Over the past months, the Coronavirus outbreak has continually risen, and business owners are urged to halt operations for the sake of common good. As a result, it’s no secret that times can’t get any harder than this if you’re trying to run your operations. 

From restaurants to clothing stores, nearly every business in Indianapolis is now facing a great wall in between themselves and continued operations. For landlords, in particular, the pressure to be as humane and understanding as possible can be even greater as local, state, and federal governments continue to stress the importance of deferring rent for the meantime.

Amid all the difficulties that have sprung due to the COVID-19 pandemic, the security deposits that your tenants have given you are one unlikely help that can be used to keep your cash flow smooth for some time. 

Why you shouldn’t return a tenant’s security deposit

Although it may seem unethical at first, the truth about security deposits is that it is far better to not return them at all in a time like this. In fact, it isn’t illegal at all to keep them. No matter how much a tenant may try to badger you about returning their security deposit, there are a few reasons you shouldn’t do so, all while staying with the confines of the law: 

In cases of non-payment

Given the current circumstances, chances are that your tenants aren’t paying rent, and probably won’t be able to for a while. 

To reach a middle ground, help your tenants keep a roof above their heads, and keep your business liquid, you can choose to withhold a security deposit so that you can still retain some funds. For cases like this, it is 100 percent legal to keep the safety deposit as the non-payment itself is classified as a breach of the lease. 

With regard to unpaid utilities

Another factor that can justify your choice to withhold your tenant’s security deposit is if they fail to pay their utility bills. If you discover that an occupant hasn’t been able to tend to their responsibilities as stated in your contract, then you are obliged to keep the amount they’ve left with you and use it as an alternative to settle unpaid dues without any problems.

On early termination

One common issue that many Indianapolis tenants are facing today is that most of their tenants are defaulting on their payments and terminating their leases before fulfilling their pre-arranged minimum term of the lease as stipulated.

While this may entirely depend on what exactly was written into your lease agreement, you can use such an occurrence as justification to recuperate lost income by keeping a security deposit. If you’re looking for a quicker way to check if your contract qualifies, you may want to look for an “early termination clause” in the writing itself.


As your cash flow becomes halted and business looks like it isn’t going back to normal anytime soon, it is vital to control the situation at hand by taking advantage of opportunities to recuperate costs and a lack of income. For property owners, this can be done by withholding security deposits. By watching out for any of the conditions mentioned above and taking the necessary steps to see if it all checks out, you can ease up the challenge of this difficult time by retaining funds that you can rely on!

Polaris Manage is a home rental, real estate, and fc property management company that services and homeowners in Indianapolis. As we take over your property to-do list, you’ll have more freedom to worry less, even if you live away from the property. Get in touch with us today!