Burlington, NC, is one of the country's most thriving cities, with an overall population growth of almost 6% since the start of the decade.
This brings welcome news to landlords in the city seeking new tenants. However, you've got to make sure that you find a tenant who'll honor their financial obligations. You don't want to have to chase after them to collect your rent!
One of the best ways to do this is by collecting security deposits. This guide will show you the security deposit rules all Burlington landlords must know.
1. Follow the Security Deposit Limits
According to North Carolina's laws, landlords can only charge a maximum of two months' rent for their security deposit. This also depends on the type of property you own.
Make sure you never overcharge this amount. While you can charge higher than the rental fee, most tenants will appreciate it if you don't charge above this amount.
2. Rental Deposit Management
Landlords are required to keep the full security deposit amount in an escrow account. The tenant must be informed of when the security deposit was added. They should also have the details of the escrow account at all times.
Landlords may not keep the security deposit in their personal bank account or in cash. The security deposit must stay in the escrow account until the end of the rental agreement.
3. Deposit Handling Practices
Once the rental agreement ends, you're obliged to return the security deposit, in full, to your tenant. This must be done within 30 days of the tenant leaving.
However, there are certain circumstances that allow landlords to keep part or all of the security deposit. You can retain the security deposit to cover the cost of damages or any incomplete payments.
The landlord may estimate the cost of repairs and withhold this amount. 60 days after the tenant has left, the landlord must provide a receipt to show the exact amount paid. If the balance is less than the estimated amount, the landlord must refund the amount to the tenant.
You can hire a property manager to assist you with collecting your security deposits. They'll know the security deposit rules so you don't have to keep up at all times.
4. Tenant Security Funds
North Carolina law allows for two other types of non-refundable deposits. If your tenants wish to bring a pet, you can charge them a pet deposit in addition to the security deposit.
The pet deposit must be a reasonable amount and never has to be refunded. The landlord can also charge a non-refundable cleaning fee. This can be used to hire a professional cleaner for the property after the tenant leaves.
Start Welcoming Tenants
Now that you know the rules for security deposits, you're ready to welcome tenants to your Burlington property.
You can hire a property manager to assist you with your landlord duties, including handling your security deposits.
Legacy Property Management NC is your best option. Our team has over 30 years of experience in property management and is happy to speak to you.