Tuesday, May 31, 2011


The following is a call to action sent out by the Triangle Apartment Association today requesting that all landlords act to support the Bed Bug Bill. Here it is:

House Bill 721 is being heard in the House Commerce & Job Development Committee (tomorrow) Wednesday, June 1 at 10:00AM.

HB 721 attempts to clarify North Carolina public policy by articulating certain duties and “safe harbors” for the respective parties:

Landlords shall not knowingly lease apartments with Bed Bug problems;

Tenants have a duty to report any Bed Bug infestation within 5 days of suspecting it;

Landlords may obtain an inspection from a licensed pest control company that a dwelling unit is Bed Bug-free; such inspection is conclusive evidence for Landlord compliance with the law;

When inspection reports are issued to Landlords, subsequent infestation treatment is assumed to be the Tenant’s responsibility;

Tenants in so-called “source apartments” may be responsible for infestation treatment in adjacent apartments;

Failure of Tenants to comply can result in a.) Landlord contracting for an infestation treatment and billing the Tenant; b.) termination of the tenancy; or c.) pursuit of damages.

We encourage all TAA members (and interested landlords) to contact Committee members and ask them to support the bill. Below please find talking points and a list of contact information for all House Commerce & Job Development Committee Members.

Landlord Tenant Bedbug Liability Talking Points

Bedbugs are a increasingly persistent threat to public health, and incidents of bedbug infestation are increasing across the state;

Current law offers little guidance or clarity on issues of liability and landlords are often left to deal with unreported infestations;

Unreported infestations are much more costly to mitigate, and can spread to adjacent units, leading to higher housing costs statewide;

This legislation would prohibit landlords from offering for lease or entering into a rental agreement for any premises that the landlord knows to be infested by bedbugs;

Landlords are responsible for providing safe and healthy conditions for their tenants; however, tenants also have a responsibility to maintain healthy conditions;

House Bill 721 recognizes the limits of current science regarding bedbugs, by allowing landlords to seek an inspection before a unit is rented or requiring them to treat any bed bugs within a 60-day grace period in newly rented units;

House Bill 721 also provides incentives to tenants to be mindful of infestation symptoms and report infestations quickly, leading to lower mitigation costs and reduced risk of infestations spreading.

House Commerce and Job Development Committee
2011-12 Members

Representative Daniel F. McComas, Chair
New Hanover County

Representative William Brawley, Vice Chair
Mecklenburg County

Representative D. Craig Horn, Vice chair
Union County

Representative Carolyn H. Justice, Vice Chair
New Hanover, Pender Counties

Representative Tim D. Moffitt, Vice Chair
Buncombe County

Representative Phil R. Shepard, Vice Chair
Onslow County

Representative Fred F. Steen, II, Vice Chair
Rowan County

Representative Mike C. Stone, Vice Chair
Harnett, Lee Counties

Representative Alma Adams
Guilford County

Representative Kelly M. Alexander, Jr.
Mecklenburg County

Representative Marilyn Avila
Wake County

Representative Larry M. Bell
Sampson, Wayne Counties

Representative James L. Boles, Jr.
Moore County

Representative Glen Bradley
Franklin, Halifax, Nash Counties

Representative Marcus Brandon
Guilford County

Representative Larry R. Brown
Davidson, Forsyth Counties

Representative Harold J. Brubaker
Randolph County

Representative Becky Carney
Mecklenburg County

Representative Jeff Collins
Nash County

Representative Bill Cook
Beaufort, Pitt Counties

Representative William A. Current, Sr.
Gaston County

Representative Jerry C. Dockham
Davidson County

Representative Nelson Dollar
Wake County

Representative Jean Farmer-Butterfield
Edgecombe, Wilson Counties

Representative Elmer Floyd
Cumberland County

Representative Dale R. Folwell
Forsyth County

Representative Phillip Frye
Avery, Caldwell, Mitchell, Yancey Counties

Representative Ken Goodman
Montgomery, Richmond Counties

Representative Charles Graham
Robeson County

Representative Mike Hager
Cleveland, Rutherford Counties

Representative Susi H. Hamilton
New Hanover County

Representative Kelly E. Hastings
Cleveland, Gaston Counties

Representative Dewey L. Hill
Brunswick, Columbus Counties

Representative Bryan R. Holloway
Rockingham, Stokes Counties

Representative Maggie Jeffus
Guilford County

Representative Linda P. Johnson
Cabarrus County

Representative Stephen A. LaRoque
Greene, Lenoir, Wayne Counties

Representative David R. Lewis
Harnett County

Representative Marvin W. Lucas
Cumberland County

Representative Darrell G. McCormick
Iredell, Surry, Yadkin Counties

Representative Marian N. McLawhorn
Pitt County

Representative Rodney W. Moore
Mecklenburg County

Representative Tom Murry
Wake County

Representative Bill Owens
Camden, Currituck, Pasquotank, Tyrrell

Representative Diane Parfitt
Cumberland County

Representative Garland E. Pierce
Hoke, Robeson, Scotland Counties

Representative Ray Rapp
Haywood, Madison, Yancey Counties

Representative Efton M. Sager
Wayne County

Representative Ruth Samuelson
Mecklenburg County

Representative Norman W. Sanderson
Craven, Pamlico Counties

Representative Mitchell S. Setzer
Catawba, Iredell Counties

Representative Timothy L. Spear
Chowan, Dare, Hyde, Washington Counties

Representative Edgar V. Starnes
Caldwell County

Representative Joe P. Tolson
Edgecombe, Wilson Counties

Representative John A. Torbett
Gaston County

Representative William L. Wainwright
Craven, Lenoir Counties

Representative Edith D. Warren
Martin, Pitt Counties

Representative Harry Warren
Rowan County

Representative Roger West
Cherokee, Clay, Graham, Macon Counties

Representative W. A. (Winkie) Wilkins
Durham, Person Counties

Representative Larry Womble
Forsyth County

Representative Michael H. Wray
Northampton, Vance, Warren Counties

Please contact committee members as soon as possible & urge them to support House Bill 721! Thank you for taking action on this very important apartment industry legislative priority!

Monday, May 30, 2011


Not to be outdone, Durham is getting ready to introduce its own version of Raleigh's Probationary Rental Occupancy Permit Ordinance (or "PROP"), as a three-year inspection program. According to the article below there would not be a fee, the City of Durham is taking suggestions on how the program is to be structured until year's end, and the program would roll out beginning in July 2012.

If I was a betting man, and I am, I would put good money on this "no fee" program becoming a fee based program within the next five years, and one more tax on local landlords. For that matter if it is a no fee program then everyone pays. The city already has the ability to inspect units where complaints have been made. This coupled with the fact that no one is told who to rent from and where to live, make this program unnecessary at best.

There is currently a bill pending in both houses of the North Carolina General Assembly that would make this program illegal. This bill is H 554 in the House, and S 683 in the Senate.

If you wish to stop this proposed Durham Rental Inspection the first thing you should do is contact your local legislators and let them know you support these bills. The second thing you can do is to contact Durham and give them your input.

Here is the article that ran in the N&O and the Durham News:
Durham to crack down on subpar rentals - Durham County - NewsObserver.com

If you are frustrated by the one-sided slant of this article you are not alone!

Wednesday, May 25, 2011

Who Can Manage Real Property In North Carolina?

Where would you even look to find the answer to this question?
Other than asking a knowledgeable landlord tenant attorney, or reading this blog (published by a knowledgeable landlord tenant attorney), the Real Estate Commission website has a lot of information for anyone who is interested in the regulation of real estate in North Carolina.

First Question: What is Property Management?

According to the NC Real Estate commission, the term "property management" encompasses a broad range of complex activities, it may in its simplest form be said to consist of (1) procuring suitable tenants for rental property, (2) collecting rents/security deposits, (3) providing for the care and maintenance of the leased premises, and (4) maintaining records regarding the property.

Second Question: Who Can Manage Real Property?

The list is pretty short: 1) a licensed realtor; 2)the property owner; 3) employees of the property owner; 3)a manager in the owner's limited liability company (the manager means in the formal LLC sense, but they do not have to also be a member); and clerical, maintenance or janitorial personnel or other person~ who are not involved in the renting' or leasing of real estate.

Third Question: Who Is An Employee of the Owner?

To determine whether persons are regular employees of the property owner (as opposed to agents or independent contractors), the Real Estate Licensing Board applies the following tests:

Does the property owner personally exercise strict control and supervision over such persons?

Does the property owner compensate these persons on a salary basis rather than on a commission or transactional basis?

Does the property owner pay social security taxes on their earnings?

If the answer to any of these questions is "no", then a presumption is raised that the person is not, in fact, an employee of the property owner, and therefore a real estate license would be required in order for this person to handle real estate transactions for the owner.

Fourth Question: Can a Real Estate Broker Form a Management Company And Employ Unlicensed Individuals to Manage Property Under His Supervision?

In a word, NO.

Fifth Question: Is It Really A Big Deal If I Manage A Property Without Authority?

To act as an agent in the leasing or renting of real estate without the required license(s) is a criminal offense.

When employing a management company you should confirm that they are licensed to manage property in North Carolina. As a final thought, not all management companies are equally knowledgeable and effective. Make sure that they are experienced and keep abreast of the constantly changes laws and ordinances that affect your property and your tenants.

Norman D. Praet, Esq. - Assisting owners and managers of rental property.

Sunday, May 15, 2011


Unless you have been living under a rock you know that those tiny little bed bugs are a big problems for landlords, both large and small. Getting rid of the bed bugs is currently only the first part of the problem. For a landlord dealing with the costs of extermination and the costs of damages to the tenant and surrounding tenants can be almost as big a headache as the bugs themselves.

This is amplified because there is no statutory framework to guide the courts in how they should deal with this issue. Given the court's tendency to rule in favor of tenants there is a very real risk that landlords will be found to have breached their duty to provide habitable premises if bed bugs are found. This is particularly unjust because the odds of a landlord causing a bed bug outbreak are very small.

The Apartment Association of North Carolina has come up with a solution to the uncertainty in House Bill 721.

What does the bill do?

The main part of he bill is as follows:

"§ 42‑43.1. Bedbug infestation; landlord and tenant obligations.

(a) A tenant shall notify his or her landlord, in writing, within five days of suspecting the presence of any infestation of the species cimex lectularius, also known as bedbugs. If the landlord did not obtain a certificate from a licensed pest control company as provided in G.S. 42‑42(a)(9), and the tenant took initial possession of the premises less than 30 days before the written notification was given, then, within five days of receiving the notice from the tenant, the landlord shall contract with a licensed pest control company to exterminate any bedbugs in the premises. If the landlord did obtain a certificate from a licensed pest control company as provided in G.S. 42‑42(a)(9), or if at least 30 days have passed since the tenant took initial possession of the premises, it shall be the tenant's responsibility to have the bedbugs in the premises exterminated.

(b) Where the tenant is responsible for the extermination of bedbugs, the landlord may provide the tenant with either the name, address, and telephone number of the licensed pest control company that certified the premises were free of an infestation of bedbugs or with the name, address, and telephone number of pest control companies that the landlord deems reputable. Within seven days of notifying the landlord of the suspected presence of bedbugs, the tenant shall do both of the following: (i) contract with one of the licensed pest control companies suggested by the landlord or, if no companies were suggested, with any licensed pest control company, and (ii) have the premises treated for bedbugs by the licensed pest control company. In all situations, the tenant shall allow the landlord and the licensed pest control company access to the premises and shall carefully follow all instructions provided by the landlord or licensed pest control company to facilitate the elimination of bedbugs. Where the tenant is responsible for the extermination of bedbugs, the tenant shall be solely responsible for any fees charged by the licensed pest control company and any damages associated with the presence and elimination of bedbugs from the premises and any attached units and spaces, and the tenant shall furnish to the landlord proof from the licensed pest control company of the services performed.

(c) After a licensed pest control company has treated the premises and deemed the premises free of an infestation of bedbugs, the tenant shall be responsible for all subsequent infestations. However, whenever a tenant notifies the landlord of the presence of bedbugs, if it is determined by a licensed pest control company that the source of the bedbugs is an adjacent unit, then the tenant in the source unit shall be responsible for the extermination of the bedbugs in accordance with the provisions of this section.

(d) The failure of any tenant to comply with the provisions of this section shall be a breach of the tenant's obligations under G.S. 42‑43(a)(8), and the landlord may do any or all of the following: (i) contract with a licensed pest control company at the tenant's expense to exterminate the bedbugs; (ii) terminate the tenant's tenancy; or (iii) pursue a cause of action against the tenant for damages."

The bill also includes complying with the new statute as part of a landlord's responsibilities under NC. Gen. Stat. 42-43(a), and allows a landlord to deduct from the security deposit if the tenant fails to comply.

Where is the bill now?

On May 18, 2011, the bill was assigned to the Subcommittee of Business and Labor within the Committee on Commerce and Job Development.

What can I do now about bed bug liability?
You probably can't make any changes affecting your current unexpired leases. However, all expired tenancies are fair game for bed bug provisions. Until this bill is passed a landlord's best bet is to use a Bed Bug Lease Addendum detailing the responsibilities of the landlord and the tenant in the event bed bugs are discovered on the rental premises. AANC is preparing a Bed Bug Lease Addendum for its members that should be available shortly! If you are not an AANC or TAA member you should use the same care in preparing this addendum that you do in preparing your lease!

Monday, May 9, 2011


House Bill 493 is advancing! To most readers that probably sounds about as interesting as "Blah Blah Blah, Blah Blah." If you are a landlord or property manager in North Carolina you will want to become more informed about H493 and possibly make a telephone call or two supporting it.

Why You Should Care.
As many of you are aware there is not exactly a level playing field when you get to court with under North Carolina landlord tenant laws as they are generally applied. The laws have been drifting towards the tenants for some time now. It was determined that the current political make-up of the state legislature made it a good time to try and change that. So far I have written about the Anti-Prop bill here. There are several other bills in addition to the Anti-Prop that have been introduced with the assistance of the Apartment Association of North Carolina and local affiliates such as the Triangle Apartment Association, to make life just a little easier for the North Carolina landlords.

Back to the topic at hand: H493-Landlord Tenant Changes:

This bill addresses several sections of the North Carolina Landlord Tenant Law, N.C. Gen. Stat. 42.

What Does H493 Change?

The changes proposed in H493 include:

d. Requiring tenant to pay into court amounts to cover landlord’s “reasonable damages” and costs upon appeal of summary ejectment action;
e. Allowing clerk to issue writ of possession if tenant is five days late on undertaking for appeal;
f. Reducing time for tenant to collect property after eviction from ten to five days;
g. Landlord’s acceptance of partial rent payment is no longer a defense to eviction action for holdover; and
h. Providing for a “cleaning fee” in vacation rentals.

The following proposed changes were removed by the committee:

a. Expediting securing of rental premises after death of sole tenant;
b. Allowing landlord to give dead tenant’s property to next of kin;
c. Providing for service of summons by “authorized process server,” and not just “sheriff;”

Where is H493 now?
H493 is currently scheduled for discussion and a vote by the entire House on May 16, 2011.

What Can I Do?

You can show your support by contacting your local house representative and letting them know that you are in favor of the bill and that you would like them to support it too.

Friday, May 6, 2011


I recently had an out of state owner of North Carolina rental property retain me to answer this question, which would seem to be a fair question. Mortgages have accelerations clauses as do many other loans, why not a residential lease.

I will start out by answering the first question some of you may have, namely “what is an acceleration clause?” An acceleration clause in this instance is a lease provision that would accelerate all the rent due over the term of the lease to be due immediately upon a breach of the lease.

There is no statutory law “on point” regarding acceleration clauses in residential leases. It is not specifically mentioned in Chapter 42 (the Landlord/Tenant Statutes) or in Chapter 75 (Unfair and Deceptive Trade Practices Statues). So we need to look a little deeper. Essentially, the acceleration clause frees a landlord from his duty to mitigate (or reduce) his damages and accelerates the collection process. The law in North Carolina is that the non-breaching party to a residential lease contract has a duty to mitigate his damages upon breach of such contract. Allowing a landlord to accelerate the rent due upon the tenant’s breach would release the landlord from this duty to mitigate. The North Carolina Court of Appeals has held that it is lawful for a commercial landlord to negotiate a lease that negates his duty to mitigate. The Court made clear that it found these contract provisions enforceable because they believe commercial parties to be of equal bargaining power. The Court specifically stated that this reasoning did not extend to “such a clause in a residential lease, which presents an entirely different situation.”

The court would likely find an acceleration clause in a residential contract to be unenforceable as a violation of public policy. The North Carolina courts and legislature take a much more “paternalistic” approach to residential tenants, because they believe that residential tenants are in a signif icantly weaker bargaining position relative to property owners. This is likely because neither the judges nor the legislators have been residential tenants for quite some time. As an example, the Court of Appeals found a landlord who attempted to collect fees that he was not owed (a late fee that was $1 in excess of the 5% statutory late fee cap) violated both the state’s Unfair & Deceptive Trade Practices Act and the North Carolina Debt Collectors Act. Violations of these acts may result in an award to the tenant of treble damages or a $2,000.00 fine, and attorneys’ fees. Further, if the court finds that in applying an acceleration clause a landlord has wrongfully withheld a security deposit, the tenant may be awarded attorneys’ fees.

Rather than attempting to enforce an acceleration clause, it is a much better policy to obtain the maximum security deposit, use a good lease that provides for all the fees to a tenant allowed by North Carolina tenancy law, and not hesitate to file a legal action to enforce the lease immediately upon default.

Legal Disclaimer

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Nothing in this blog shall create an attorney-client relationship. The opinions expressed herein are those of the blogger and not of the PRAET LAW FIRM, PLLC.