Landlord Tenant Law Changes

In 2012, the North Carolina legislature enacted House Bill 493, which changed some sections of the landlord tenant statutes. The new law changed a variety of aspects of the landlord-tenant relationship, but two of the important changes are: (1) allowing landlords to accept partial rent and retain the right to evict a tenant; and (2) changing some permitted uses of security deposits.

Accepting Partial Rent
The legislature added a new clause to Section 42-26 of the General Statutes which states that “the lease may provide that the landlord’s acceptance of partial rent … does not waive the tenant’s breach”. In simpler terms, this changes what had been a longstanding rule – if you as the landlord accepted any rent with knowledge of a breach of the lease for which you could evict the tenant, then you waived your right to evict for that breach. This included a failure to pay rent in full – if the landlord accepted any rent payment, then he or she would have to wait until the next month for the tenant not to pay in order to be allowed to pursue a summary ejectment. It is important to understand exactly what the new law says, however. In order to be protected when taking partial rent, the provisions of the lease must specifically provide for that situation. Otherwise, the general rule will prevail. Unless you are certain that your lease contains such a provision, the safer course will continue to be to refuse to accept any rent following a breach of the lease, if the goal is to pursue an eviction.

Security Deposits
The new law also rewrote part of the Tenant Security Deposit Act, although the actual changes are relatively minor. Specifically, the “Permitted Uses” of security deposits have been changed to exclude expenses for electrical service, but to specifically include costs for damage to smoke detectors and carbon monoxide detectors, fees and commissions paid to a licensed real-estate broker to re-rent the premises, and certain fees (late fees, complaint-filing fees, court-appearance fees and second
trial fees). The obligations of a landlord with respect to security deposits remain unchanged, and these obligations are regularly overlooked. The security deposit must be held in a separate trust account with a North Carolina bank and the landlord must inform the tenant of where the security deposit is held. As an alternative, the landlord can obtain a bond with a licensed North Carolina insurance company in the amount of the security deposit. At the end of lease term, the landlord must provide at least a preliminary written itemization of the charges applied against the security deposit within thirty days, along with the refund amount, if any. Willful noncompliance with these requirements can lead to a forfeiture of the entire security deposit, as well as an award of attorneys’ fees to the tenant.

There are other changes to the landlord-tenant statutes, including establishing a process for removing personal property belonging to a deceased tenant and changing the dollar thresholds for donating and disposing of personal property left behind by tenants. If you have questions about these changes, or any other aspect of landlord-tenant law, please feel free to contact us.