Requirements to Remember In the Landlord Tenant Act

Many licensees are unaware that the Landlord Tenant Act limits fees a landlord or his property manager may charge when pursuing evictions or monies owed by a tenant, determines the timing of landlord security deposit accounting to tenants, imposes duties on landlords to provide fit premises, and permits tenants to terminate leases early in foreclosure situations. Since property managers often assist their landlord clients in complying with the law, an understanding of the requirements of the law is important.

Permitted Landlord Fees

In addition to allowable late fees, the law permits a landlord or property manager to charge a tenant in an eviction situation one of the following three additional fees pursuant to a written lease:

• Complaint Filing Fee – When a tenant is in default and sued for summary ejectment or money owed, but permitted by the landlord to cure the default, the landlord may charge the tenant a filing fee of $15 or 5% of the monthly rent, whichever is greater, even though the landlord dismisses the claim.
• Court Appearance Fee – When a landlord successfully sues a tenant in default in small claims court and the tenant does not appeal, the landlord may charge the tenant a fee of 10% of the monthly rent.
• Second Trial Fee – When a landlord successfully sues a tenant in default in small claims court and, if the tenant has appealed, and the landlord is also successful in district court, the landlord may charge the tenant up to 12% of the monthly rent. (Note that a property manager cannot act on behalf of a landlord at the district court level.)

Administrative fees in addition to court filing fees are no longer permitted when pursuing the eviction of a tenant or recovery of monies owed. Each of the defined fees is exclusive of the others and may only be charged in situations where the landlord has a written lease with the tenant. The law allows only one to be collected. The fee cannot be deducted from a subsequent rent payment and cannot be the basis of a default on the lease in a subsequent summary ejection action.

Security Deposit Accounting

The requirement that landlords account to tenants for security deposits within 30 days of tenancy termination was modified in 2009 to permit an interim report within 30 days and a final accounting within 60 days. The change provides additional time for landlords to obtain estimates and actual costs to repair any damage.

Under the statute, willful failure by a landlord to comply with the deposit, bond or notice requirements of the Tenant Security Deposit Act voids certain of the landlord’s rights. If a tenant does not receive an accounting in a timely manner, the tenant can sue the landlord and, despite any legitimate claims for damages, win the right to have the entire security deposit returned in addition to charging the landlord for attorney fees. Licensees should make certain they send notices in a timely manner and document files carefully to avoid liability for themselves or their landlord clients.

Duty to Provide Fit Premises

An entirely new section added in 2009 requires landlords to remedy any “imminently dangerous condition” once they have actual knowledge of it, whether they have received notice of it from the tenant or not. If the tenant caused the dangerous condition, the landlord/agent may charge the tenant the “actual and reasonable” cost of repairs. The term “imminently dangerous condition” means any of the following:

• Unsafe wiring, flooring, steps, ceilings or roofs, or chimneys or flues
• Lack of potable water, operable toilet, operable bathtub or shower
• Lack of operable locks on all doors leading outside, broken windows or a lack of operable locks on all ground level windows
• Lack of operable heating facilities capable of heating living area to 65° when it is 20° outside (November 1 – March 31)
• Rat infestation as a result of defects in the structure
• Excessive standing water, sewage or flooding problems caused by plumbing leaks or inadequate drainage that contribute to mosquito infestation or mold

Landlords must also supply carbon monoxide detectors on each level of any residential rental unit that has:

• A fireplace
• A fossil fuel burning heater or appliance (i.e. coal, oil or natural gas)
• An attached garage

Responsibility for repairs, installation and replacement of batteries are the same as current laws regarding smoke detectors.

Foreclosure and Tenant Rights

Tenants residing in residential properties with less than 15 rental units and being sold in foreclosure have the right to terminate their lease upon 10 days’ written notice to the landlord.  While a broker has a duty to disclose that a property is in foreclosure, frequently the broker only becomes aware of it after the Notice of Sale has been posted at the rental unit. A notice that has been posted constitutes receipt. Once the Notice of Sale is received, the tenant has the right to terminate early. At that point, the landlord/agent must prorate the rent to the effective date of the termination and cannot hold the tenant liable for any other rent or damages due only to the early termination.

Brokers should be aware that state and federal statutes can change from year to year. Property managers in particular should stay up to date with the changing laws to best represent and protect their landlord or tenant clients.  State laws and pending bills can be found on the North Carolina General Assembly website at www.ncleg.net.

This article came from the October 2011-Vol42-2 edition of the bulletin.