Landlord-Tenant: Of scam warnings and Why There are Lawyers

I moved the following out of the comments section to here:

Beware of the following scam: The renter makes an agreement w/the landlord to apply 1/2 of the security deposit to cleaning the apartment. The landlord is then to return the other half after approval of the apartment. The renter then asks the landlord to convert the deposit to the last months rent. Then the renter sues in court to get 1/2 of the security deposit returned per the original agreement. The landlord then looses 1-month's rent when the court upholds the original agreement. This happened.

The writer does not identify themselves as a landlord or a tenant, a Hoosier or a foreigner, or how they came to learn of this "scam".

As I see it, this was not a scam. The landlord did not consult with its attorney before altering the original contract. Indiana law (IC 32-31-3-9) sets out the uses for a security deposit as generally "....deposit paid by a tenant to the landlord or the landlord's agent to be held for all or a part of the term of the rental agreement to secure performance of any obligation of the tenant under the rental agreement" and then gives a bit more detail as:

(1) a required prepayment of rent other than the first full rental payment period of the lease agreement;
(2) a sum required to be paid as rent in any rental period in excess of the average rent for the term; and
(3) any other amount of money or property returnable to the tenant on condition of return of the rental unit by the tenant in a condition as required by the rental agreement.

I see nothing in the quoted statement of facts that makes the money paid anything other than a security deposit. Being a security deposit, the landlord must comply with Indiana's law on security deposits.

I wrote about security deposits and rental property in Landlord-Tenant matters: security deposits. You should probably read that to get a bit more detail on the subject than I am providing here. Under Indiana's security deposit statute, the landlord must provide an accounting of what was done with the security deposit. Not doing so left the landlord open to a lawsuit for the money (and attorney fees).

What I see is not a scam played upon an innocent landlord by a fraudster. What I do see are these scenarios or some variant on them:

1. The landlord lacked any experience with Indiana's security deposit law and did not seek any legal advice. Any lawyer could tell the landlord the problems with this deal.
   
2. The landlord chose to ignore Indiana's security deposit law and chose not to seek any legal advice - either through ignorance or the idea that doing so was a waste of money.

The tenant made the landlord follow the law on security deposits. A law that does not offer many exceptions but the landlord failed to use the exceptions available to it.

I would not suggest any landlord doing what this landlord did without talking to me first. Then I would have counseled the landlord how to avoid problems with the security deposit. Cost? Less than going to court and losing.