Managing rental property may seem simple and profitable to the uninitiated—in truth, the landlord-tenant relationship is ripe for conflict. In our state, landlord-tenant laws have been written and construed in such a way that tends to give the benefit of the doubt to the tenant. As a result, dealing with stubborn or clever tenants that are uncooperative can oftentimes be costly and time-consuming. We here at Coltrane Grubbs & Orenstein are glad to assist you in the event that you have reached a difficult stretch with one of your tenants. If you are not in such a predicament, but are a landlord renting property in our state, there are some steps that you can take proactively as a landlord to prevent problems and help solve problems quickly in the event that they occur. The following are some important tips for landlord success:
1) Have a Written Lease Agreement
In North Carolina, oral lease agreements are typically enforceable, depending on some specific factors. Still, having an oral lease agreement is risky for an obvious reason: in the event of some dispute over the terms of the agreement, it becomes difficult to determine (from an evidentiary perspective) which party is telling the truth. As a tenant, you wouldn’t want your landlord hauling you into court several months into your tenancy to collect $800 in rent when you were under the impression that the rate was $400. As a landlord, the opposite scenario happens with alarming regularity: the landlord comes into court claiming that the tenant has been $100 short on their rent for three months, and the tenant defends by saying that they thought the rent was a lesser number. Nothing can disarm a landlord-tenant dispute better than a well-crafted lease agreement signed by both parties. Our office regularly drafts lease agreements that can suit this purpose.
2) Conduct Move-In and Move-Out Inventories
The condition of the apartment is the aspect of tenancy relationships that is most commonly disputed by the parties. The best way to deal with, and prevent, disputes with your tenant is to have a clear record of the condition of the apartment prior to the tenancy. It is recommended that you take the time to walk through the apartment with the tenant to identify those issues that the tenant sees, but you do not. Make sure to point out and record the condition of appliances, carpets, flooring, fixtures, and bathroom ceilings/walls. After the tenant leaves, it is equally important to take another thorough inventory, using the initial move-in inventory as a comparison point. This inventory is what you will use to identify issues that exceed normal “wear and tear” and justify application of security deposit funds towards repair.
3) Properly Handle Security Deposits
Speaking of security deposit funds, North Carolina statue specifically provides for the proper handling of security deposit funds. While I won’t go into exhaustive detail here, a previous blog post (found here) can give you all the information you need to know about how to handle security deposits. Many landlords handle security deposits improperly, because they just do not know the rules.
4) Keep Meticulous Records (Don’t Be Lazy)
Landlords have a tendency to take your check every month, deposit it, and go on about their business. Please don’t be lazy! Keep an accurate and up to date ledger of payments received from your tenant. Keep up with repairs that are made during the tendency. Keep up with your inventories. Documentation and records can be the difference in the event that there is some dispute about the condition of the tenancy or the amount/existence of rental payments.
5) Know Your Neighbors
Let’s face it, neighbors are nosy. Use your nosy neighbors to your advantage – it is good to have a neighbor who will be willing to tell you when something is going on that should not be happening on your property. In many cases, your neighbors can be your first line of defense and information in the event that your tenant is up to no good.
6) Know How to Evict (Don’t be Afraid to Get Help)
Eviction in North Carolina can be a difficult and complicated task, given the wrong set of circumstances. Know that self-help eviction is prohibited in our state for residential tenancies. Know also that it can be advantageous to seek the assistance of an attorney early in the case, even if it is only to get advice about how to handle the eviction on your own. Oftentimes, paying for an attorney’s advice or assistance on the front end can prevent repeat filings and prolonged disputes.
7) You are Only as Good as Your Tenant
This is the most important piece of advice that I have for landlords: you are only as good as your tenant. Before you sign a lease, make sure that you have gathered as much information about your tenants as possible. If they have references, check them. If they are willing to provide a credit report, get it. If you know them personally, or by acquaintance, find out what you can from your contacts. The vast majority of tenants will pay regularly, keep the tenancy in good condition, and are otherwise reasonable. It is the “one-in-ten” tenant that you really have to avoid – these tenants can cost you dearly in frustration and court/attorney costs. A clever and dishonest tenant can be a serious problem in our state, no matter what precautions you take.
Coltrane Grubbs & Orenstein is a full-service, client-oriented law firm with extensive experience in treating and resolving landlord-tenant disputes. If you are dealing with a troublesome tenant, or would like to avoid a troublesome tenant altogether, give our office a call today to set up an initial consultation (336-996-4166).
NC Security Deposits: Rights of Tenants and Limitations on Landlord using Security Deposits in North Carolina
North Carolina has a set of specific rules and laws about use of security deposits—these restrictions are laid out in North Carolina General Statute §42-50 through §42-56. Whether you are a landlord or tenant in North Carolina, it is important that you have an understanding of the rules governing security deposits.
Limitations on Collection of NC Security Deposits
As a preliminary matter, there are some restrictions on the amount of the deposit provided to the landlord. In NC, §42-51(b) provides the upper limits of security deposits depending on the length of the tenancy. For a week-to-week tenancy, the security deposit cannot be more than two weeks’ worth of rent. For a month-to-month tenancy, the tenancy cannot be more than one and one-half months’ rent. If the tenancy is longer than month to month, then the security deposit cannot be more than two months’ rent. Be sure that, before you sign your lease (if you are a tenant) or set your security deposit amount (if you are a landlord), the security deposit is not set a statutorily prohibited level.
During the Lease, what can a Landlord do with the Deposit?
In North Carolina, security deposits (in residential tenancy settings) must be deposited in a trust account, held separate from other funds. In the alternative, the landlord can provide the tenant with a bond for these security deposits (which is a rarer approach). This is an oft violated/ignored aspect for landlords who do not regularly service multiple tenancies. There is a further requirement under law that obligates the landlord to notify the tenant of the name and address of the bank where the deposit or bond is held as well.
Once the Lease Term has Expired, What Happens to the Deposit?
After the expiration of the tenancy, the landlord must return the deposit within thirty (30) days. If the landlord keeps any portion of the deposit, the landlord must account for the unreturned portion in writing within the thirty day period. It is possible to provide an interim accounting prior to accounting for the full use of the security deposit under the statute, in the event that repairs to damages occur outside of the thirty-day period. The landlord is only permitted to keep that portion of the security deposit necessary to cover the actual allowable costs. While there still exist some modern leases that include “forfeiture clauses” (where the landlord can keep more than their actual cost), these clauses are unenforceable under the current rules. In other words, a landlord cannot keep the entire security deposit just because there was some damage in the leasehold.
What is an Appropriate Use of a Security Deposit? Can a Security Deposit be Kept to Offset Unpaid Rent?
The statute specifically lays out the permitted uses for security deposit funds:
- Nonpayment of rent or costs for water/sewer/electric services on the premises;
- Damages to the premises;
- Damages as a result of nonfulfillment of the rental period (unless nonfulfillment is the result of Landlord’s breach);
- Unpaid bills that have become a lien on the premises;
- Costs of re-renting the premises after a breach by the tenant;
- Costs of removal and storage of tenant’s property after summary ejectment;
- Court costs; and
- Late fees (to the extent permitted by law).
Importantly, a landlord may not withhold from the security deposit funds used to pay for normal wear and tear. It is difficult to ascertain, sometimes, the difference between “damages” and “wear and tear”—the NC Attorney General’s office suggests that replacement of door handles, oven heating elements, curtain strings, toilet parts, faucet handles, or electrical switches falls into the purview of wear and tear. More substantial changes, like replacement of window screens/panes, cleaning coffee stains on the carpet, fixing large holes in the wall, or cleaning filthy conditions are the type of repairs that would be appropriate for security deposit use. You can learn more from the NC Attorney General’s Office in their Security Deposit handbook, found here.
What do I Do?!!!
Whether you are a landlord or a tenant, if you find that you have questions about how to handle or recover security deposits, talking to an attorney who is experienced in landlord-tenant disputes can be very helpful. Attorneys at Coltrane Grubbs and Orenstein deal with landlord-tenant disputes on a regular basis and would be glad to guide you through the security deposit protocol in NC. Give our office a call today (336-996-4166) to set up an appointment!