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What Are Permitted Uses of the Security Deposit by a Landlord/Agent?

North Carolina law strictly defines what a landlord or property manager may deduct from a tenant’s security deposit.

Audience: rental property owners who need clarity on what they can legally deduct from a tenant’s security deposit under North Carolina law, and how MoveZen ensures compliance.

These rules help ensure fairness for both parties and protect owners from legal risk. Understanding these permitted uses is essential for making accurate, lawful decisions during turnover.

Here’s what owners need to know.

FAQs ❓

Can I charge a tenant for normal wear and tear?
No. Wear and tear cannot legally be deducted.

Can I charge for cleaning?
Yes. if cleaning is needed to return the home to the move-in cleanliness standard.

Can I charge for unpaid rent?
Absolutely. This is one of the primary permitted uses.

Can I deduct for repainting or flooring?
Yes, if damage exceeds normal wear and tear and depreciation rules apply.

Can I deduct for missed utility bills?
Yes, if the lease makes the tenant responsible and documentation exists.

Permitted Uses of the Security Deposit Under NC Law ✔️

North Carolina General Statute § 42-51 outlines exactly what security deposits can be applied toward. MoveZen follows this list strictly.

1. Unpaid Rent & Late Fees 💵

Deposits may be used for:

  • Unpaid base rent

  • Late fees permitted by the lease

  • Eviction filing fees (if applicable under statute)

Rent-related deductions are among the most common and fully allowable.

2. Damage Beyond Normal Wear and Tear 🔧

Owners may deduct for:

  • Holes larger than picture hooks

  • Broken doors or hardware

  • Pet-caused carpet damage

  • Excessive stains, burns, odors

  • Broken blinds

  • Major scratches or gouges

  • Water damage caused by negligence

“Normal wear and tear” is different from “damage.”

3. Violations of the Lease Agreement 📄

Examples include:

  • Unauthorized pets

  • Unauthorized occupants

  • Failure to return keys/remotes

  • Failure to maintain yard (if required)

  • Smoking in a non-smoking home

Documentation is required for all such deductions.

4. Unpaid Utility Bills (If Tenant Was Responsible) 💡

If utilities were supposed to remain in the tenant’s name — and they failed to do so — owners may deduct:

  • Final water bills

  • Electric bills

  • Gas bills

  • HOA administrative utility charges

  • Penalties caused by early shutoff

Proof of charges is required.

5. Cleaning Costs 🧹

Deductions are allowed when:

  • The home is not returned in move-in-level cleanliness

  • Deep cleaning is required

  • Excessive dirt, grease, pet residue, or trash is left behind

Standardized cleaning charges are typically used.

6. Carpet Cleaning or Replacement (Depreciated) 🧼

Owners may deduct:

  • Carpet cleaning fees

  • Partial replacement costs based on damage

Badly stained or pet-damaged carpet often requires replacement.

Depreciation rules apply you cannot charge the full cost if the carpet was already years old.

7. Repair or Replacement of Damaged Appliances 🔌

Deposits can cover:

  • Broken refrigerator shelving

  • Damaged stove elements

  • Broken dishwasher racks

  • Misuse-related appliance failure

Again, depreciation determines allowable charges.

8. Costs of Removing Abandoned Property 📦

If a tenant leaves belongings behind, reasonable removal costs are deductible.

Examples:

  • Furniture

  • Trash

  • Mattresses

  • Debris

  • Hazardous materials

9. Legal Fees and Court Costs (Where Allowed by Statute) ⚖️

If eviction or legal action occurred, some fees may be deductible.

This must comply with NC law and your lease agreement.

What You Cannot Charge the Deposit For ❗

This is equally important.

🚫 Normal wear and tear

🚫 Upgrades or improvements

🚫 Full replacement of aging items

🚫 Cosmetic enhancements

🚫 Future rent after lease termination

🚫 Damage caused by neglected maintenance or owner failure

Charging for these can result in disputes or legal issues.

Why MoveZen Handles All Deposit Accounting for Owners ✔️

MoveZen ensures:

  • Compliance with NC deposit law

  • Correct application of depreciation schedules

  • Accurate categorization of damage vs. wear

  • Proper documentation (photos, invoices, inspection reports)

  • Timely accounting within required deadlines

This protects owners from:

  • Deposit disputes

  • Legal claims

  • Regulatory penalties