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The Security Deposit Refund Game

Mahlum Law Office is pleased to announce we will be expanding our practice to include representing Tenants in disputes with their Landlord, specifically in regard to the return of any security deposit. In recent months we have noticed an increase in calls from people whose Landlord refused to return their security deposit or deducted expenses that violate the law. This seems to be a growing practice for some Landlords, and North Carolina Attorney General Roy Cooper has had to file suit against one Chapel Hill landlord.

By law, a landlord must keep your security deposit in a separate Trust Account with a bank*, and notify you within 30 days of the name and location of that bank. A landlord must provide you with a written accounting of any deductions made from the security deposit, and return the balance to you within 30 days of the end of the lease. If damages cannot be assessed in 30 days, they can notify you and have an additional 30 days. Only actual expenses for damages that were NOT due to normal wear and tear can be deducted. If your landlord doesn’t keep the deposit in a trust account or doesn’t provide an accounting of damages in 30 days, he or she forfeits the ability to keep any of the security deposit and it should be returned to you in full.

What can a Landlord deduct from your deposit? After you move out, it can be used to cover any unpaid rent, including future months and the cost of re-renting the premises if you move out early. It can also be used for any unpaid bills that become a lien against the property or for costs related to eviction or storing your property after eviction. Of course, the landlord can also use the security deposit to fix damages to the premises. This is where the most egregious landlord violations happen. A landlord cannot estimate the expense, they cannot withhold for things that are “normal wear and tear,” and they cannot keep more than the actual cost to fix the damage.

What is the solution? You can file suit in Small Claims Court. You do not need an attorney and most forms are provided. You will need to pay a filing fee, but you will receive a court date in front of a Magistrate. On that court date, you can present your case and your landlord will have an opportunity to state their case. The Magistrate will make a ruling, but that ruling can be appealed to District Court.

Alternatively, you can contact us. We will review your case and discuss your options with you. Oftentimes these cases can be resolved with a simple letter to the landlord that explains their obligation to you, the tenant, and the landlord will refund what you are owed right away. Because we know many of these cases can be resolved quickly once we contact your landlord, we are able to represent you for an affordable fee and help you recover the money you are due.

In some cases, we may suggest that we sue your landlord in court. If your landlord’s actions were particularly bad, we may be able to sue for Unfair and Deceptive Trade Practices and recover more than the amount you originally paid. These cases are a little more involved and don’t get resolved as quickly, but the benefit may outweigh the negatives.

Landlord’s refusal to return security deposits stems from the position they are in. They have your deposit and you hope they return it. They are in the power position and they know most tenants will give up rather than pursuing the deposit. We can help you level the playing field and get your security deposit back. Call Mahlum Law Office, we can help.

*There is an exception to this rule; a Landlord can obtain a special Bond through an insurance company that would cover any security deposit in lieu of using a Trust Account. The landlord must notify you of the name of the insurance company if a trust account is not used.

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