Lessee vs. landlord/owner

My Landlord lost her home and the bank contacted me regarding the situation. The bank stated they now owned the house, so to avoid any type of altercations/problems I decided to move out. So I told the landlord I was not going to pay her the months rent, not only because the bank stated they're the owners but because i am not going to be there the full month. She does not want to give me the deposit back, instead the owner is using it as rent for day to day until we leave the house.

Did you pay this month's rent? If not, the LL is entitled to use your deposit to pay the unpaid rent owed to her. Did you check the county tax auditor and court records websites to see if the bank has officially retaken the house yet? They may only be in the process of doing so. Until their name is on the tax auditor's records, they don't own the place yet.

I did pay the rent for this month. It was due on the 15th and I dropped it off on the 14th. That rent was from November 15th through December 15th. The house didn't burn completely and I think he is probably going to restore the damage, but who knows how long that is going to be. The fire inspector demanded the structural damage fixed within 24 hours, and that was a week ago. There has not yet been one person in that house except for us moving our stuff out.

"The house didn't burn completely and I think he is probably going to restore the damage, but who knows how long that is going to be."

Where did this information come from? You didn't state anything about this previously! It is important to give all the facts when posting so we can give acurate info. When was the fire and when was the fire marshall there? Had you stated this earlier, it may have been possible that you could have just deposited rent with the clerk of court (rent withholding) instead of paying the LL. Or depending on state law, you may have the option to cancel the lease immediately if the house is uninhabitable and get an expedited return of your deposit.