Insurance, on a global scale, has a value of $9.8 trillion. As a landlord, that makes a lot of sense. Your little side hustle alone is rife with thousands of dollars of liability.
Insurance is expensive, though, and it can be a real pain in the patootie to make the simplest claim. It really makes you regret upgrading to a better policy when the added premium fails to get you coverage. Instead, you can always rely on your security deposits.
Security deposits are common knowledge when it comes to renting, but there are a lot of misconceptions about them. In this guide, we take a deeper look at deposits for Raleigh, NC landlords.
What Can You Use Security Deposits for?
Some landlords get the false impression that they can use the security deposit for anything they desire. Be careful, here. Legally, there are a limited number of reasons you can keep a security deposit.
You can't use the security deposit for basic wear and tear or deep cleaning. You can use it for major damages or an unreasonable amount of move-out clutter. This includes if the place has claw marks and smells like a barnyard from the dog, even if you had a pet policy.
Other reasons include unpaid rent or utilities. You can only take as much from the security deposit as you need to cover your expenses, no more.
How Much Can You Require?
NC security deposit laws are on par with the rest of the country. In most cases, you will have tenants on a yearly lease. The most you can charge them for their security deposit is two months' worth of rent.
You may also require a pet deposit to cover pet-related maintenance fees and repairs. Instead of charging two months' worth of rent, you can charge a specific amount such as $200.
There is no concrete law on this, so use your good judgment and come to an agreement with your tenants. If you have concerns about the deposit amount, speak to your property management services.
How Do You Store It?
You can't just put the security deposit in your bank account and call it good. The tenant needs the assurance that they can get it back when the lease is up. For this reason, North Carolina gives you two options for storing it.
First, you can put it in a trust account that is insured and licensed by North Carolina state. Second, you can post bond that is equal to the security deposit's amount. Failing to adhere to one of these two options could get you in trouble.
Get Property Management with PMI
Security deposits are the best way to keep your tenants honest and give you (the landlord) an effective surety. That said, be aware that you can't claim the deposit for just any reason. You must collect the proper amount and store it according to the law.
PMI Capital City helps budding landlords in Raleigh manage their properties with ease. Get started with a no-obligation, free rental analysis to determine your property's earning potential.
