Landlord/Tenant: Security Deposits & Vacation Rentals

Many North Carolina brokers manage rentals, from apartments in Charlotte to beach cottages on the Outer Banks. The Landlord/Tenant questions draw on two statutes: the Tenant Security Deposit Act and landlord duties in Chapter 42, and the Vacation Rental Act in Chapter 42A. Most of the testable material is numbers (deposit caps, day counts, fee limits), so this lesson collects them in one place.

Security deposits: how much and where

The maximum deposit depends on the length of the tenancy (§ 42-51(b)):

• Week-to-week: two weeks' rent.
• Month-to-month: one and one-half months' rent.
• Terms longer than month-to-month (for example, a one-year lease): two months' rent.

Example: On a 12-month lease at $1,400 a month, the deposit can be no more than $2,800. On a month-to-month tenancy at the same rent, the cap is $2,100.

The deposit must be held in a trust account at a licensed, federally insured depository institution (or a trust institution authorized to do business in NC), or the landlord may instead furnish a bond from a licensed insurer. Within 30 days after the lease term begins, the landlord or agent must tell the tenant where the deposit is held or who issued the bond (§ 42-50).

Using and returning the deposit

A deposit may be applied only to the permitted uses in § 42-51(a). These include unpaid rent, damage to the premises, damages from the tenant not completing the rental period, unpaid bills that become a lien, costs of re-renting after the tenant breaches (including a reasonable broker's fee), removal and storage costs after summary ejectment, court costs, and fees allowed by § 42-46.

After the tenancy ends and the landlord gets possession back, the landlord must mail or deliver an itemized list of damages along with any balance within 30 days. If the claim can't be determined in time, the landlord sends an interim accounting within 30 days and a final accounting within 60 days. The landlord may not keep any part for normal wear and tear, or more than actual damages (§ 42-52).

Late fees

A late fee may be charged only if rent is five calendar days or more late, counting from the day after rent was due. For monthly rent, the fee may not exceed $15 or 5% of the monthly rent, whichever is greater. A late fee may be imposed only once per late payment (§ 42-46(a)-(b)).

Fit premises and lawful eviction

Under § 42-42(a), the landlord must comply with building and housing codes and make repairs to keep the premises fit and habitable. The landlord must also keep common areas safe and maintain the electrical, plumbing, heating and similar systems, with the tenant giving written notice of needed repairs except in emergencies. Operable smoke alarms are required, and the landlord repairs or replaces them within 15 days of written notice.

The tenant, in turn, must keep their part of the premises clean and safe, dispose of waste properly, and not damage the property or disable smoke or carbon monoxide alarms (§ 42-43).

The Vacation Rental Act

A vacation rental is a rental of residential property for vacation, leisure or recreation for fewer than 90 days by someone who has a permanent residence to return to (§ 42A-4). Key rules:

• The written agreement must carry a conspicuous notice that it is a vacation rental agreement under the Act, including expedited eviction (§ 42A-11).
• Before the tenant moves in, the landlord or broker may not disburse more than 50% of the total rent, apart from authorized third-party fees (§ 42A-16(a)).
• Vacation rental security deposits must go into a trust account. A bond is not allowed. The deposit must be applied, accounted for or refunded within 45 days after the tenancy ends (§ 42A-18(a)).
• If the owner sells, the buyer takes title subject to vacation rental agreements ending within 180 days after the buyer's deed is recorded (§ 42A-19(a)).

Brokers managing rentals

• A broker is excused from delivering every lease to the owner within three days only if the broker has the owner's prior written authority, uses a preprinted form whose material terms the broker can't change, and gives the owner an accounting within 45 days of the lease. On the owner's request, the broker must still deliver any lease within five days (Rule 58A .0106(b)-(c)).
• Unlicensed leasing staff may show units, take applications, and complete preprinted form leases. They may not negotiate rent, deposits or lease terms (§ 93A-2(c)(6)).
• Disputed tenant security deposits follow Chapter 42 and § 42A-18, not the general trust-money dispute rule (Rule 58A .0116(d)).

Summary ejectment

The court eviction process a landlord must use to remove a residential tenant.

Vacation rental

A residential rental for vacation, leisure or recreation for fewer than 90 days by a tenant with a permanent home elsewhere.

Where this shows up on the exam

Landlord/Tenant is 3 of the 60 scored State items in the Pearson NC outline (April 2026). Know the deposit caps (2 weeks / 1.5 months / 2 months), the 30-day return, the 5-day late-fee trigger, and the Vacation Rental Act's 90-day, 50% and 45-day numbers.

Sources

North Carolina law as published by the General Assembly and the Office of Administrative Hearings, checked 2026-11-05:

• 21 NCAC 58A .0106(b)
• 21 NCAC 58A .0106(b)(3)
• 21 NCAC 58A .0106(c)
• 21 NCAC 58A .0116(d)
• N.C.G.S. § 42-25.6
• N.C.G.S. § 42-42(a)(1)
• N.C.G.S. § 42-42(a)(2)-(3)
• N.C.G.S. § 42-42(a)(4)
• N.C.G.S. § 42-42(a)(5)
• N.C.G.S. § 42-43(a)
• N.C.G.S. § 42-43(a)(4)
• N.C.G.S. § 42-46(a)
• N.C.G.S. § 42-46(a)(1)
• N.C.G.S. § 42-46(b)
• N.C.G.S. § 42-50
• N.C.G.S. § 42-51(a)
• N.C.G.S. § 42-51(a)(5)
• N.C.G.S. § 42-51(a)(6)-(7)
• N.C.G.S. § 42-51(b)
• N.C.G.S. § 42-52
• N.C.G.S. § 42A-11(a)
• N.C.G.S. § 42A-16(a)
• N.C.G.S. § 42A-18(a)
• N.C.G.S. § 42A-19(a)
• N.C.G.S. § 42A-4(3)
• N.C.G.S. § 93A-2(c)(6)
• Pearson VUE, Real Estate Licensing in North Carolina (April 2026), Examination Content Outline