Security Deposits in North Carolina and Eviction Appeal

A landlord’s ability to keep a tenant’s security deposit in North Carolina is controlled by state law. In particular, North Carolina Gen. Statute 42 – 50, et seq. dictates the landlord’s rights and the tenant’s protections. An adequate security deposit is a landlord’s best protection from tenants who fall behind in rent or cause property damage. This is an all too common problem since many tenants will fail to pay their last month’s rent in order to save up deposit for the next leasehold. Further, many landlords note that a tenant’s eviction is not the last surprise in the ordeal; when the Landlord re-enters the property, he or she is often met by property damage from a disgruntled former tenant.

Notwithstanding, a landlord has certain restrictions in North Carolina in applying the security deposit. The landlord may withhold the security deposit for unpaid rent, damage to property, and other unforeseeable costs. The landlord may not, however, offset the security deposit for normal wear and tear at the hands of the tenant. While the definition of wear and tear may be debatable, it is logical that simple tasks such as cleaning would certainly fall in the category here.

Whether the security deposit is withheld based on permissible reasons like unpaid rent or impermissible reasons such as vacuuming costs, residential landlords in North Carolina are required to itemize how the landlord applied the security deposit and then refund any balance within 30 days after the tenant has delivered possession back to the landlord. If the landlord cannot adequately account for the anticipated repairs to the unit, the landlord can provide an interim accounting to the tenant and then a final accounting within 60 days. Failure of the landlord to provide this accounting will entitle the tenant to any actual damages the tenant sustains and even the tenant’s attorney’s fees if the court finds willful noncompliance with the failure to provide the accounting. This tenant protection in North Carolina law trips landlords regularly and is the basis for many lawsuits for which the landlord may be forced to defend.

Should the tenant default, the Landlord has the right to pursue eviction in small claims court in the county where the property lies. In small claims court, either party may appeal, thus win or lose, the parties may have another day in court after the small claims proceeding. As such, many people refer to small claims as simply the first bite at the apple.

The eviction appeals process is time sensitive: within ten (10) days of the Magistrates Order, the appeal forms must be filed, along with the appeal fees and a bond. The bond is generally going to be the amount of money in controversy; most times that means missed rent. Thus, if you are the tenant who is two months at $1000/month, the Court will likely require you to put down the $2000 rent arrears to preserve the appeal. Further, the appealing tenant must pay unto the Court, each month’s rent while the appeal is being processed. This mechanism protects the Landlord from tenants appealing just to buy more free time on the premises. At any time that the tenant fails to make these required rent/bond payments, the Landlord can ask the Court to issue a Writ of Possession that causes the Sheriff to come out and evict the tenant. This eviction will occur DESPITE the ongoing appeal.

If the tenant is able to cure their rent arrears and maintain monthly rent payments by tendering them to the Court as they come due, then the Tenant will have his or her day in District Court. At District Court, the vast majority of eviction appeals will be heard by the Judge and the appeal will be “de novo”, which is Latin for “all new”. In other words, whatever happened in small claims court is forgotten and the parties have to redo everything for the District Court Judge.

Landlord and Tenant law can be complicated with procedure. If you would like an experienced attorney to assist, please do not hesitate to contact us at Arnold & Smith, PLLC.