Thank you to Legal Aid of North Carolina – Charlotte Office for updating the below content with North Carolina information.
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4.1 – Overview
This chapter focuses on North Carolina statutory and common law regarding the rights of landlords and tenants with respect to residential leases. Be wary of relying on resource materials that may include general statements of what the law usually is across the nation, as North Carolina law is quite different from the laws of other states.
4.2 – Most Common Questions
Is a tenant entitled to terminate a lease if the dwelling is completely or partially unusable?
Maybe. See Q 4.1.
May a tenant withhold rent owing due to a landlord’s failure to repair the dwelling after the disaster?
Yes but subject to the risk of eviction. See Q 4.3 and Q 4.4.
What recourse does a tenant have if she cannot pay rent because of a lost job or wages?
Typically none, unless the tenant lives in subsidized housing. Emergency relief may be available. See Q 4.7.
What should a tenant do if a landlord tries to evict the tenant following the disaster?
See Q 4.13.
Does a tenant have any right to recover against any party, including a landlord or neighbor, because of personal property loss or damage?
Only if that party was negligent. See Q 4.15, Q 4.16, Q 4.20, Q 4.23 and Q 4.25.
4.3 – Summary of the Law
The landlord-tenant relationship in residential leases is governed by Articles 2A, 3, 4A, 5, 6, and 7 of Chapter 42 of the North Carolina General Statutes.
Chapter 42 is lengthy and complex. Callers should be strongly discouraged from taking actions until they thoroughly understand their rights, especially withholding rent and/or terminating the lease.
It is important to note that in many situations the lease contains applicable provisions. Sometimes a statute only applies if the lease is silent. Every analysis of a tenant’s rights should begin with a thorough reading of their lease.
Commercial leases are governed by common law (i.e., cases). Parties to commercial leases are given wide latitude in crafting their agreements in any way so long as the terms violate no law or important public policy. Therefore, the lease document will almost exclusively govern the relationship. If a particular situation is not expressly contemplated or addressed by the lease, then the relevant case law and rules of contract construction will apply.
A landlord may not lock-out a tenant without going through the court process. N.C. Gen. Stat. § 42-25.7. A landlord is required to file and serve a complaint for summary ejectment. N.C. Gen. Stat. § 42-25.6. Trial usually occurs within two weeks. N.C. Gen. Stat. § 42-28. The losing party may appeal – within ten days – for a new trial in District Court. N.C. Gen. Stat. § 7A-228. If the tenant lost, the tenant can remain in the home during the appeal as long as the tenant pays the required bond to the court. N.C. Gen. Stat. § 42-34. The amount of the bond is the undisputed amount of past due rent as well as rent since the trial date. Id. If the tenant qualifies as indigent, he will need to file a Petition to Proceed as an Indigent and the bond will only be the rent since the trial date. Id. During the appeal, the tenant must pay the rent when due to the court to keep the landlord from obtaining a writ of possession. Id.
Article 6 of Chapter 42 deals with security deposits. Within 30 days after the termination of the tenancy, the landlord must itemize in writing any use of the security deposit and return the balance to the tenant. N.C. Gen. Stat. § 42-52. The tenant must advise the landlord where to send the written itemization and/or the deposit. If the landlord cannot determine its claim against the security deposit within 30 days, the landlord can provide an interim accounting within 30 days and a final accounting in 60 days. Id.
Permitted uses of the security deposit are rent due; damages to the premises, damages as a result of ending the lease early, unpaid bills attributable to tenant that become a lien on the property; the costs of re-renting the property after a breach by the tenant; and the costs of removing and storing a tenant’s possessions after a summary ejectment action. N.C. Gen. Stat. § 42-51.
Landlords have a duty to keep the premises in a habitable condition. N.C. Gen. Stat. § 42-42. If they fail to do so, a tenant may not owe the full amount of rent. After property is damaged by a storm, the tenant should notify, in writing, the landlord of everything that is damaged. The tenant should keep a dated copy of all notices provided to the landlord. Some local housing codes (e.g. Mecklenburg County) list certain conditions that render the premises “imminently dangerous” and proclaim it is illegal for a landlord to collect any rent if any of those conditions exist. Tenants should check their local housing codes.
The next step will be determined by the extent of the damage.
If the damage is insignificant, the tenant should continue to pay rent.
If the damage is significant, the tenant should call the local residential code enforcement office to have the property inspected. Landlords will be ordered to repair property and can be fined for failing to do so within a reasonable time. Reports by code enforcement are valuable in disputes between the tenant and the landlord.
If the damage is significant but the tenant can continue to live in the home, the tenant should attempt to negotiate with the landlord a credit or reduced rent until the damage is repaired. If an agreement is made, it should be put in writing and signed by both parties. If the parties cannot agree on a credit or reduced rent, the tenant will need to decide whether to withhold all or some of the rent.
The starting point is that a tenant owes rent. If, however, a landlord fails to repair significant damage promptly, the landlord is entitled to collect only the fair rental value of the property in its actual condition. If the tenant has paid her rent in full, the tenant can assert a claim against the landlord for the diminished value of the property. If the tenant pays less than the fair rental value of her property, the tenant can be evicted and will owe the difference. Thus, the tenant’s best move is to pay the rent in full and assert a claim against the landlord. The following example demonstrates the risk of unilaterally withholding rent.
If tenant’s rent is $600 per month but the storm has destroyed one of the house’s two bedrooms. Tenant thinks that with one bedroom destroyed, the home is worth only $300 per month and pays the landlord that amount. The landlord could file to evict the tenant for non-payment of rent. The tenant could file a counterclaim for breach of the implied warranty of habitability. If the court found the landlord breached the implied warranty of habitability, the court would have to determine the fair rental value of the home in its damaged condition. That is a very subjective determination and there is no way to predict accurately the value that a magistrate will apply. If the magistrate determined the damaged home was worth $400 per month, the tenant would be evicted and would owe $100 for each month that she underpaid. If the magistrate determined that the damaged home was worth $300 per month, the tenant would not be evicted and no one would get a money judgment. If the magistrate determined that the damaged home was worth $200 per month, the tenant would not evicted and would get a money judgment for $100 for each month that she overpaid. If the tenant has underpaid, the landlord has the right to have the tenant evicted – even if the tenant then offers to pay the difference (though the landlord could agree to let the tenant pay and remain in the property). For this reason, withholding rent is a risky approach for a tenant.
If the damage to the home is so substantial that the tenant cannot live in the home safely, then the tenant should attempt to reach an agreement with the landlord regarding (i) rent already paid; (ii) possibly terminating the lease, (iii) future rent until the home becomes habitable (presumably none), (iv) rent if the home is habitable but before all repairs are done; (v) the date of repairs; and (vi) what will be done with personal property in the home during repairs.
If the tenant cannot reach an agreement with the landlord, the tenant will have to decide whether to pay or withhold rent. If the tenant no longer lives at the property, the threat of an eviction is less significant (though an eviction judgment could negatively impact a tenant’s ability to rent elsewhere) and the tenant is more likely to prove that the fair rental value of the home is zero. However, the landlord may argue that the home has some rental value, perhaps as a storage unit – which may be persuasive if tenant has left belongings in the home.
Landlord’s Duty to Name all Occupants in an Eviction Suit
If an eviction is based on a written lease, then a landlord must sue, by name, all tenants who are obligated under the lease. If the landlord does not name each person who is obligated under the lease, those not named cannot be evicted and a writ of possession cannot be issued against that person.
4.4 – Assistance Numbers
American Red Cross Disaster Services Relief Hotline
Better Business Bureau
NCBA Legal Disaster Hotline
NC Department of Insurance Consumer Helpline
NC Attorney General
4.5 – FAQs
4.5.1 – General Questions
Q 4.1 – What are my rights if I want to terminate my lease following the disaster?
The first step should be to try to negotiate a termination with your landlord (after reading your lease). If you reach an agreement, put it in writing and have both parties sign it. If the landlord will not agree, the tenant could either (i) vacate the property, stop paying rent, and hope to convince a magistrate that the home is uninhabitable or that you had a right to terminate (if the landlord files suit, which it may not); or (ii) sue the landlord for a declaration that the tenant has been constructively evicted and that the lease should be terminated. It may be difficult to prevail in a lawsuit if the landlord repairs the home promptly.
4.2 – If the premises are totally unusable because of the disaster, do I have to permanently move out even though I want to stay?
If a government agency, e.g., the local building department, declares the premises off limits for residential use, the tenant will not be able to reside in it until repairs are made. The tenant should try to reach an agreement with her landlord, presumably at a lower rent rate until the property is habitable. If an agreement is not made, the tenant will need to decide whether to pay rent.
Q 4.3 – If the dwelling is partially unusable because of the disaster and if I don’t want to permanently move out, can my rent be partially abated (temporarily reduced)?
Yes. However, the tenant can only get the reduction if the landlord agrees or by a court order. If the tenant unilaterally stops paying rent or pays less than the full amount, the landlord may file for summary ejectment and will prevail if the court determines the tenant owes the landlord money.
Q 4.4 – May I withhold payment of rent because of the disaster or because the landlord has failed to timely repair the dwelling after the disaster?
Tenants may withhold rent because of damage to the premises, but doing so without an agreement with the landlord or a court order is risky because if a tenant withholds too much rent, the tenant will be subject to being evicted for failing to pay. If the landlord requires a tenant to pay the full rent for damaged property, tenant can later assert a claim for the amount overpaid. In addition, if the landlord demanded full rent while knowing of the damage, tenant may be able to recover treble damages. Thus, tenant should (i) inform landlord in writing of all defects as soon as possible; (ii) seek an agreement regarding a reduced rent; and (iii) if an agreement is not possible, full pay and then file suit.
There are no statutes regarding repairs made by tenants. Tenants should review their lease for applicable provisions. Tenants who repair their homes may not be able to recover their costs. A court would consider how much time tenant gave landlord to make the repairs, how much tenant spent, and how much it would have cost landlord to make the repairs. There is no case law regarding whether tenant could recover anything for his time making the repairs.
Q 4.5 – My current unit is uninhabitable due to a disaster, but my landlord has another available. Is landlord required to make the other unit available? Can landlord make me sign another lease contract extending the length of my lease in order to move to the new unit?
No. Neither the landlord nor the tenant has any obligation with respect to other available housing unless expressly set forth in the lease.
Q 4.6 – Do I have to keep paying rent to my landlord while I am not living at my house/apartment?
Yes, unless and until the lease is terminated (by agreement, court order, or terms of the lease) or the tenant has an agreement with the landlord to do otherwise (in writing, to protect the parties).
Q 4.7 – What can happen and what should I do if I cannot pay the rent on my dwelling because of job or salary interruptions following the disaster?
Temporary government rent assistance may be available from the Federal Emergency Management Agency (FEMA) or other governmental agencies. Disaster Unemployment Assistance (DUA) may be available to you if you do not qualify for standard Unemployment Insurance (UI), are unemployed as a direct result of the disaster, are able and available to work, file an application for DUA within thirty days of the date of announcement of the availability of DUA, and have not refused in employment in a suitable position.
If your lease is terminated by your landlord because the premises are totally unusable, you must move out—regardless of whether you can or cannot pay the rent. If you do not leave, the landlord cannot use self-help to remove you—the landlord will have to file an eviction case against you in court and seek an order to remove you. If you live in public or federally subsidized housing or receive Section 8 assistance, you are entitled, in most circumstances, to have your rent reduced when you suffer a loss in income. You must notify your landlord or the housing authority. If the premises are only partially unusable and if you don’t pay the abated (partially reduced) rent, you must move out if the landlord asks you to — unless you and your landlord agree otherwise. If the landlord is entitled to evict you and you do not move after the landlord has given you notice to vacate, you can be evicted only through a court eviction lawsuit.
Q 4.8 – How could I pay rent if I wanted to?
It is recommended that you contact your landlord to determine what methods of payment may be
viable. Should you be unable to successfully contact your landlord, sending a personal check via certified mail to the address set forth in the lease agreement or the last provided address, if different, is advisable. Depending on the landlord, it may also have a website and have payment or other information related to the disaster on such site.
Q 4.9 – Can my landlord rent my home/apartment to someone else while I am gone?
No. The landlord must honor the lease until the lease is terminated. If the landlord wants you out in order to move someone else in, then the premises are obviously not “totally unusable” and the landlord cannot terminate the lease. If the landlord unlawfully locks you out, you should contact a lawyer for assistance.
Q 4.10 – How do I contact my landlord?
It is advisable to try every means of communication available, including, but not limited to: telephone calls to every available phone number, e-mail correspondence, and letters sent via mail to the address set forth in the lease agreement or last provided address, if different. Depending on the landlord, it may also have a website and have contact or other information related to the disaster on such site. The tenant should document all efforts and attempts to contact her landlord.
Q 4.11 – My landlord told me to move out because the dwelling is totally unusable after the disaster. Do I have to move out?
Only if the landlord properly terminates the lease (and uses the summary ejectment process) or a governmental agency declares the property uninhabitable.
Q 4.12 – My landlord told me to move out the next day because he wants the dwelling for his daughter who lost her house in the flood. He told me if I didn’t move out, he’d change the locks. Do I have to move out?
No. The landlord must continue to honor the terms of the lease. The landlord may not change the locks to prevent the tenant from entering the dwelling for such a reason.
Q 4.13 – What should I do if I am served with an eviction lawsuit?
You should carefully read the summons to see the date, time, and location of your trial; it will be very soon. You should carefully read the complaint, particularly paragraph 3, to see your landlord’s basis for trying to evict you. You can represent yourself, you can hire a lawyer, or you can seek free counsel from Legal Aid Of NC.
Q 4.14 – How can I recover my personal property from the leased premises?
FEMA and federal security officials are going to be in control of when and how evacuees are allowed to return to their homes.
Between evacuation and when the agencies permit a return, the best advice we can give an evacuee is to try to contact the landlord and determine whether the landlord (i) knows anything about the condition of the property, and (ii) has been able to do anything to secure the property.
4.5.2 – Landlord or Previous Homeowner Fraud or Negligence
Q 4.15 – May I recover damages against my landlord for injuries or property damage I suffered as a result of the disaster?
When the injury or property damage results from a natural disaster and not from the landlord’s negligence, the landlord is not liable for such injury or property damage. However, you can sue your landlord if the landlord’s negligence caused or contributed to your injuries or damage from the disaster.
Q 4.16 – I have suffered personal injuries, or loss or damage to my personal belongings from the disaster. May I recover damages against my landlord or the previous homeowner if they knew about the possibility of flooding and failed to inform me?
If the landlord or seller made an affirmative misrepresentation concerning the possibility of flooding, the tenant or buyer may be able to sue the landlord or seller for fraud to recover for property damages or personal injuries. If you knew, however, that the property could flood or did not rely on the affirmative misrepresentation, then you will not be able to recover damages.
If the landlord or seller said nothing about the possibility of flooding, then you will probably not be able to recover any damages. Generally, the mere failure to disclose a fact known by the seller or landlord is not fraud. However, failure to disclose the possibility of flooding may, under certain circumstances, support a lawsuit against a landlord or seller who knew of past flooding or knew of the possibility of flooding. Active concealment of known past flooding (for example, painting over flood water marks on walls) may also be the basis for tenant recovery. See 37 Am. Jur. 2d, Fraud and Deceit, 144-146.
Q 4.17 – Can I recover damages against my landlord or the previous homeowner if they didn’t know about the possibility of flooding?
No. As a general rule, the tenant or buyer cannot recover from the landlord or previous owner a loss or damage from flooding if the landlord or previous owner knew nothing about past flooding or the possibility of flooding, and did not tell the tenant or buyer that the property was not subject to flooding.
4.5.3 – Insurance Coverage
Q 4.18 – All of my personal belongings were destroyed at the place I rent. What help can I get from my insurance company?
If you had renter’s insurance or homeowner’s contents insurance at the time of the storm, contact your insurance company. If your situation is desperate, make sure you describe your situation to the insurance company. If the insurance company agrees that there is coverage, you can ask for advance payment to cover a part of your loss.
Emergency assistance may be available from local Volunteer Agencies (i.e., Red Cross, Salvation Army, United Way).
Q 4.19 – What should I do if I do not have insurance on my personal belongings?
If your losses are not covered by insurance, you may be able to receive money for “Other than Housing Needs” that are the result of a disaster from FEMA to replace necessary items of personal property. “Other than Housing Needs” assistance is available for necessary expenses and serious needs caused by the disaster. You may also wish to contact the Red Cross, which may be able to help you.
Q 4.20 – If my personal belongings are lost or damaged as a result of the hurricane, flood or other disaster, may I recover damages front my landlord under the landlord’s hazard insurance policy?
No. The landlord has no “insurable interest” in the tenant’s property, and therefore, the landlord’s hazard insurance cannot (and does not) insure the tenant’s personal property.
However, if the damage or loss of the tenant’s property is due in whole or in part to the landlord’s negligence, the tenant may be able to sue the landlord and the loss may be covered by the landlord’s liability insurance carrier.
Q 4.21 – Is flood damage to my home covered under my insurance policy?
Your homeowner’s insurance policy (sometimes called a “casualty insurance policy,” “hazard insurance policy,” or “fire and extended coverage policy”) probably does not cover flood damage. The policy may cover water damage inside the home from direct or blowing rainfall, but it probably does not cover damage from surface water or rising water. Windstorm insurance normally will be limited to greater-than-normal wind conditions, such as from a disaster. You should carefully read your policy, talk to your insurance agent, and consult an attorney if you have questions.
Flood insurance may be purchased from the federal government under the National Flood Insurance Program (NFIP). You can buy policies from any state-licensed local agent if your community is participating in the NFIP. There is usually a thirty-day grace period after purchasing flood coverage until it goes into effect. Visit http://www.fema.gov/media-library/assets/documents/272?id=1404 for information and Frequently Asked Questions.
Q 4.22 – Does my automobile insurance cover the damage to my car resulting from the disaster?
Normally, disaster damage to an owner’s vehicle will be covered under the owner’s comprehensive auto coverage, although specific language in the policy and any express policy exclusions will control.
Q 4.23 – May I recover damages against my neighbor whose property damaged my property during the disaster?
The general rule is that a person is not liable for injuries or damages caused by a natural disaster or “Act of God” where there is no fault of negligence on the part of the owner whose property caused damage to others during the disaster. Therefore, your neighbor is liable only when he or she was negligent and such negligence was a cause of the damage. See 1 Am. Jur. 2d, Act of God, 11, 15; and 57 Am. Jur. 2d, Negligence, 669.
Q 4.24 – What can I do with someone else’s property, which the disaster carried onto my land?
When personal property is carried away by flood, wind or explosion onto the land of another, such personal property still belongs to the original owner and the original owner may enter and retrieve it. If the landowner refuses to let the owner of the personal property enter, or if the landowner appropriates the property for the landowner’s own use, the owner of the personal property can sue the landowner for the value of the property. The landowner is an “involuntary bailee” and has the right to possession of the property against all others, except the true owner. The landowner may, if necessary, move the property to use the land, provided it is done in a reasonable manner. The landowner may not damage the property either intentionally or through gross negligence. See 1 Am. Jur. 2d. Abandoned, Lost, Etc., Property, 24-27.
Q 4.25 – May I sue the local, state or federal government for damages caused by the disaster?
Under some circumstances, the government may have liability if its employees were negligent and caused the damages. However, under the doctrine of “sovereign immunity,” governmental authorities are generally immune from liability for the negligent acts of their agents and employees. The doctrine of sovereign immunity normally applies to “governmental functions” such as crime prevention, flood control, firefighting, preservation of health, etc.
Q 4.26 – What about my commercial lease?
In commercial leases, the common law has not been pre-empted by statute. Therefore, you must review the provisions, preferably with an attorney if possible, to determine the scope of your rights and obligations.
Q 4.27 – Must I continue paying rent for my commercial lease space (office, retail, mini-storage, etc.) even though it has been rendered totally or partially unusable by the disaster?
The particular provisions of a commercial lease will control.