Where North Carolina Landlords Should Store Tenant Security Deposits and Required Tenant Notice

North Carolina law, specifically N.C.G.S. 42-50 requires landlords to deposit tenant security deposits into either:

(a)  A trust account in North Carolina at a bank authorized to conduct business in North Carolina 

Or

(b)  Landlord at Landlord’s option, may furnish a bond from an insurance company licensed in North Carolina

Or

(c)   An account outside North Carolina, only if landlord provides tenant with an adequate bond in the amount of the deposits

The law requires that tenant security deposits held in bank accounts not be comingled with other funds.

The landlord, shall notify the tenant within 30 days after the beginning of the lease term of the name and address of the bank where the tenant’s deposit is located or the name of the insurance company providing the bond.  

** FAILURE TO COMPLY MAY RESULT IN: (1) FORFEITURE OF THE RIGHT TO WITHHOLD ANY PART OF THE DEPOSIT & (2) TENANT MAY SUE FOR FULL RETURN OF DEPOSIT + COURT COSTS + ATTORNEY’S FEES PURSUANT TO N.C.G.S. SEC. 42-55

Landlord Best Practices

-       Open a separate escrow account only for security deposits

-       Do not mix security deposits and rental income

-       Document interest and notices carefully

-       Use a property management attorney or accountant to help with compliance

Do you have a client with and tricky landlord-tenant issue, needs a contract review, or other real estate legal matter? We’re here to help. Quick turnarounds and no surprises.

Contact Biazzo Law today at (703) 297-5777 or alyssa@biazzolaw.com to schedule a consultation today. www.biazzolaw.com 

** Information in this newsletter email should not be considered legal advice, nor does it form an attorney-client relationship

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