Security Deposit Law
What North Carolina landlords must do with security deposits — the cap, interest, return deadline, account rules, and penalties — with citations to the statute itself.
Verified as of June 10, 2026
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Deposit cap
2 weeks' rent (week-to-week), 1.5 months' rent (month-to-month), 2 months' rent (longer terms). Reasonable nonrefundable pet fee allowed on top.
Interest
No. North Carolina does not require landlords to pay interest on security deposits.
Return deadline
Mail or deliver an itemized accounting and any refund within 30 days after the tenancy ends and the tenant moves out.
G.S. 42-51(b) caps the security deposit at two weeks' rent for week-to-week tenancies, one and one-half months' rent for month-to-month tenancies, and two months' rent for terms greater than month to month. Separately, G.S. 42-53 lets you charge a reasonable, nonrefundable fee for pets, which does not count against the deposit cap.
Article 6 of Chapter 42 (the Tenant Security Deposit Act) contains no interest-payment requirement. The statute requires the deposit to be held in a trust account or secured by a bond, but it is silent on interest, so there is no statutory obligation to pay interest to the tenant.
N.C. Gen. Stat. §§ 42-50 to 42-56 (Article 6, Tenant Security Deposit Act)
If the extent of damage cannot be determined within 30 days, G.S. 42-52 lets you send an interim accounting by day 30 and a final accounting within 60 days after termination of the tenancy. If the tenant's address is unknown, apply the deposit as permitted by G.S. 42-51 after 30 days and hold any balance for the tenant's collection for at least six months.
G.S. 42-50 requires deposits to be held in a trust account with a licensed and federally insured depository institution or trust institution authorized to do business in North Carolina, or alternatively secured by a bond from an insurance company licensed in the state. Within 30 days after the lease term begins you must notify the tenant of the name and address of the bank or institution holding the deposit, or the name of the bonding company.
Under G.S. 42-55, willful failure to comply with the Article's deposit, bond, or notice requirements voids the landlord's right to retain any portion of the deposit. Courts may also award attorney fees against a party found in willful noncompliance. North Carolina has no statutory double- or treble-damages multiplier for deposit violations.
No significant local security-deposit ordinances; North Carolina regulates residential security deposits uniformly statewide under G.S. Chapter 42, Article 6.
The deposit must sit in a trust account at a licensed, federally insured depository or trust institution authorized to do business in North Carolina, or be secured by a bond from an insurer licensed in NC. You must notify the tenant of the bank's name and address (or the bonding company) within 30 days after the lease term begins.
G.S. 42-51 lists the only permitted uses: unpaid rent and utility charges, damage to the premises (including smoke and CO alarms), losses from the tenant breaking the lease, unpaid liens from tenant occupancy, re-renting costs, removal and storage after eviction, court costs, and fees authorized by G.S. 42-46. Amounts withheld may never exceed your actual damages, and normal wear and tear is not deductible.
Send the itemized accounting and refund within 30 days after the tenancy ends and possession is delivered. If you genuinely can't determine the damage amount in 30 days, send an interim accounting by day 30 and the final accounting within 60 days of termination.
Within 30 days of terminating your ownership interest you must either transfer the remaining deposit to your successor-in-interest and notify the tenant, or return the balance to the tenant.
G.S. 42-53 expressly allows a reasonable, nonrefundable pet fee in addition to the capped security deposit. An unreasonable pet fee risks being treated as part of the deposit and pushing you over the cap.
G.S. 42-56 applies the Act to all persons engaged in renting or managing residential dwelling units on a weekly, monthly, or annual basis, excluding single-room rentals.
The notice requirement is one of the obligations whose willful violation voids your right to retain any portion of the deposit under G.S. 42-55, and can support an attorney-fee award against you.
G.S. 42-52 bars withholding for ordinary wear and tear and caps withholding at your actual damages; inflated deductions expose you to forfeiture of the whole deposit if found willful.
Exceeding the G.S. 42-51(b) cap is a violation of the Article; a willful violation voids your right to retain any portion of the deposit and can carry attorney fees.
The statute already gives you the fix: send an interim accounting by day 30, then a final accounting within 60 days. Sending nothing by day 30 is a violation; the interim letter preserves your position.
When the tenant's address is unknown you may apply the deposit to permitted charges after 30 days, but you must hold any remaining balance for the tenant's collection for at least six months.
It depends on the tenancy: up to two weeks' rent for week-to-week tenancies, one and one-half months' rent for month-to-month tenancies, and two months' rent for leases longer than month to month (G.S. 42-51(b)). You can also charge a reasonable, nonrefundable pet fee on top (G.S. 42-53).
30 days after the tenancy ends and the tenant delivers possession, by mail or hand delivery, with an itemized list of any deductions (G.S. 42-52). If you can't determine the damage amount that fast, send an interim accounting within 30 days and a final accounting within 60 days of termination.
No. G.S. 42-52 expressly bars withholding for ordinary wear and tear, and any amount you withhold cannot exceed your actual damages. Deduct only for the items listed in G.S. 42-51, such as unpaid rent, utilities, tenant-caused damage, and re-renting costs.
No. The Tenant Security Deposit Act requires the deposit to be held in a North Carolina trust account or secured by a bond (G.S. 42-50), but it imposes no obligation to pay interest to the tenant.
Willful failure to comply with the deposit, bond, or notice requirements voids your right to keep any portion of the deposit, even for legitimate damage, and the court may award the tenant attorney fees (G.S. 42-55). There is no statutory damage multiplier, but full forfeiture plus fees is a real cost.
Yes, in effect. G.S. 42-50 requires the deposit to be held in a trust account at a licensed, federally insured depository or trust institution authorized to do business in North Carolina — or you can instead furnish a bond from an insurer licensed in NC. Either way, you must tell the tenant the bank or bonding company's name and address within 30 days of the lease starting.
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Statute facts on this page were verified against the cited official sources on June 10, 2026.
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