Email Dave Email
Feb 15, 2016

Security Deposit Tips For Rental Properties

Sponsored Content provided by Dave Sweyer - Owner and Broker, Sweyer Property Management

Requiring a security deposit is one of the standard components of renting out your investment property. Holding a deposit benefits the owner as it protects you from paying out of pocket for repairs that exceed the standards of normal wear and tear. But do you know what you should be doing as a property owner with that security deposit?

The security deposit is a predetermined amount that is provided by the tenants upon their approval to lease a property, and it is meant to cover any unusual or extreme damages that occur during their occupancy. When the lease expires and the tenants vacate, the security deposit is returned to them, minus any costs you may have to deduct to cover excessive damages.

It sounds simple, right?

Unfortunately there can be a lot of confusion regarding the collection of a security deposit, where it must be held, and disbursing it at lease end. This may not only cause friction between the tenants and owners, but in some cases can lead to legal action being taken by tenants.

If you own rental properties, there are a few tips you should keep in mind regarding managing security deposis:

  1. Set clear expectations in writing. Be sure that your tenants understand before they even put the deposit down what they are responsible for and what costs you will be forced to deduct at the end of their lease if applicable. Put it in writing! Don’t allow for any negotiable items at the end of a lease term.
  2. Know the law. As a property owner, the security deposit is meant to protect you, but there are certain items and repairs for which you cannot legally deduct money or charge a tenant. Start with this link to get acquainted with North Carolina law surrounding security deposits.
  3. Keep the security deposit in a trust account. According to North Carolina law, tenants’ security deposits must be kept in trust accounts for the duration of tenancy. Keeping the security deposit in the appropriate bank account is vitally important to long-term property ownership. Not only will this help end-of-year reconciliations, but it will assure that the security deposit is properly earmarked and ready to be disbursed back to the tenants when they vacate. You should never comingle accounts (this is illegal) and you should talk to an accountant about establishing a trust or escrow account.
  4. Charge the appropriate amount. Be sure to get the number right. You need to make sure the amount charged for a security deposit is enough to cover any repairs you may need to make; however, keep in mind that a security deposit in North Carolina can never exceed an amount equal to two months’ rent.
  5. Know your community association’s rules and be sure those are part of the tenants’ expectations. If your rental property is in a community governed by association rules, be sure that tenants understand that they must comply with those rules. If your tenants are in violation of community covenants, you will need funds at your disposal to get your property into compliance, pay any fines or both. These types of situations can be avoided if you are sure all expectations are clearly set in writing with your tenants and that they’ve been provided a copy of the community rules.
  6. Document the property. Before new tenants occupy your rental home, be sure to do a walkthrough and make a video of the entire property, inside and out. This will make any damage claims at the end of the lease easier to prove as the video provides you visual proof of the property’s condition at the beginning of the lease.
The importance of collecting a security deposit and setting clear expectations at the outset of a tenant’s occupancy cannot be emphasized enough. As a property owner, it is vital that you seize the opportunity to set expectations and collect funds to protect your property from potential damages. It is in an owner’s best interest to document property condition, be knowledgeable of community rules, set clear expectations, request the correct amount in deposit funds, and comply with all state laws.
If you need assistance, we are here to answer questions and offer our expertise. With nearly 30 years of experience managing rental properties in the Cape Fear region, Sweyer Property Management is uniquely positioned to help you manage the entire process, starting with that ever-important security deposit. We’ll even film your property’s virtual tour!
Give us a call today to find out how we can help you ensure that you are protecting your property with the security deposit.
Sweyer Property Management has been providing real estate property management services and long-term rentals to the Wilmington area since 1987. The company continues to be the industry leader with more than 1400+ units and more than 20 employees. Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland and Hampstead areas while maintaining a 4.8 Google+ rating for customer service. To inquire about the company’s full-service management services, or to take a tour of houses for rent in the area, email [email protected], or visit You can also Like and follow the Sweyer Property Management Facebook page to get property management tips or see properties for rent.


Sweyer animated 300x250 ad
Ico insights



“Late-Stage” College Planning in Four Steps

Brett Tushingham - Tushingham Wealth Strategies
Mike stonestreet 300x300

Don’t Let Wildlife Invade Your Life

Mike Stonestreet - CAMS (Community Association Management Services)

Why Volunteer for a Nonprofit Board?

Yasmin Tomkinson - Cape Fear Literacy Council

Trending News

A First Look At Independence Mall's Upcoming Transformation

Cece Nunn - Mar 19, 2018

Three People Named Fulbright Recipients For The 2017-18 Academic Year

Christina Haley O'Neal - Mar 20, 2018

Tayloe/Gray Expands Services With Packaging Expert

Christina Haley O'Neal - Mar 20, 2018

GE Aviation Invested $36M In Wilmington Last Year

Christina Haley O'Neal - Mar 20, 2018

The Grove At Live Oak Bank Wins Wood Design Award

Christina Haley O'Neal - Mar 20, 2018

In The Current Issue

2018 MADE Honors Region’s Makers  

In the third year of our MADE Awards competition, the winners covered a wide range of products being conceived and produced in the local mar...

MADE Winners - Arts Category

Intracoastal Iron & Metalwork LLC, Second Set Designs LLC/Tachits and TAY HAM are the winners in the MADE Arts Category....

MADE Winners - Functional Product Category

Flow Sciences LLC, Maverick American Spearfishing and Surgilum made the list of MADE Winners in the Functional Product Category....

Book On Business

The 2018 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!



WilmingtonBiz Expo - Keynote Lunch with John Gizdic, CEO, New Hanover Regional Medical Center
Wilmington's Most Intriguing People of 2017
2017 Health Care Heroes