Legal opinion issued on rental refunds

Published 10:50 am Sunday, March 22, 2020

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The legal counsel of the North Carolina Real Estate Commission has clarified agency’s position about returning tenant funds held in trust by a real estate broker and about advanced disbursements.

Historically, writes legal counsel Janet B. Thoren, the state’s Real Estate Commission “has required North Carolina licensed vacation rental brokers to refund any and all funds held in trust, less certain statutory fees or earned commissions, where access to vacation rental homes is obstructed.”

The restricted entry is not an evacuation order. Visitors in Dare County on Tuesday, March 17, were not required to leave.

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However, under the county’s prohibition, vacation homeowners cannot provide access to units for tenants who have pending reservations. Tenants have the legal right to use and enjoy the leased property. When access can’t be provided, the vacation homeowner and the broker are required to refund all monies paid by the tenant.

If the broker has legally disbursed up to 50% of the rent to the rental home owner, the broker must return any funds held in trust. “Similarly, the landlord, and not the broker, is responsible for returning to the tenant the money the landlord received as an advance disbursement.”

The agency’s position concludes “a landlord who refuses to return money to a tenant may be subject to a civil suit by the tenant.”



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