Published 2026-09-27 · 8 min read

Indiana Security Deposit Law 2026: Limits, Deadlines & Deductions

Indiana's deposit chapter is short and strict: no state cap on what you charge, 45 days to return the deposit with a written itemized notice — and if you fail to send the damage notice, the law treats you as having agreed that no damages are due, forcing a full refund. Every section below is from Indiana Code Title 32, Article 31, Chapter 3 (IC 32-31-3).

The short version: Charge what the lease allows (no cap). Within 45 days after termination and delivery of possession, send a written itemized list of damages with the amount due — but only after the tenant gives you a forwarding address in writing. Skip the notice and you owe the whole deposit back; shortchange the itemization and you pay back the withheld amount plus the tenant's attorney's fees and court costs.

The statute table

Limits: how much can you charge?

No state maximum. IC 32-31-3-12 caps nothing — the deposit is whatever your lease and market set. No interest and no separate account are required either. Check local pricing with the Security Deposit Max Checker.

The 45-day deadline, precisely

Two conditions must both be true before the clock matters: the rental agreement has terminated and the tenant has delivered possession (moved out and returned control). From that point you have 45 days to deliver the written notice itemizing deductions and the amount due (§12(a)).

But here's the twist landlords miss: you are not liable under this chapter until the tenant supplies a mailing address in writing. No forwarding address, no ticking deadline — so make requesting it part of your move-out checklist, and remind the tenant in writing. Track the date with the Security Deposit Deadline Finder.

When the clock actually starts

Indiana's clock needs both triggers, not just one. A lease that ends on paper on the 31st does not start the 45 days if the tenant is still in possession on the 2nd; equally, a tenant who moves out early but whose rental agreement has not terminated has not started it either. The count runs from the later of termination and delivery of possession — the day the agreement is over and you have the unit back. That distinction matters most in holdover and early-move-out files, where the two dates can sit a week or more apart. Log three dates in the deposit file on move-out day: the termination date, the date possession was delivered, and the date the tenant supplied a mailing address in writing. The third date is Indiana-specific and easy to lose: without a written forwarding address you are not liable under the chapter at all, but the moment the tenant supplies one — even weeks later — the file needs to show exactly when it arrived, because a dispute will turn on those three dates and nothing else.

A worked example

Say a tenant renting for $1,800 a month vacates and delivers possession on Monday, March 2, 2026, with the rental agreement terminated that same day, leaving a $1,800 deposit, and supplies a forwarding address in writing at move-out. Your written itemized notice of damages and the balance are due within 45 days: Thursday, April 16, 2026. Suppose the file supports $450 of tenant-caused damage beyond ordinary wear and tear and $200 of unpaid utility charges the tenant owed — $650 in total, both squarely inside the closed list in §13. The notice delivered by April 16 lists each damaged item with its estimated repair cost (§14), states the $650 assessed, and returns the $1,150 balance with it. What you cannot do is send a lump-sum letter — "$650 in damages, balance enclosed" — because §14 requires the estimated cost for each damaged item, and §16 prices a failure to itemize at the full amount withheld. And what you cannot do under any circumstances is let April 16 pass with no notice at all: under §15 the law then deems you to have agreed that no damages are due, and the full $1,800 comes back even though the $650 was real.

Never miss Indiana's 45-day deadline: the Security Deposit Disposition & Deadline Tracker ($14.95) tracks per-unit deductions, itemization status, and the forwarding-address date — so the clock never lapses.

Deductions and the itemized list

IC 32-31-3-13 is a closed list — a deposit may be used only for:

1. Accrued rent (note: unless otherwise agreed, the tenant may not apply the deposit to rent — §12(a));

2. Damages from the tenant's noncompliance with the law or the rental agreement (damage beyond ordinary wear and tear); and

3. Unpaid utility or sewer charges the tenant was obligated to pay.

The §14 itemized list must show the estimated cost of repair for each damaged item plus the amounts and lease basis you intend to assess. A charge that does not fit one of the three §13 categories does not become lawful because it appears in the lease or because the tenant verbally agreed to it — the statute says the deposit may be applied only to that list. Cleaning fees, reletting fees, and administrative charges survive only to the extent they are genuinely damages from the tenant's noncompliance or accrued amounts the tenant owed; when in doubt, bill them separately rather than withholding them from the deposit. Produce the list with the Security Deposit Deduction Letter Generator.

Move-out compliance checklist

1. Get the forwarding address in writing at move-out. Without it you are not liable under the chapter — but ask for it, document the ask, and record the date it arrives; that date belongs in the deposit file.

2. Fix both trigger dates on day one. Record the termination date and the date possession was delivered separately; the 45 days run from the later of the two.

3. Calendar day 45 immediately. Work backwards from it, not forwards from when repairs finish — Indiana has no estimate bridge and no second deadline to hide behind.

4. Inspect and document in the first days. Photograph every claimed item and tie each charge to one of the three §13 categories: accrued rent, noncompliance damages, or unpaid utility/sewer charges.

5. Itemize per item, with an estimated cost for each. §14 is per-item, not per-category; a single lump sum is the fact pattern §16 penalizes.

6. Deliver the notice and the balance together, provably. The written notice and the amount due travel in the same 45-day window; keep the mailing record with the file.

7. If the notice cannot be ready, return the deposit instead. A full refund sent on time costs you the deduction claim; a late notice under §15 costs you the claim anyway — plus the tenant's attorney's fees under §12(b) and §16.

Interest and where the money sits

No interest and no separate account under Indiana law. The deposit is yours to hold; the statute's discipline is entirely about the 45-day accounting, not the custody.

The penalty, spelled out

Indiana punishes paperwork failures harder than the dollar amount suggests:

• No damage notice within 45 days → the law deems you to have agreed no damages are due, and you must return the full deposit immediately (§15). Your real damages become irrelevant.
• General failure to comply → the tenant recovers all of the deposit due plus reasonable attorney's fees (§12(b)).
• Failure to itemize → liability for an amount equal to the part withheld, plus reasonable attorney's fees and court costs (§16).

There is no double or treble multiplier in Indiana — but §15's deemed-admission rule means a late notice can cost you the entire deduction claim.

Run the worked example through those sanctions. On the $1,800 deposit above, if you withhold the $650 but never itemize it per item, §16 exposes you to an amount equal to the part withheld — another $650 — plus the tenant's reasonable attorney's fees and court costs, on top of returning what was due. If you send no notice at all within 45 days, §15 is worse: you are deemed to agree no damages are due, the full $1,800 is returnable immediately, and §12(b) adds the tenant's reasonable attorney's fees to a failure to comply. The arithmetic is the lesson: in Indiana the itemized notice is not paperwork that supports the deduction — procedurally, it is the deduction, and skipping it converts a documented $650 claim into a $1,800 refund plus fees.

FAQ

How long does an Indiana landlord have to return a security deposit?

45 days after termination of the rental agreement and delivery of possession, with a written itemized notice (IC 32-31-3-12(a)).

Is there a limit on security deposits in Indiana?

No state limit (IC 32-31-3-12).

What can be deducted from an Indiana security deposit?

Only accrued rent, damages from the tenant's noncompliance with law or the lease, and unpaid utility/sewer charges the tenant owed (IC 32-31-3-13).

What if the tenant doesn't give a forwarding address?

The landlord is not liable under the deposit chapter until the tenant supplies a mailing address in writing (IC 32-31-3-12(a)).

What happens if the landlord never sends the damage list?

The landlord is deemed to agree that no damages are due and must return the full deposit immediately (IC 32-31-3-15).

Can a tenant apply the deposit to the last month's rent?

Not unless the lease says so — "unless otherwise agreed, a tenant is not entitled to apply a security deposit to rent" (IC 32-31-3-12(a)).

Does Indiana require the itemized list to price each item separately?

Yes. The notice must show the estimated cost of repair for each damaged item and the amounts the landlord intends to assess (IC 32-31-3-14); a lump-sum total is not an itemization.

What does a failure to itemize cost in Indiana?

Liability for an amount equal to the part of the deposit withheld, plus reasonable attorney's fees and court costs (IC 32-31-3-16) — in addition to returning the deposit due.

Read the statute yourself

Everything on this page traces back to Indiana Code Title 32, Article 31, Chapter 3 (IC 32-31-3). If a deadline, deduction, or penalty question is ever disputed, the primary sources — not a summary — are what control:

• Indiana Code 32-31-3, Security Deposits (Indiana General Assembly) — the official full text of the chapter covering the 45-day return, the forwarding-address rule, the closed deduction list, and the penalties.
• IC 32-31-3 (Justia) — full text of the chapter in a readable layout, useful for cross-checking the official version section by section.
• IC 32-31-3-12 (Cornell Law Institute) — the core return-deadline section, including the 45-day rule and the written-mailing-address condition.

Track Indiana's 45-day deadline and damage-list rule: Indiana gives you 45 days to return the deposit with an itemized damage list — miss it and the law deems you to agree no damages are due, forcing a full refund. The Security Deposit Disposition & Deadline Tracker keeps your deposit register, deduction ledger, and deadlines in one formula-driven tracker ($14.95, one-time purchase).

The deposit is only one piece of Indiana compliance. Our full Indiana landlord-tenant law guide covers the rest of the relationship — termination notice clocks, eviction for cause, repairs and habitability, entry and the ban on self-help, and Indiana's retaliation statute.

More security deposit guides

• Security deposit laws by state
• Illinois security deposit law
• Iowa security deposit law
• Idaho security deposit law
• Kansas security deposit law

Last verified: October 15, 2026. This is general information, not legal advice. Verify with a licensed Indiana attorney before acting.