Court orders refunds to student renters whose deposits were withheld

Refunds totaling $14,935 will be returned to 27 prior tenants of a Chapel Hill landlord who illegally withheld security deposits, an Orange County superior court judge ruled Monday.

Judge Allen Baddour entered a judgment and permanent injunction against James Ware Kelley and his firm, Ware Investments LLC, ordering them to pay the refunds as well as $96,000 in civil penalties and $12,000 in court costs, according to a press release from N.C. Attorney General Roy Cooper’s office.

The firm is also barred from collecting security deposits in the future.

“Security deposits protect landlords from tenants, but they should give them back if the tenants haven’t done anything wrong,” Cooper said in the release.

Kelley said in an email that he believes Cooper is targeting him because of his work investigating mortgage fraud.

“It’s the most likely reason Roy Cooper is attacking me,” he said. “Protecting big corporations that are campaign contributors instead of representing citizens.”

It’s been widely speculated that Cooper will run for governor in 2016.

Noelle Talley, spokeswoman for the N.C. Department of Justice, said the office cannot be sure how long it will take for tenants to receive the refunds, since Kelley filed for bankruptcy in Colorado in 2013.

“It’s tied up in bankruptcy court, so what our office will be doing next is going to bankruptcy court to try to collect on the judgment,” she said.

Talley said Kelley and his firm withheld tenants’ security deposits after their leases ended and did not provide tenants with written records describing the reasons the deposits had been withheld.

According to the press release, Kelley also placed tenants’ deposits in personal checking accounts rather than trust funds or insurance bonds as North Carolina law requires. Furthermore, Kelley did not comply with a court order to turn over records identifying the tenants who were owed money.

Cooper filed a lawsuit against Kelley in 2013. The tenants are owed refunds ranging from $350 to $1,410 and were identified through complaints to Carolina Student Legal Services and the attorney general’s consumer protection division.

Tristan Routh, a staff attorney at Student Legal Services, said he was aware of at least 14 complaints filed in that office by UNC students who were tenants of Kelley’s firm.

“It’s important to realize that you have rights as a tenant,” he said.

Talley said prior tenants of Kelley’s firm not included in the judgment can contact the attorney general’s office if they also had their deposits unreasonably withheld.

“It is a common issue, with student renters not always knowing that they’re entitled to get the security deposit back,” she said.

Routh said there are a number of ways students can protect themselves from having their security deposits withheld. They include getting a receipt for the deposit, making sure rules for the deposit are outlined in the lease and checking for damage to the property before the lease starts and after it ends.

“You should go over it with a fine-toothed comb,” he said.

city@dailytarheel.com