North Carolina Security Deposit Law

Maximum deposit

A security deposit may not exceed two weeks' rent for a week-to-week tenancy, 1.5 months' rent for a month-to-month tenancy, or two months' rent for any longer term (N.C. Gen. Stat. § 42-51(b)). (N.C. Gen. Stat. § 42-51(b), N.C. Gen. Stat. § 42-53)

Two months' rent for terms longer than month-to-month; 1.5 months for month-to-month; two weeks for week-to-week

Return deadline

Landlords must return the deposit balance with a written itemization within 30 days after the tenancy ends and possession is returned; if damages cannot be determined by then, an interim accounting is due within 30 days and a final accounting within 60 days (N.C. Gen. Stat. § 42-52). (N.C. Gen. Stat. § 42-52)

Itemized statement of deductions

Landlords must itemize any damage in writing and mail or deliver it to the tenant with the deposit balance (N.C. Gen. Stat. § 42-52). (N.C. Gen. Stat. § 42-52)

Interest on the deposit

North Carolina law does not require landlords to pay interest on security deposits, though deposits must be held in a trust account or covered by a bond (N.C. Gen. Stat. § 42-50). (N.C. Gen. Stat. Ch. 42, Art. 6 (silent on interest))

Penalty for wrongful withholding

A landlord who willfully fails to follow the trust-account/bond or notice rules forfeits the right to keep any part of the deposit, and a tenant may recover damages and, for willful noncompliance, attorney's fees (N.C. Gen. Stat. § 42-55). (N.C. Gen. Stat. § 42-55)

Where the deposit is held

North Carolina landlords must place tenant deposits in a trust account at a licensed, federally insured depository or trust institution authorized in the state, or instead buy a bond from an insurer licensed in North Carolina (N.C. Gen. Stat. § 42-50). (N.C. Gen. Stat. § 42-50)

An out-of-state trust account is allowed only if the landlord also gives the tenant an adequate bond for the deposits; willful failure to follow the deposit or bond rule voids the landlord's right to keep any of the deposit (§ 42-55).

Receipt or written notice of the deposit

Within 30 days after the lease term begins, a North Carolina landlord must tell the tenant the name and address of the bank holding the deposit or the insurer that issued the bond (N.C. Gen. Stat. § 42-50). (N.C. Gen. Stat. § 42-50)

Willfully skipping this notice forfeits the landlord's right to retain any part of the deposit and can expose the landlord to attorney's fees (§ 42-55).

Move-in condition checklist

North Carolina's Tenant Security Deposit Act does not require a move-in inspection or condition checklist (N.C. Gen. Stat. §§ 42-50 to 42-56). (N.C. Gen. Stat. ch. 42, art. 6 (§§ 42-50 to 42-56))

Pet deposits

On top of the regular deposit limits, a North Carolina landlord may charge a reasonable, nonrefundable fee for pets the tenant keeps on the premises (N.C. Gen. Stat. § 42-53). (N.C. Gen. Stat. § 42-53)

§ 42-53 begins 'Notwithstanding the provisions of this section'; the statute does not define 'reasonable' or say whether a refundable pet deposit counts toward the § 42-51(b) caps.

Nonrefundable fees

Apart from a reasonable pet fee, North Carolina treats tenant deposits as refundable money that may be used only for the purposes listed in the statute and must be fully accounted for at move-out (N.C. Gen. Stat. §§ 42-51, 42-52, 42-53). (N.C. Gen. Stat. § 42-51, N.C. Gen. Stat. § 42-52, N.C. Gen. Stat. § 42-53)

Permitted deposit uses are unpaid rent and certain utilities, damage, breach-of-term damages, liens, re-renting costs, post-eviction storage, court costs and fees allowed by § 42-46; § 42-53 is the only express authorization of a nonrefundable charge.

Small-landlord exemptions

North Carolina's deposit act covers anyone in the business of renting or managing homes weekly, monthly or yearly regardless of size, but excludes the rental of single rooms (N.C. Gen. Stat. § 42-56). (N.C. Gen. Stat. § 42-56)

There is no unit-count or owner-occupancy exemption; the only carve-out is 'single rooms', and vacation rentals are handled under the separate Vacation Rental Act (ch. 42A).

Deposit alternatives and installments

North Carolina has no law on tenant deposit alternatives or installment payments; the bond in § 42-50 is the landlord's option for securing deposits it holds, not a substitute product for tenants (N.C. Gen. Stat. §§ 42-50 to 42-56). (N.C. Gen. Stat. ch. 42, art. 6 (§§ 42-50 to 42-56))