Legal Question in Landlord & Tenant Law in Indiana

Hello! My daughter was living in an efficiency apartment above a garage this past year. Her friend rented it to her "under the table" because he was at his limit in people that can be living on that property. She moves in July 2016. He wanted her to sign an agreement that she would pay $500 a month until July 2017. However since the apartment does not have an address and is not zoned to be rented the agreement just says she is giving him $500 a month. He also was pocketing the money and not listing it as income on his taxes. My daughter moved back home this past month due to her having a baby. My question is is she liable for the rent even though it is not a "real" apartment and he is not listing it on his taxes? He has sent her 3 different agreements he wants her to sign now saying she will give him the rest of the months until July 2017. He also keeps bothering her through texts and phone calls about the payments for the next 4 months. He keeps threatening to take her to court if she doesn't sign them. Please help!! What should she do? I think he is just trying to bully her into signing and paying the money. Thanks so much, Concerned Mom

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