Indiana Security Deposit Returns and Deductions

Last Updated: January 23, 2024 by Phil Ahn

For laws on security deposit collections and holdings in Indiana, click here.

Security Deposit Deductions in Indiana

In Indiana, the following can be deducted [1] from security deposits:

• Unpaid rent and utilities
• Rent due as a result of early termination
• Costs of damage excluding normal wear and tear
• Monetary damage as a result of a breach of the lease or violation of the law

Most states, such as Indiana, do not have a legal limit on how much a landlord can charge for damages except that the charges must be reasonable.

If the cost of the damages exceeds the amount of the security deposit, landlords are entitled to seek additional damages from the former tenant, [2] unless they fail to uphold their responsibilities regarding the return of the security deposit. [3]

What is Considered Normal Wear and Tear in Indiana?

“Ordinary wear and tear” is defined by case law as the “gradual deterioration of the condition of an object which results from its appropriate use over time.” [4]

Examples include:

• Gently worn carpets
• Lightly scratched glass
• Faded paint and flooring
• Loose door handles
• Stained bath fixtures

“Damage” means destruction to the rental unit that occurs because of abuse or negligence by a tenant during the course of the tenancy.

Examples include:

• Heavily stained, burned, or torn carpets
• Accumulation of dirt and debris
• Broken tiles or windows
• Holes in the wall
• Missing fixtures

Can the Landlord Charge for Replacing the Carpet in Indiana?

Landlords can charge for replacing the carpet if it is damaged beyond normal wear and tear.

Can the Landlord Charge for Nail Holes in Indiana?

Landlords in Indiana can charge a tenant for nail holes if they damage the walls in a way that is not a result of ordinary enjoyment of the rental unit.

Tenants have the right to use the walls within their unit in a reasonable way. This includes inserting small nails or thumbtacks to hang posters or pictures.

However, large holes from drilling, multiple nail holes, large nail holes, and holes made for hanging heavier things may be considered damage and thus, chargeable to the tenant.

Can the Landlord Charge a Cleaning Fee in Indiana?

Landlords in Indiana can charge a cleaning fee if it is specifically stated in the lease agreement and the cleaning fee is reasonable.

Landlords cannot charge for cleaning done as a result of normal wear and tear. However, landlords can include provisions in the lease agreement that require tenants to clean the rental unit to return it to its original condition. If the tenant fails to clean the rental unit as described in the lease, the landlord can charge for cleaning.

Can the Landlord Charge for Painting in Indiana?

In Indiana, landlords can charge for painting, except for normal wear and tear. For example, if the tenant:

• Causes damage beyond normal wear and tear
• Repaints the wall but is not permitted to do so under the lease agreement
• Repaints the wall in an unprofessional way

Normal wear includes:

• Minor scrapes from daily use
• Fading due to sunlight
• Minor cracks in the original paint

Landlords can charge for repainting if the damage is not the result of normal use. This includes stains, large or deep scratches, and water damage.

Security Deposit Returns in Indiana

Landlords must return a security deposit as a check or money order [6] within 45 daysfrom the date the tenant vacates the rental unit with an itemized list of damages (if any).

How Long Do Landlords Have to Return Security Deposits in Indiana?

Indiana landlords have 45 days [7] after the tenant moves out to return any unused portion of the security deposit.

Do Landlords Owe Interest on Security Deposits in Indiana?

Unlike in some states, such as New Jersey, landlords in Indiana do not owe interest on security deposits.

How Do Landlords Give Notice in Indiana?

If deductions are to be made from the security deposit, an itemized list of deductions must be sent by mail to the tenant’s forwarding address. The notice must include estimated costs of the damage and the amount deducted by the landlord. [8]

Can a Security Deposit Be Used for Last Month’s Rent in Indiana?

In Indiana, a tenant is not entitled [5] to apply the security deposit toward rent. However, the law allows landlords to deduct any unpaid rent from the security deposit.

Landlords can include a provision in the lease agreement that the security deposit cannot be used for the last month’s rent until the tenant vacates the rental unit.

Security Deposit Disputes in Indiana

If landlords do not return the security deposit or provide a written statement of deductions, if any, within the required time period, tenants can file for damages in court up to the amount of the security deposit [9] plus court costs [10] and reasonable attorneys’ fees.

Tenants can also take legal action against a landlord for unreasonable deductions.

How Can Tenants File a Dispute for a Security Deposit in Indiana?

If a landlord fails to perform their obligations regarding a security deposit, the tenant can file a dispute in Small Claims Court if the amount of damages is less than $10,000. [11] If the amount is greater, the tenant must file a civil case in the Circuit Court.

A small claims case regarding the return of a security deposit must be filed within 6 years. [12]

Cases are filed in the Small Claims Court where the property is located or where the defendant lives or works. An attorney is not required but permitted. Filing fees vary by court but are typically $87 to $104.