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How Does MoveZen Handle Security Deposits From Tenants? 

Security deposits are one of the most regulated areas of property management.

Audience: property owners who want to understand how security deposits are collected, held, used, and accounted for — and how compliance is maintained.

MoveZen handles them using strict trust accounting procedures designed to protect owners, tenants, and compliance with North Carolina law.

Here's how the process works from start to finish.

Frequently Asked Questions

Who actually holds the tenant's security deposit?
The deposit is held in a regulated trust account, not mixed with operating funds.

Can security deposits be used for repairs during the lease?
No. Deposits are not a repair fund during occupancy.

Does the deposit belong to the owner?
Not until lawful deductions are determined after move-out.

What if damages exceed the deposit amount?
Additional charges may be pursued separately.

How Security Deposits Are Collected

At move-in:

  1. The tenant pays the security deposit as required by the lease
  2. Funds are deposited into a designated trust account
  3. The deposit is recorded on the tenant ledger

Security deposits are never commingled with rent or fees.

Where Security Deposits Are Held

Security deposits are held in compliance with North Carolina Real Estate Trust Account rules, separately from operating funds, and with full ledger tracking.

This protects all parties and ensures audit readiness.

What Security Deposits Can Be Used For

After move-out, deposits may be applied to:

  • Unpaid rent (if allowed by law)
  • Tenant-caused damage beyond normal wear and tear
  • Lease violations that allow deposit application

All deductions must be documented and lawful.

 

What Security Deposits Cannot Be Used For

Security deposits cannot be used for:

  • Normal wear and tear
  • Routine maintenance
  • Upgrades or improvements
  • Owner-preferred renovations

This distinction is critical for compliance.

The Move-Out and Accounting Process

After the tenant moves out:

  1. A move-out inspection is completed
  2. Damages are documented
  3. Charges are calculated
  4. A security deposit accounting is prepared
  5. Any remaining balance is refunded to the tenant

Deadlines are set by state law.

How Owners See This on Statements

Owner Statements will reflect charges paid from deposit (if applicable), repair expenses applied, and no "income" from the deposit itself.

Deposits are liability funds until lawfully applied.

What Happens if Ownership or Management Changes

If management or ownership transfers, security deposit responsibility transfers appropriately, funds are accounted for and documented, and tenant rights remain unchanged.

This continuity is required by law.

A Helpful Owner Perspective

Instead of viewing the deposit as "available money," it helps to think "This is a regulated tenant fund with very specific rules."

That mindset avoids legal and financial problems.