North Carolina - Security Deposit Trust Accounts

[Shaun Palmer]

Hey BPer's

I am trying to understand the legal aspect of security deposits as it pertains to a trust account in North Carolina.  Basically, the NC Statutes state this:

§ 42-50. Deposits from the tenant.

Security deposits from the tenant in residential dwelling units shall be deposited in a trust account with a licensed and federally insured depository institution lawfully doing business in this State or the landlord may, at his option, furnish a bond from an insurance company licensed to do business in North Carolina. The security deposits from the tenant may be held in a trust account outside of the State of North Carolina only if the landlord provides the tenant with an adequate bond in the amount of said deposits. The landlord or his agent shall notify the tenant within 30 days after the beginning of the lease term of the name and address of the bank or institution where his deposit is currently located or the name of the insurance company providing the bond. (1977, c. 914, s. 1; 2015-93, s. 2.)

What I am most interested in is the "Trust Account".  I am not interested in furnishing a bond.  Maybe this is a simple question but does this have to be set up through a service or could this just be my bank and I hold the money?  Just trying to make sure I am doing things correctly as I am getting started.  Thanks in advance. Shaun

[Gregory Walter]

Having the account labelled "trust account" or "escrow account" is important, as is keeping funds separate from your own, as is the account being held at a NC bank.  Those are the big three for security deposit accounts in NC.