Indiana security deposit law

Indiana does not cap the amount of a security deposit. A security deposit includes a required prepayment of rent other than the first full rental period, rent charged in any period above the average rent for the term, and any other money returnable to the tenant when the unit is returned in the condition the lease requires.

Ind. Code §§ 32-31-3-9 to 32-31-3-19

• Cities and counties may not regulate security deposits unless the General Assembly authorizes it. Ind. Code § 32-31-1-20(c) See Rent control and local rules on the Indiana page
• You may accept, but may not require, a lien on a tenant's motor vehicle as a security deposit or to secure rent. To enforce it you must record the lien and follow the security deposit chapter. Ind. Code § 32-31-3-13.5
• Money paid for an option to purchase under a lease with an option to purchase is not a security deposit, unless it is shown the intent was to evade the deposit law. Ind. Code § 32-31-3-9(c)

When the rental agreement ends and you get possession back, you have 45 days to deliver a written notice that itemizes what you kept, with the amount due to the tenant. You may deduct accrued rent, damages caused by the tenant's failure to follow the law or the lease, and unpaid utility or sewer charges the tenant owed under the lease. You are not liable under the deposit law until the tenant gives you, in writing, a mailing address for the notice.

Ind. Code § 32-31-3-12 Ind. Code § 32-31-3-14

• A deduction for damage must be for actual damage to the unit or a related facility that is not ordinary wear and tear. The deposit may also cover rent in arrears, rent due because the tenant ended the lease early, the last rent payment if a written agreement says the deposit will serve as it, and utility or sewer charges the tenant owed and you paid. Ind. Code § 32-31-3-13
• Within 45 days after the tenant's occupancy ends, mail the tenant an itemized list of damages with the estimated cost of repair for each damaged item, and include a check or money order for the rest of the deposit. Ind. Code § 32-31-3-14
• If you do not send the itemized notice of damages, the law treats that as your agreement that no damages are due, and you must return the full deposit immediately. Ind. Code § 32-31-3-15
• A landlord who does not comply owes the tenant the part of the deposit withheld plus reasonable attorney's fees and court costs. Ind. Code § 32-31-3-12(b) Ind. Code § 32-31-3-16
• Unless you agree otherwise, the tenant may not apply the deposit to rent. Ind. Code § 32-31-3-12(a)
• If you sell the property, you remain liable for the deposit for one year after giving the tenant written notice of the sale, unless the buyer notifies the tenant that it has taken on that liability and you transfer the deposit to the buyer. Ind. Code § 32-31-3-19
• A protected individual who ends a lease under the domestic violence law is entitled to deposits, returns and other refunds as if the tenancy had expired under the lease. This applies even though the law otherwise lets you hold a deposit tied to a lease that other adult tenants continue until 45 days after all of their tenancies end. Ind. Code § 32-31-9-12(e) Ind. Code § 32-31-9-13
• A waiver of the deposit law by a landlord or tenant is void. Ind. Code § 32-31-3-17

Indiana does not require you to hold a security deposit in a separate or interest-bearing account, and it does not require you to pay interest on it.

Ind. Code §§ 32-31-3-9 to 32-31-3-19

• The owner of the unit when the rental agreement ends is bound by the deposit return rules. Ind. Code § 32-31-3-12(d)

Indiana does not require a move-in inspection, condition checklist or inventory. At the end of the tenancy the tenant must return the unit clean and in proper condition, except for ordinary wear and tear.

Ind. Code § 32-31-7-6

• Deductions from the deposit for damage are limited to actual damage that is not ordinary wear and tear. Ind. Code § 32-31-3-13(1) See Returning the deposit on the Indiana page
• When you deliver the unit, you must have the tenant acknowledge in writing that it has a functional smoke detector. Ind. Code § 32-31-5-7(a) See Smoke alarms on the Indiana page