North Carolina Department of Justice
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Cooper schools student landlord on security deposits

Release date: 8/1/2013

AG files suit against Chapel Hill landlord for failure to return deposits

Chapel Hill:  A landlord who failed to maintain and return security deposits must repay renters and reform his ways, Attorney General Roy Cooper said today.
Cooper filed suit against Ware Investments, LCC and its managing officer, James Ware Kelley, of Chapel Hill last week, seeking to stop their deceptive practices and win money back for student renters.  He is asking the courts to require Kelley and his company to repay tenants’ security deposits and also pay civil penalties to the state.
“Some landlords need to be taught a lesson,” Cooper said.  “The law on security deposits is clear and they must follow it.”
As alleged in Cooper’s complaint, Kelley 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 Kelley withheld tenants’ security deposits and did not provide a written record of any charges for which their deposits had been used.
An example illustrates how Kelley and Ware Investments have failed to abide by the law when it comes to security deposits.   Two students rented an apartment from the defendant in Chapel Hill, and both wrote checks for security deposits when they signed a lease in March, 2011.  Documents show that Kelley then deposited their security deposit checks into a regular business checking account rather than a designated trust account as required by law.   When the roommates moved out in July, 2012, Kelley failed to return their security deposits or otherwise account for them, even after receiving a demand letter from the renters’ attorney. 
Kelley and his company have been sued repeatedly by tenants in Orange County courts for similar problems, and plaintiffs in those cases have succeeded.
“Across the state, many college students will soon be moving into apartments for the new school year, and we want first-time renters to know their rights so they can avoid getting ripped off,” Cooper said.
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.

Cooper’s office has also put together Renting 101: Tips for first-time renters, which is being sent to all college and university student newspapers in the state.
For more tips and help with landlord/tenant issues, contact the Attorney General’s Office at 1-877-5-NO-SCAM or visit

Media contact:  Noelle Talley (919) 716-6413