March 13, 2009
HOUSE BILL No. 1081
DIGEST OF HB 1081
(Updated March 11, 2009 12:57 pm - DI 106)
Citations Affected: IC 32-31.
Synopsis: Requires the owner or former owner of residential real
property containing four or fewer rental units to notify the tenants if a
judgment of foreclosure is entered concerning the property, and permits
a tenant to terminate a rental agreement if a judgment of foreclosure is
entered against the owner or former owner. Authorizes a tenant to bring
a civil action if the owner or former owner does not comply with the
notice provisions, and provides that a tenant who terminates a rental
agreement early in compliance with the statute does not forfeit the
damage deposit due to the early termination, but may still be liable for
actual damages. Specifies that the notice provisions do not apply to:
(1) an action in which the plaintiff states in the complaint that the
foreclosure will not affect the rights of a nondefaulting tenant; and (2)
real property where a receiver has been appointed. Makes conforming
Effective: July 1, 2009.
(SENATE SPONSORS _ LUBBERS, BRODEN, BRAY, LANANE,
January 7, 2009, read first time and referred to Committee on Judiciary.
February 5, 2009, amended, reported _ Do Pass.
February 9, 2009, read second time, amended, ordered engrossed.
February 10, 2009, engrossed. Read third time, passed. Yeas 55, nays 41.
February 19, 2009, read first time and referred to Committee on Judiciary.
March 12, 2009, amended, reported favorably _ Do Pass.
March 13, 2009
First Regular Session 116th General Assembly (2009)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type
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Additions: Whenever a new statutory provision is being enacted (or a new constitutional
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will appear in that style type in the introductory clause of each SECTION that adds
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Conflict reconciliation: Text in a statute in this style type
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between statutes enacted by the 2008 Regular Session of the General Assembly.
HOUSE BILL No. 1081
A BILL FOR AN ACT to amend the Indiana Code concerning
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 32-31-3-13; (09)EH1081.1.1. -->
SECTION 1. IC 32-31-3-13 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 13. A security deposit
may be used only for the following purposes:
(1) To reimburse the landlord for actual damages to the rental unit
or any ancillary facility that are not the result of ordinary wear and
(2) To pay the landlord for:
(A) all rent in arrearage under the rental agreement; and
(B) rent due for premature termination of the rental agreement
by the tenant. However, this clause does not apply to a
rental agreement terminated in accordance with
(3) To pay for the last payment period of a residential rental
agreement if a written agreement between the landlord and the
tenant stipulates that the security deposit will serve as the last
payment of rent due. However, if a rental agreement is
terminated in accordance with IC 32-31-8-7, this subdivision
applies only to the prorated rent due, if any.
(4) To reimburse the landlord for utility or sewer charges paid by
the landlord that are:
(A) the obligation of the tenant under the rental agreement;
(B) unpaid by the tenant.
SOURCE: IC 32-31-8-1; (09)EH1081.1.2. -->
SECTION 2. IC 32-31-8-1, AS AMENDED BY P.L.62-2008,
SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2009]: Sec. 1. (a) Except as provided in section 7 of this
chapter or in subsection (b), this chapter applies only to dwelling units
that are let for rent under a rental agreement entered into after June 30,
(b) This chapter does not apply to dwelling units that are let for rent
with an option to purchase under an agreement entered into before July
SOURCE: IC 32-31-8-7; (09)EH1081.1.3. -->
SECTION 3. IC 32-31-8-7 IS ADDED TO THE INDIANA CODE
AS A NEW
SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2009]: Sec. 7. (a) This section applies to rental agreements
entered into, extended, or renewed after June 30, 2009.
(b) This section applies only to real property containing one (1),
two (2), three (3), or four (4) rental units that is the subject of a
judgment of foreclosure under IC 32-30-10-5. However, this section
does not apply if:
(1) a receiver is appointed in the foreclosure action under
IC 32-30-5; or
(2) if the plaintiff asking foreclosure states in its complaint
that the foreclosure will not affect the rights of a tenant not in
default of the tenant's lease.
(c) As used in this section, "former landlord" means the
landlord at the time the judgment of foreclosure was entered.
(d) As used in this section, "former owner" means the owner at
the time the judgment of foreclosure was entered.
(e) Not later than ten (10) days after the judgment of foreclosure
on real property described in subsection (b) is entered, the former
owner of the real property shall provide each tenant with written
(1) the judgment of foreclosure; and
(2) the tenant's rights under this section;
by registered or certified mail.
(f) A tenant of real property described in subsection (b) has the
right to terminate the tenant's rental agreement upon written
notice delivered to the former landlord. Termination of a rental
agreement under this subsection is effective on a date established
by the tenant, but not earlier than:
(1) ten (10) days after the tenant receives the written notice
described in subsection (e); or
(2) ten (10) days after the date the judgment of foreclosure is
entered, if the tenant does not timely receive the written
notice described in subsection (e).
(g) A tenant who terminates a rental agreement under this
section is liable for all rent and other charges due under the rental
agreement to the effective date of termination, in an amount that
is prorated to the effective date of termination. Rent due under this
subsection is payable at the time it would have been payable under
the terms of the rental agreement being terminated.
(h) Except for the rent and other charges payable as described
in subsection (g), a tenant who terminates a rental agreement
under this section is not liable for any other rent or charges solely
because of the early termination of the rental agreement. However,
a tenant may be liable for other charges if the tenant causes
damage to the rental premises.
(i) A tenant may bring an action in any court having jurisdiction
to enforce an obligation of a former owner or a former landlord
under this section, or to obtain a remedy for the former owner's
noncompliance. If the tenant prevails in an action brought under
this section, the tenant may recover:
(1) actual and consequential damages;
(2) reasonable attorney's fees and court costs; and
(3) reasonable relocation expenses.
(j) A waiver of this chapter by a landlord or current or former
tenant, by contract or otherwise, is void.