| Quick Facts | Answer |
| Maximum / Limit | No Limit |
| Receipt Requirement | None |
| Inventory Requirement | None |
| Interest Requirement | None |
To learn about laws on security deposit returns in Indiana, click here.
Maximum Security Deposit Allowed in Indiana
There is no limit on how much a landlord can collect for a security deposit in Indiana. While other states impose a maximum security deposit limit, such as one month’s rent, Indiana does not.
State law preempts local governments from establishing their own security deposit rules. If any city or county law imposes security deposit rules that conflict with state law, it is unenforceable.
Can Landlords Charge an Additional Pet Deposit in Indiana?
Yes, landlords can collect an additional pet deposit in Indiana, except for service dogs and emotional support animals.
How Much Rent Can a Landlord Collect Upfront in Indiana?
There is no limit on the amount of rent that can be collected upfront in Indiana. Many states have a limit on the amount of rent that can be collected at once, but Indiana does not.
However, if rent is collected in advance beyond the first full rental payment period (e.g. first month’s rent), it is considered part of the security deposit and must be treated according to the same rules.
Security Deposit Collections in Indiana
While other states have additional requirements for landlords that collect a security deposit, such as providing certain documentation of the condition of the unit at move-in, Indiana does not.
Do Landlords Have To Provide a Receipt for the Security Deposit in Indiana?
Although some states like Washington require a receipt, landlords are not required to provide a receipt for the security deposit in Indiana.
What Obligations Do Landlords Have To Establish the Condition at Move-in in Indiana?
Indiana law does not require landlords to document or establish the property’s condition at move-in. While other states legally require a written inventory of damages to be completed when collecting a security deposit, Indiana does not.
Security Deposit Holdings in Indiana
Indiana law does not require landlords to hold security deposits separate from other funds. Some other states mandate how and where security deposits are held, but Indiana does not.
Are Tenants Entitled to Interest on Their Security Deposit in Indiana?
Indiana law does not require landlords to provide interest on held security deposits.
How Are Security Deposits Accounted for in Indiana?
Security deposits are not considered taxable income when they are collected.
What Happens to a Security Deposit When the Property is Sold in Indiana?
When a property is sold in Indiana, the seller must transfer the security deposit to the new owner, who must handle it according to the same rules. The seller must notify the tenants in writing regarding the transfer of property and responsibility.
Within one year after the seller sends written notice to the tenant notifying them of the sale, they remain liable until both of the following events occur:
- The security deposit is transferred
- The new owner sends written notice to the tenant that they have accepted responsibility for the security deposit
Sources
- 1 Ind. Code § 32-31-1-20(c)(2)
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A unit (as defined in IC 36-1-2-23) may not regulate, through an ordinance or otherwise, any of the following aspects of a landlord-tenant relationship with respect to privately owned real property located in the unit unless the regulation is authorized by an act of the general assembly:
…
(2) Security deposits.
Source Link
- 2 Ind. Code § 32-31-3-9
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(a) As used in this chapter, “security deposit” means a deposit paid by a tenant to the landlord or the landlord’s agent to be held for all or a part of the term of the rental agreement to secure performance of any obligation of the tenant under the rental agreement.
(b) The term includes:
(1) a required prepayment of rent other than the first full rental payment period of the lease agreement;
(2) a sum required to be paid as rent in any rental period in excess of the average rent for the term; and
(3) any other amount of money or property returnable to the tenant on condition of return of the rental unit by the tenant in a condition as required by the rental agreement.
(c) The term does not include the following:
(1) An amount paid for an option to purchase under a lease with option to purchase, unless it is shown that the intent was to evade this chapter.
(2) An amount paid as a subscription for or purchase of a membership in a cooperative housing association incorporated under Indiana law.
Source Link - 3 Ind. Code § 32-31-3-12
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(a) Upon termination of a rental agreement, a landlord shall return to the tenant the security deposit minus any amount applied to:
(1) the payment of accrued rent;
(2) the amount of damages that the landlord has suffered or will reasonably suffer by reason of the tenant’s noncompliance with law or the rental agreement; and
(3) unpaid utility or sewer charges that the tenant is obligated to pay under the rental agreement;all as itemized by the landlord with the amount due in a written notice that is delivered to the tenant not more than forty-five (45) days after termination of the rental agreement and delivery of possession. The landlord is not liable under this chapter until the tenant supplies the landlord in writing with a mailing address to which to deliver the notice and amount prescribed by this subsection. Unless otherwise agreed, a tenant is not entitled to apply a security deposit to rent.
(b) If a landlord fails to comply with subsection (a), a tenant may recover all of the security deposit due the tenant and reasonable attorney’s fees.
(c) This section does not preclude the landlord or tenant from recovering other damages to which either is entitled.
(d) The owner of the dwelling unit at the time of the termination of the rental agreement is bound by this section.
Source Link - 4 Ind. Code § 32-31-3-19
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(a) Unless otherwise agreed, if a landlord conveys, in a good faith sale to a bona fide purchaser, property that includes a dwelling unit subject to a rental agreement, the landlord is relieved of liability under law or the rental agreement as to events occurring after written notice to the tenant of the conveyance. However, for one (1) year after giving notice of the conveyance, the landlord remains liable to the tenant for the security deposit to which the tenant is entitled under section 14 of this chapter unless:
(1) the purchaser acknowledges that the purchaser has assumed the liability of the seller by giving notice to the tenant; and
(2) upon conveyance the seller transfers the security deposit to the purchaser.
(b) Unless otherwise agreed, a manager of a dwelling unit is relieved of any liability the manager might have under law or the rental agreement as to events occurring after written notice to the tenant of the termination of the manager’s management.
Source Link
