My tenant has informed me that he is unable to pay this month rent and wants to move out. MY understanding is that they forfeit the deposit and are to be charged a porated daily fee until the home is rented again.

Is this correct?

It depends on what is contained in the written lease. If the lease does not address a default by the tenant then the general rule is that the tenant is still responsible for payment of rent until the property is re-rented or the lease term ends, whichever is earlier. Most state laws require that the landlord make a reasonable effort to re-rent the property but some locations, such as Florida, do not require the landlord to mitigate his damages.

The deposit is not automatically forfeited unless the written lease says so. The deposit is intended to cover the landlord for damage to the property beyond ordinary wear and tear. You have to send the tenant a written statement of the accounting of the deposit within 2 to 4 weeks after they move out. (The actual time depends on your state's law.) In addition to damages the deposit can be applied to any outstanding rental balance, but you still have to send the tenant that written accounting within the 2 or 4 week period.

At the top of the Real Estate Law forum is a sticky post containing links to the landlord/tenant laws for all of the states.

A couple of points to add to Lisa's response. The key here is when the lease expires. If there is a current lease that expires in 6 months for example, the tenant can't just decide to move. The tenant would be responsible for the rent until the end of the lease or until the unit is rented, whichever comes first. The only thing pro-rated would be if the unit is re-rented in the middle of a rental period.

However, if there is no current lease (i.e. the tenant is on a month to month basis), then they only have to give you one rental period's notice.

As Lisa said, you can apply the security towards unpaid rent, but that's generally not automatic. And you do have to provide an accounting of how the security was used.