Pets are handled separately. G.S. 42-53 allows a landlord to charge a reasonable, nonrefundable pet fee.
Where the Money Must Be Held
Under G.S. 42-50, deposits must go into a trust account with a licensed and federally insured depository institution or an authorized trust institution, or the landlord may instead furnish a bond from an insurance company licensed in North Carolina. Within 30 days after the lease term begins, the landlord or agent must tell the tenant the name and address of the bank or institution holding the deposit, or the name of the bonding company.
Tip for renters: If you have not received that notice within the first month, ask for it in writing.
What a Deposit Can Cover
G.S. 42-51(a) limits deposit use to specific items, including:
- Unpaid rent, and certain water, sewer or electric charges allowed by law.
- Damage to the premises, including damaged or destroyed smoke or carbon monoxide alarms.
- Damages from not fulfilling the rental period, with exceptions spelled out in the statute.
- Unpaid bills that become a lien on the property because of the tenant’s occupancy.
- Costs of re-renting after a tenant’s breach, including reasonable broker fees.
- Costs of removing and storing a tenant’s property after a summary ejectment.
- Court costs and certain fees permitted by G.S. 42-46.
Normal wear and tear is not damage
G.S. 42-52 says a landlord may not withhold any part of the deposit for conditions due to normal wear and tear, and may not keep more than actual damages.
How Fast the Deposit Must Be Returned
After the tenancy ends and the landlord gets the property back, G.S. 42-52 requires the landlord to mail or deliver a written, itemized list of any damage along with the remaining balance within 30 days. If the full claim cannot be determined in 30 days, the landlord must send an interim accounting within 30 days and a final accounting within 60 days.
If the tenant’s address is unknown, the landlord may apply the deposit as permitted after 30 days and must hold any balance for the tenant for at least six months. Giving your landlord a forwarding address in writing helps avoid that situation.
When the Property Is Sold
Wilmington-area rentals change hands often. Under G.S. 42-54, when a landlord’s interest ends, including by sale, the landlord must within 30 days either transfer the remaining deposit to the new owner and notify the tenant of the new owner’s name and address, or return it to the tenant. Investors buying an occupied rental should confirm deposit balances before closing. Our guide to buying a long-term rental in Wilmington covers more due diligence items.
If Something Goes Wrong
G.S. 42-55 lets a tenant file a civil action to require an accounting and recover the balance. A landlord’s willful failure to follow the deposit, bond or notice requirements voids the landlord’s right to keep any portion of the deposit, and a court may award attorney’s fees for willful noncompliance.
Move-In and Move-Out Checklist for Renters
- Photograph and video every room at move-in and move-out, with dates.
- Complete and keep a copy of any move-in condition report.
- Report repair needs in writing.
- Clean thoroughly and return all keys.
- Provide a forwarding address in writing.
New to renting downtown? See our first downtown Wilmington apartment checklist.
FAQ: Security Deposits in North Carolina
Can my landlord charge three months’ rent as a deposit?
For residential tenancies covered by the Act, the cap is two months’ rent for terms longer than month-to-month, and lower for shorter tenancies.
Is a pet fee refundable?
The law allows a reasonable nonrefundable pet fee. Check your lease for how any pet charges are labeled.
Can a landlord charge for repainting after a normal lease?
Not for normal wear and tear. Charges must reflect actual damage beyond ordinary use.
Are vacation rentals covered the same way?
Short-term vacation rentals are generally governed by the separate Vacation Rental Act in Chapter 42A, which has its own rules.
Thinking About Buying Instead?
If you are weighing renting against owning, our rent vs. buy guide is a good start. When you are ready, reach out to Aspyre Collective to talk through your options in Wilmington and New Hanover County.
