Security systems like cameras or fences keep intruders out of your rental property. Security deposits have a similar purpose.
They'll ensure you accept responsible tenants and help repay the damage if you don't. They're a necessary but highly regulated part of being a responsible landlord.
Read on for five of the most essential things to know about security deposits in Charlotte, NC.
1. Maximum Amounts
The maximum security deposit amount for one-year leases is two month's rent. The maximum for a month-to-month lease is one and a half months' rent. The maximum for weekly leases is two weeks' rent.
When deciding how much to charge for a security deposit, consider factors such as:
- The type of property
- What similar properties in the area charge
- The tenant's rental history and credit score
2. Storing Security Deposits
Security deposits must be placed in a trust account at a state or federally insured institution in North Carolina. You can also post a surety bond.
Tell the tenant where their money is being stored within 30 days. It keeps them in the loop and prevents disputes later.
3. Allowable Deductions
Charlotte rental laws regulate what you can deduct from a security deposit. Examples include:
- Unpaid rent
- Unpaid utility bills
- Excessive damage
- Leaving before the lease term is up
- Court costs or eviction fees
Knowing the difference between excessive damage and normal wear and tear is one of the best landlord agreement tips because it keeps you from making unlawful deductions.
Normal wear and tear happens naturally from using a property. Examples include loose handles, faded paint, and scratched glass.
Excessive damage is caused by a tenant's neglect or abuse. Examples include broken appliances and deep stains.
Property inspections help you tell the difference. Use them to compare the property's condition when the tenant moves in and moves out to see if they caused excessive damage.
4. When to Return Them
It doesn't matter whether you deducted all of a deposit or none of it. Charlotte's deposit regulations say that you must return whatever's left.
You have 30 days from the end of the lease date to do so. Send it in the mail or deliver it to them in person.
Give an itemized list of any deductions from tenant security deposits, even if you can't calculate the total cost. In that case, you have 60 days to provide a full report.
If you don't have your tenant's forwarding address, keep what's left of their security deposit. You have to give the tenant six more months to claim the deposit.
5. Consequences for Not Returning Them
Knowing the regulations surrounding security deposits isn't just about protecting your property. It also protects you from severe legal and financial consequences.
Your tenant can sue if you don't return the deposit on time. This forces you to give them the full deposit amount plus damages and legal fees.
What Else Should I Know?
Security deposits have laws regarding their maximum amounts, storage, deductions, and return timelines. Every landlord needs to know them to avoid potential legal and financial consequences.
Wilkinson Property Management has provided professional property management in Charlotte, NC since 1999. We've managed 633 homes in the area.
We provide 24/7 support using high-quality technology. Contact us today to see how our vision and experience can maximize your investment today.
