Chapel Hill landlord ordered to return security deposits

Judge Allen Baddour also issued a permanent injunction to bar Ware Investments LLC and managing officer James Ware Kelley from collecting any more security deposits.

“Security deposits protect landlords from tenants but they should give them back if the tenants haven’t done anything wrong,” Cooper said in a statement. “The court agreed with us that these students deserve refunds and we’ll work to help them collect their money.”

The Attorney General's Office sued Kelley in 2013, alleging that he put security deposits in his personal and business bank accounts instead of a separate trust account as required by law. When tenants’ leases ended, Ware Investments and Kelley withheld the security deposits and failed to provide written records of how the deposits had been used, Cooper said.

Kelley failed to turn over records identifying all tenants who were owed money despite court orders to produce the information, Cooper said. The Attorney General's Office and Student Legal Services at the University of North Carolina at Chapel Hill have identified 27 former tenants owed from $350 to $1,410 by Kelley. Cooper asked that other former tenants who didn't get their security deposits back from Kelley file consumer complaints at www.ncdoj.gov or call 1-877-5-NO-SCAM toll-free within North Carolina.

Baddour's judgment covers $14,935 in refunds to renters, $96,000 in civil penalties and $12,000 in court costs. Noting that Kelley has filed for bankruptcy twice in the past four years, Cooper said his office will work to recover the refunds and penalties through the bankruptcy process and will file any new claims for security deposits with the bankruptcy court.