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A landlord was not entitled to damages and was ordered to return a security deposit after the Court of Appeals of Indiana found error at the trial court.
In January 2020, Montgomery Scott Turner and Morgan Mitchell entered into a rental property agreement with Roxanna Knowles for a residence in Mitchell.
As part of the agreement, the tenants paid a $650 security deposit. They later renewed their lease with the security deposit carrying over.
In May 2022, the landlord informed the residents that rent would be raised. The tenants informed the landlord via mail that they did not accept the increase and would be moving out by June 1. They also proved a new mailing address for their security deposit to be sent to.
Also, the tenants had already paid their rent through June 21, so they sought remittance of the unused balance of the rent.
The landlord responded by demanding that the tenants vacate within 30 days of May 10. But less than 30 days later, on June 2, the landlord filed a complaint for eviction against the tenants.
A hearing on the complaint was held on June 15, but the tenants didn’t appear because they were not served with the complaint. At the hearing, the landlord stated the tenants had already left the residence on June 7 when they returned the keys.
The Lawrence Superior Court ordered the tenants evicted and set a hearing for damages for Aug. 3.
After the tenants became aware of the proceeding, they retained counsel and moved to set aside the eviction order due to the lack of service of process. The court granted the motion but denied the motion for a continuance of the damages hearing.
At the damages hearing, the tenants presented undisputed evidence that the landlord never provided them with an “itemized receipt accounting for damages” or their security deposit.
The court ultimately found the landlord was entitled to damages for the physical condition of the residence, which amounted to $4,727.05, reduced by $500 for loss of value and the already-paid security deposit.
The tenants filed a motion to correct error, which was denied because “the Indiana Code’s provisions on the return of security deposits did not apply here because the ‘surrender and acceptance’ of the residence ‘occurred on June 21 by virtue of’ the Tenants’ having paid their rent through that date.”
The tenants brought one issue on appeal: whether the Lawrence Superior Court erred when it concluded that the surrender and acceptance of the residence happened on June 21 rather than on June 7.
Reversing, the appellate court wrote, “The Indiana Code is clear that where, as here, a landlord fails to provide a tenant with notice of damages within forty-five days of the termination of a lease under I.C. § 32-31-3-15, the landlord agrees as a matter of law that ‘no damages are due, and the landlord must remit to the tenant immediately the full security deposit.’
“Thus, the trial court erred when it awarded damages to the Landlord for physical damage at the residence and did not order the Landlord to return the $650 security deposit to the Tenants,” Judge Paul Mathias wrote. “We therefore reverse the trial court’s judgment and remand with instructions to vacate its award of damages for the Landlord and order the Landlord to return the $650 security deposit to the Tenants. We further instruct the trial court on remand to determine the Tenants’ reasonable fees and costs in accordance with Indiana Code section 32-31-3-16.”
The case is Montgomery Scott Turner and Morgan Mitchell v. Roxanna Knowles, 22A-EV-2622.
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