Indiana Security Deposit Laws

Indiana Code, Title 32:

• Section 32-31-3-9 (security deposit definition)
• Section 32-31-3-12 (security deposit return)

State law has no set limit for how much a landlord may require as a security deposit. Written notice after receipt of security deposit is not required.

However, city and county laws may impose such limits.

State law doesn't require a tenant's security deposit to be stored in any particular manner.

Indiana law allows landlords to retain all (or a portion) of the security deposit as a lien on the tenant's motor vehicle.

The tenant may claim up to the full amount of the security deposit, plus reasonable attorney's fees, if the landlord wrongfully withholds any of the deposit.

Landlords may deduct for reasonable fees and expenses incurred during the rental period, including:

• The tenant's possible nonpayment of rent and costs for water or sewer services provided (it may be used to cover last month's rent if the landlord and tenant agree in writing);
• Damage to the premises, including damage to or destruction of smoke alarms or carbon monoxide alarms;
• Damages as the result of the nonfulfillment of the rental period (i.e. leaving before the end of the lease period), except where the tenant was forced to leave the property because of a landlord's violation;
• Any unpaid bills that become a lien against the property due to the tenant's occupancy; and
• The costs of re-renting the premises after breach by the tenant, including any reasonable fees or commissions paid by the landlord to a licensed real estate broker to re-rent the premises.

Note: Funds can't be deducted from the security deposit for "normal wear and tear" on the property.

The landlord must provide a written, itemized list of deductions from the security deposit, including:

• Description of the damaged item(s);
• Cost of repairing or replacing damaged item(s); and
• Amount deducted from the security deposit.

Note: Failure to include this list forfeits the landlord's right to make any deductions.

The landlord must return the balance of the deposit (amount paid minus reasonable, itemized deductions) by check or money order within 45 days after termination of lease and vacancy of premises.

The landlord isn't liable for returning the security deposit (minus reasonable deductions) until the tenant provides a mailing address to the landlord, in writing.

The landlord isn't required to do a walk-through inspection prior to the tenant vacating the premises.