Overview
Indiana’s security deposit laws are outlined in Indiana Code § 32-31-3. These laws provide clear rules on how landlords must handle, return, and deduct from security deposits, while also protecting tenants from unfair practices.
While the state does not cap the deposit amount or require interest payments, it sets strict timelines for returns and itemized deductions. Landlords who fail to comply may be liable for damages and legal fees.
This guide covers:
How much landlords can charge
Deadlines and rules for deposit returns
What deductions are allowed
Penalties for non-compliance
Related Statute: Indiana Code § 32-31-3
1. Security Deposit Limits & Storage Requirements
Maximum deposit: Indiana law does not limit the amount a landlord can charge for a security deposit. The amount is typically set in the lease agreement.
Storage requirements: There is no legal requirement to store the deposit in a separate or interest-bearing account, and landlords are not obligated to pay interest on deposits.
Law Reference: IC § 32-31-3-9
2. Security Deposit Returns & Allowable Deductions
Return deadline: Landlords must return the full deposit or any remaining balance within 45 days after the tenant vacates the rental unit.
Permissible deductions: Deductions may include unpaid rent, damages beyond normal wear and tear, and costs to restore the premises to its original condition, excluding ordinary wear and tear.
Itemized statement required: If deductions are made, landlords must send an itemized list of damages and associated costs to the tenant’s last known address within the 45-day period.
Tenant responsibilities: Tenants must provide a forwarding address in writing to receive their deposit or the itemized list. Failure to do so may delay or forfeit their claim.
Law Reference: IC § 32-31-3-12
3. Penalties for Mishandling Security Deposits
Forfeiture of right to deduct: If the landlord fails to comply with the 45-day requirement or does not provide the itemized list, they lose the right to retain any portion of the deposit.
Tenant remedies: Tenants may sue for the full deposit amount, attorney fees, and up to double the amount wrongfully withheld if the landlord acted in bad faith.
Law Reference: IC § 32-31-3-14
Key Takeaways
Indiana does not cap the amount landlords can charge for a security deposit.
Deposits must be returned within 45 days of move-out, along with an itemized list of deductions.
Landlords are not required to pay interest or use a separate deposit account.
Failure to follow the law can result in forfeiture of deductions and liability for damages and legal fees.
By following Indiana’s clear guidelines, landlords can protect their property and avoid penalties, while tenants can ensure their rights are upheld.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. Readers should not act or refrain from acting based on any information included in this post without seeking legal counsel or other professional guidance specific to their situation. The information is provided “as is” without any representations or warranties of any kind, express or implied, including but not limited to the accuracy, completeness, or reliability of the content. Laws and regulations may change and vary by jurisdiction.
