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Problem landlord barred from taking security deposits

Release date: 4/10/2014

AG filed suit against Chapel Hill landlord who failed to return deposits

Chapel Hill:  A landlord who failed to return security deposits is now barred from taking security deposits from tenants, Attorney General Roy Cooper said today.

Orange County Superior Court Judge R. Allen Baddour, Jr. yesterday granted Cooper’s request to prohibit Ware Investments, LCC and its managing officer, James Ware Kelly, of Chapel Hill, from requesting or receiving security deposits from tenants.   

“North Carolina law is clear, and landlords need to know and follow the rules on security deposits,” Cooper said.

The preliminary injunction was issued as a result of a lawsuit Cooper filed in August, 2013, seeking to stop the defendants’ deceptive practices and win money back for student renters.  The case is continuing, and Cooper is seeking refunds for tenants who never got their security deposit back as well as civil penalties.
As alleged in Cooper’s complaint, Kelly and his company rent residential properties to university students in Chapel Hill and Durham.  They collected security deposits from tenants, which were then deposited in personal or regular business accounts instead of being placed into a separate trust account as required by law.   When tenants’ leases ended, Ware Investments and Kelly withheld tenants’ security deposits and did not provide a written record of any charges for which their deposits had been used.

“Educate yourself so you can avoid problems,” Cooper encouraged renters. “Many renters are signing new leases for next school year and putting down deposits right now, while others will be moving out next month and trying to get their deposits back.”

To prevent problems getting your security deposit back:

  • Check your lease and make sure you follow all deadlines for informing your landlord about when you plan to move out.   Many leases convert to month-to-month at the end of your year rental if you don’t give the landlord enough notice, which can cost you an extra month’s rent (usually deducted from your security deposit).
  • Participate in the landlord or building manager’s inspection of the property after you move out.  This can help you avoid having charges for normal wear and tear deducted from your deposit unfairly.  
  • Be sure to notify your landlord of your new address when you move out so that you can receive your security deposit refund promptly.

For more tips and help with landlord/tenant issues, contact the Attorney General’s Office at 1-877-5-NO-SCAM or visit

Contact:  Noelle Talley (919) 716-6413