Prior to 2012, a landlord could require a lien on a motor vehicle owned by a tenant as a security deposit or to secure payment of rent by the tenant. On July 1, 2012, a new law went into effect that prohibits landlords from requiring a lien on a motor vehicle owned by a tenant.
The Indiana Code now states: “A landlord may not require, but may accept, a lien on a motor vehicle that is owned by a tenant as a security deposit or to secure the payment of rent by the tenant.” If a landlord accepts a lien, the landlord must comply with other sections of the Code that deal with liens and security deposits.
Keep in mind that the new law allows a landlord to accept an offer from a tenant for a lien. However, this could cause potential problems. Landlords will need to document and be able to demonstrate that the tenant offered the lien, and that the landlord did not require one. The attorneys at GRIFFITH LAW GROUP have developed, and recommend that property managers and real estate investors use, a standard form which complies with all of the requirements of the new law. If you have questions regarding this matter, please contact your attorney.