If the tenant breaks the lease, am I obligated to returntheir deposit?

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If the tenant breaks the lease, am I obligated to returntheir deposit?

My current tenant signed a year lease, now not even 3 months into the agreement, he wants to break the lease. Am I obligated to return his deposit?

Asked on July 20, 2011 Indiana

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

According to the relevant section of the IN Code, IC 32-7-5-12, upon termination of a rental agreement all of the security deposit held by a landlord must be returned to a tenant except for, among other things, any amounts that are applied to accrued rent. So basically, you can keep all or part of a security deposit for any past due rent that is owed. As to the remaining rent that is owed but not yet due, its unclear if you could apply the security deposit to that. One thing is for sure, your tenant owes you for rent from the date of their last payment until you are able to re-rent the premises, including any damages (e.g. costs for advertising for a new tenant, etc). To collect these amounts you may have to take your tenant to small claims court. At this point you should place a quick call into a local attorney who specializes in landlord-tenant law to confirm all of this.


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