North Carolina Residential Rental Lease Agreement

Successful Landlord

Residential lease agreements are contracts between a tenant and landlord. Unlike a contract for the sale of good or services, many provisions for these agreements are governed by state laws and by some federal laws. Landlords seeking to rent a unit or other property for residential purposes may look to the North Carolina Residential Rental Agreement Act for the restrictions, duties and obligations of both tenant and landlord.

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Every North Carolina residential lease agreement should have basic provisions so that both parties may understand their respective obligations regarding rent, maintenance, repairs and termination. Implied in each contract is the landlord’s duty to provide a habitable residence. A landlord may not discriminate against a tenant, or prospective tenant, on the basis of race, color, creed, ancestry, religion, gender, familial status and disability.

The following are provisions that should be included in your lease agreement:

  1. Name of landlord and address to which the tenant should pay rent, send notices and serve a summons or other court documents
  2. Names of the tenants who will be living on the premises
  3. Rental term—weekly, monthly, yearly or other
  4. Rent and due date for each month—tenant may pay up to 4 days beyond due date without penalties
  5. Late fees-no more than $15 or 5% of the monthly rent, whichever is greater
  6. Returned check fee of $25
  7. Security deposit-there are limits on what a landlord may charge
  8. Obligations of the tenant
  9. Obligations of the landlord
  10. Responsibility for utilities
  11. Landlord entry—reasonable time, usually 24-hours unless an emergency
  12. No commercial use of the unit
  13. No criminal activity
  14. Termination notice requirements
  15. Notice of increase in rent
  16. Pet clause—a reasonable nonrefundable deposit is allowed
  17. Subletting clause
  18. Disclosure of the presence of any lead-based paint or hazards on the property for rental property built before 1978—both landlord and tenant must sign an EPA-approved disclosure form and the tenant provided an EPA pamphlet entitled “Protect Your Family from Lead in Your Home (federal requirement)

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Landlord Obligations
A North Carolina landlord has certain obligations to a tenant including:

  • Providing smoke detectors that have been properly installed with new batteries at the beginning of each new tenancy and to replace or repair them if the tenant makes such a request
  • Maintaining common areas in a safe condition
  • Providing functional heating, electricity, plumbing, ventilating, sanitary and air conditioning systems, locks on doors and windows and to repair holes and cracks in doors and walls
  • Keeping the premises free from rodent infestation
  • Making repairs in a reasonable time if the tenant makes a request including only an oral request if an emergency

Tenant Obligations
A tenant has the following obligations:

  • Keeping the leased premises clean and safe and create no unsanitary or unsafe conditions
  • Disposing of trash, ashes and rubbish in a safe and sanitary manner
  • Keeping plumbing fixtures clean
  • To not deface, damage or destroy or remove any part of the premises and to not render inoperable the smoke alarm
  • To allow the landlord entry to make repairs or to show the unit to prospective tenants, buyers or others upon reasonable notice
  • To notify the landlord if the smoke alarm becomes inoperable and to replace batteries at the tenant’s expense
  • To send written notice to the landlord if there are needed repairs or an unsafe condition exists

Should the landlord neglect to make the needed repairs, there is no statute allowing the tenant to deduct a portion of the rent to make the repairs. If you attempt to evict the tenant on this basis, it is likely you will not prevail if the repairs requested were reasonable and were part of your obligations to the tenant.

Security Deposits
As a North Carolina landlord, you are limited by the amount you can request for the security deposit. For a yearly lease, the deposit may not be more than 2 month’s rent. For a monthly, it is one and half times the monthly rent. For a weekly lease, it is limited to 2-weeks’ rent.

You have to deposit the security funds in a separate trust account in a state bank or obtain a security deposit bond in the amount of the deposit from an insurance company. You have 30-days after the lease begins to notify the tenant of the location of the trust account or the name of the insurer for the bond. No accrued interest on the funds is required to be given to the tenant.

You must provide a move-out checklist with an itemized list of the damages and costs within 30-days of the tenant’s vacating the unit. You may also retain all or part of the deposit for the following reasons:

  1. Unpaid rent
  2. Damage to the unit that is not the result of normal wear and tear or deterioration
  3. Unpaid bills of the tenant that have become a lien on the premises
  4. Damages incurred as a result of the tenant’ early termination
  5. Cost of re-letting the premises
  6. Costs of removing and storing tenant’s property after eviction
  7. Court costs associated with eviction

Domestic Violence Situations
You may not evict, fail to renew or refuse to enter into a lease agreement with someone who has been the victim of domestic violence. A tenant who has become the victim of domestic violence may terminate a lease before the expiration of the lease term upon 30-days’ notice and with proof of domestic violence status. You cannot penalize the tenant by retaining any portion of the security deposit in such circumstances. Under these circumstances, you must also upon request by the tenant change the locks or re-key the doors within 48 or 72 hours of the request depending on the situation.

Termination of Lease for Nonpayment of Rent
If the tenant fails to pay the rent on time in a fixed time clause, there is a 5-day grace period. Unless you provide in the lease that you can begin immediate eviction proceedings if the tenant has not paid by the 5th day, the tenant can cure the failure to pay within 10 days after you request that the tenant pay all the rent that is due.

Lease Termination for Other Lease Violations
Should the tenant violate any other provision in the lease other than nonpayment of rent, such as engaging in unlawful activities, creating a constant nuisance to other tenants or having unauthorized persons living in the unit, you can immediately begin eviction proceedings. It is up to you whether you want to allow the tenant to cure the violation.

NC Notice to Quit
If the tenant wishes to terminate the tenancy on a month-to-month, the notice to quit must be given 7 days before the end of the monthly period or before the rent is due. A yearly lease requires a 30-day notice before the end of the current year of the tenancy. If a weekly lease, the notice is only 2-days.

In the event the tenant wishes to terminate the lease early, you can have a provision that allows the tenant to vacate at any time with a 30-day notice, which is automatic if a month-to-month lease, without further obligation to pay the remaining rent due. Otherwise, the tenant is responsible for the rent still due to the last day of the rental term, though you do have to make a reasonable effort to find a replacement tenant. If you do not, then a court might only award you limited damages.

Termination for Military Personnel
Under North Carolina law, if the tenant is in the military and has received permanent change of station orders at least 50 miles from the rental unit, then the tenant is allowed to terminate the lease upon 30-days’ written notice to the landlord. The termination is effective 30-days after the landlord receives the notice, along with a copy of the official orders or if verified in writing by the tenant’s commanding officer. This also applies in case the tenant is prematurely or involuntarily discharged from the military.

If the tenant is deployed with his/her unit for not less than 90 days, the tenant may also terminate the lease upon written notice accompanied by a copy of the military orders or verification by the commanding officer. The effective date of termination is 30-days after the first date on which the rent is due or 45-days from the date the landlord receives the notice, whichever is shorter.

What is Constructive Eviction?
Constructive eviction occurs when conditions become so intolerable that the tenant is forced to vacate. This may include the landlord’s failure to repair an unsafe condition or provide basic utilities. The tenant may go to court, usually small claims, to get damages for having to move out based on the landlord’s negligence or breach of duties under the lease. Court fees may be awarded but not attorney’s fees.

No Self-Help Eviction or Retaliatory Eviction
A landlord may not evict a tenant without a valid eviction order or re-take possession by forcing the tenant out. This includes changing the locks, shutting off utilities, harassing the tenant.

Retaliatory eviction refers to a landlord who tries to evict a tenant because the tenant made complaints about the premises or the landlord’s failure to repair or maintain the unit to a government authority or the landlord’s supervisor, if any. Other protected actions include participating in a tenants’ union or in exercising any other rights prescribed by law. If the landlord undertakes any eviction action within 12-months of any of these activities by the tenant, the tenant may recover damages in court.

For any North Carolina residential lease agreement, be sure you understand your duties and obligations under state and federal laws. If you have concerns about your rights and remedies, consult with a North Carolina landlord/tenant attorney.

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