by Thomas R. Miller
Deputy Legal Counsel
Q. Residential property management is the most important part of my real estate practice. I am aware that under the Tenant Security Deposit Act, when a tenant moves out prior to the expiration of his lease, he does not automatically lose his security deposit. My question is this: May I add a provision to my lease form which would require the tenant to pay a $300 "termination fee" as liquidated damages if he breaches his lease?
A. No. Section 42-52 of the Tenant Security Deposit Act clearly states that the "landlord (or his agent) may not . . . retain any amount from the deposit which exceeds his actual damages." A landlord is not entitled to recover double rent or any other type of windfall at the tenant's expense. Neither the landlord nor his agent may circumvent the provisions of the Tenant Security Deposit Act by the use of a "termination fee", or forfeiture or liquidated damages clauses in residential leases.
Q. I am a licensed real estate broker engaged in the property management business. Recently, the owner of an apartment building which I manage notified me of his intent to sell the property. The new owner will be managing the property himself. What should I do with the tenant security deposits for this property which I now hold in my trust account?
A. Section 42-54 of the Tenant Security Deposit Act states that upon the termination of the landlord's interest in rental property, the landlord or his agent shall (after making lawful deductions) either return the deposits to each tenant or transfer them to the new landlord, notifying each tenant by mail of the transfer and of the new landlord's name and address. By doing either of the above, you will be relieved of any further liability regarding the deposits.
Q. Now that I have obtained my North Carolina real estate broker's license, are other brokers required to co-broker their listings with me?
A. No. Merely having a real estate license does not entitle a broker to share the listings of his fellow brokers. The right to split commissions is contractual and stems from an agreement between the listing and selling agents to cooperate in a given transaction.