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My tenant chose to leave before the end of the lease and bought a house. In reviewing the utilities after move out, I discovered the tenant was constantly late on the water bill, would only pay once they received the final shut off notice. They did the same thing at move out, I called to switch the water bill and discovered a lien was going to be placed on my property the next day if I did not pay the bill because it was so delinquent. The lease says that utilities are to be paid by tenant. When I contacted the tenant for immediate payment to prevent water shut off and a lien, they said they would not pay it, their new house is their priority. I do still have the security deposit which will be used to pay the bill, however my question is since the lease states tenant is to pay and they didn’t, is this grounds for keeping the whole security deposit since they technically broke the lease by not paying the water bill?

Itemize what you deduct from their security  deposit in a  letter

The tenant is responsible  for this utility  per  your lease?  If  they don't pay  it, you  need to pay it so it isn't attached to your property  tax bill, but  you also take  that  amount they were  responsible for from their  security  deposit.

Not a good idea to keep any deposit beyond the utility bill amount.  You didn't indicate whether you had an  agreement with the tenant  for leaving before  the end of the lease, that is another issue...

Hello. Assuming you allowed them to break lease by vacating early for the home purchase but then later changing your mind over the utility bill might not fly in court should they push the issue. Alot depends on the amount you've decided on keeping beyond the bill. Unfortunately, when a landlord is looking for restitution "above and beyond expenses", courts tend to side with the tenant.  Good Luck