North Carolina security deposit law

A security deposit may not exceed two weeks' rent for a week-to-week tenancy, one and one-half months' rent for a month-to-month tenancy, or two months' rent for a term longer than month to month.

N.C. Gen. Stat. § 42-51(b)

• The deposit may cover only the uses the statute lists: unpaid rent and certain utility charges you bill, damage to the premises (including smoke and carbon monoxide alarms), damages for not completing the rental period, unpaid bills that become a lien on the property, the costs of re-renting after the tenant's breach, removal and storage after a summary ejectment, court costs, and any fee the fee statute permits (late fees and the eviction administrative fees). N.C. Gen. Stat. § 42-51(a) N.C. Gen. Stat. § 42-46
• You may also charge a reasonable, nonrefundable fee for pets. A refundable pet deposit is part of the security deposit and counts toward the cap. N.C. Gen. Stat. § 42-53 N.C. Gen. Stat. § 42-51(b)
• These deposit rules apply to anyone in the business of renting or managing residential units on a weekly, monthly or annual basis, except single rooms. N.C. Gen. Stat. § 42-56
• You may not keep any part of a deposit as damages for not completing the rental period when the tenant ended the lease under the military or domestic violence early termination laws, or left because you violated the lockout law or the fit premises duty. N.C. Gen. Stat. § 42-51(a)(3) See Ending a fixed-term lease early on the North Carolina page

Within 30 days after the tenancy ends and you get possession back, you must mail or deliver the balance of the deposit with a written, itemized list of any damage you deducted.

N.C. Gen. Stat. § 42-52

• If you cannot work out your full claim within 30 days, send an interim accounting within 30 days and a final accounting within 60 days after the tenancy ends and you get possession back. N.C. Gen. Stat. § 42-52
• If you do not know the tenant's address, you may apply the deposit as the statute allows after 30 days, and you must hold the balance for the tenant to collect for at least six months. N.C. Gen. Stat. § 42-52
• You may not deduct for normal wear and tear or keep more than your actual damages. N.C. Gen. Stat. § 42-52
• When your interest in the unit ends (a sale, assignment, death or receivership), within 30 days you must either transfer the remaining deposit to your successor and mail the tenant the successor's name and address, or return it to the tenant. N.C. Gen. Stat. § 42-54
• A tenant can sue for an accounting and the balance. A willful failure to follow the deposit, bond or notice rules voids your right to keep any part of the deposit, and on a finding of willful noncompliance the court may award attorney's fees. N.C. Gen. Stat. § 42-55

You must hold security deposits in a trust account with a licensed, federally insured depository institution or a trust institution authorized to do business in North Carolina, or instead furnish a bond from an insurance company licensed in North Carolina. North Carolina's deposit law does not require you to pay interest on the deposit.

N.C. Gen. Stat. § 42-50

• A trust account outside North Carolina is allowed only if you give the tenant an adequate bond in the amount of the deposits. N.C. Gen. Stat. § 42-50
• Within 30 days after the lease term begins, you or your agent must tell the tenant the name and address of the bank or institution holding the deposit, or the name of the insurance company providing the bond. N.C. Gen. Stat. § 42-50
• A willful failure to follow the deposit, bond or notice rules voids your right to keep any part of the deposit. N.C. Gen. Stat. § 42-55 See Security deposit return on the North Carolina page

North Carolina's residential rental statutes do not require a move-in inspection or condition checklist. A written record still helps you show damage beyond normal wear and tear when you itemize deposit deductions.

N.C. Gen. Stat. §§ 42-38 to 42-46 N.C. Gen. Stat. §§ 42-50 to 42-56

• Deductions are limited to actual damages and may not cover normal wear and tear. N.C. Gen. Stat. § 42-52 See Security deposit return on the North Carolina page