North Carolina Security Deposit Collections & Holdings

North Carolina Security Deposit Collections & Holdings

Last Updated: January 5, 2023 by Ashley Porter

Quick Facts Answer
Maximum / Limit 2 Weeks, 1½ Months’ or 2 Months’ Rent
Receipt Requirement None
Inventory Requirement None
Interest Requirement None

To learn about laws on security deposit returns in North Carolina, click here.

Maximum Security Deposit Allowed in North Carolina

The maximum security deposit allowed in North Carolina depends on the length of the lease term:

  • Week-to-Week: 2 Weeks’ Rent
  • Month-to-Month: 1½ Months’ Rent
  • Longer than Month-to-Month: 2 Months’ Rent

However, these limits and other security deposit rules only apply to landlords that lease whole dwelling units, rather than single rooms within a unit.

Can Landlords Charge an Additional Pet Deposit in North Carolina?

In North Carolina, landlords can charge a pet deposit, except for service dogs and emotional support animals. However, the total refundable deposit cannot exceed the maximum security deposit amount. Landlords cannot exceed the limit by giving them another name like “pet deposit” or “damage deposit”.

However, this law does not prevent landlords from adding a monthly pet premium and/or a reasonable, non-refundable pet fee that exceeds the security deposit limits.

How Much Rent Can a Landlord Collect Upfront in North Carolina?

There is no limit on the amount of rent that can be collected upfront in North Carolina. Many states have a limit on the amount of rent that can be collected at once, but North Carolina does not.

Security Deposit Collections in North Carolina

When collecting a security deposit, landlords in North Carolina must notify the tenant within 30 days after the start of the lease term of the name and address of the bank or institution where the tenant’s deposit is currently located or the name of the company providing the bond.

Do Landlords Have to Provide a Receipt for the Security Deposit in North Carolina?

While landlords in North Carolina must provide a written disclosure to tenants containing information such as where the security deposit will be held, an additional receipt of the deposit is not required to be provided.

What Obligations Do Landlords Have to Establish the Condition at Move-in in North Carolina?

North Carolina law does not require landlords to document or establish the property’s condition at move-in. While other states legally require a written inventory of damages to be completed when collecting a security deposit, North Carolina does not.

Security Deposit Holdings in North Carolina

Landlords in North Carolina must hold security deposits in one of two places: a trust account or by posting a surety bond.

Option 1: Trust account. The landlord may place the security deposit in a licensed and state or federally-insured trust account.

Option 2: Surety bond. The landlord may post a surety bond with an insurance company licensed to do business in North Carolina.

If the security deposit from the tenant is held in a trust account outside of the State of North Carolina, the landlord must also provide the tenant with a bond in the amount of the deposit.

Are Tenants Entitled to Interest on Their Security Deposit in North Carolina?

North Carolina law does not require landlords to provide interest on held security deposits.

How Are Security Deposits Accounted for in North Carolina?

Security deposits are not considered taxable income when they are collected.

What Happens to a Security Deposit When the Property is Sold in North Carolina?

Within 30 days of the sale of a property in North Carolina, the landlord or their agent can make any allowable deductions and then do one of the following:

  • Transfer any remaining portion of the security deposit to the new owner and notify the tenant by mail of the new owner’s name and address

Return any remaining portion of the deposit to the tenant

Sources