A tenant in Carmel signs a two-year lease and pays a $1,500 security deposit. After 18 months, the landlord and tenant mutually agree to terminate the lease early. The tenant vacates and delivers possession on April 10. The landlord does not return the deposit or provide any written statement. On June 30, the tenant demands the full deposit back. The landlord argues that because the early termination was mutual, the standard 45-day rule does not apply. Which of the following best describes the legal outcome under Indiana law?
Correct Answer
B) The landlord must return the full deposit because the 45-day deadline passed on May 25, and the landlord forfeited all deduction rights
Under IC 32-31-3-12, the 45-day rule applies to all residential lease terminations, including early mutual terminations. There is no exemption for mutually agreed early terminations. The lease effectively terminated when the tenant delivered possession on April 10. The 45-day deadline therefore expired on May 25. Since the landlord failed to return the deposit or provide an itemized statement by May 25, IC 32-31-3-13 mandates forfeiture of all deduction rights, and the landlord must return the full $1,500 deposit.
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Related Topics & Key Terms
Key Terms:
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A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
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