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Indiana’s Security Deposit Law

Posted on | February 26, 2009 | 17 Comments

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Question from one of Matt’s readers-

“Dear Mr. Griffith,

I rented an apartment in West Lafayette IN for six months and the lease ended on DEC 31, 2008. I had vacated the apartment on DEC 22, 2008 and left the keys and forwarding address with the landlord. Does the 45 days count from the date my lease ends or the date I left the forwarding address? I will appreciate your response.

Thanks,

S.A.”

Matt’s Answer-

Your question concerns Indiana’s security deposit statute, also known as the 45-Day Letter Rule.  Most states have a similar rule.  The 45-Day Letter Rule governs how a landlord of a residential property must handle the tenant’s security deposit after the lease is terminated.

In Indiana, the 45-day triggering event is the date the landlord regains possession. For you, that would be the date you returned the keys.

The statute requires the landlord to provide you (via US mail is acceptable) with an itemized list of any damages, which can include unpaid rent, and the balance of your security deposit, if any.

I represent far, far more landlords and property managers than tenants.  So, I can say with great confidence that the 45-Day Letter Rule is not well understood or even known by most landlords.  In fact, when I speak at the “Ask Matt” portion of the monthly meetings for CIREIA, I often ask how many attendees (real estate investors) do not know about the 45-Day Letter, and there are no fewer than 10 hands raised each time.

For more information on this law, visit the "Ask Matt" page at CIREIA’s website-  http://www.cireia.org/clubportal/ClubStatic.cfm?clubID=1507&pubmenuoptID=21366

Another question from one of Matt’s readers

"I was at the CIREIA meeting tues. and had a few questions about the 45 day rule.

1. Does it apply to section 8 also?

2.Does this also apply to section 8 unpaid utilities and any damages after they move out?

Thanks for your time,

B.H."

 

Matt’s Answer-

The 45-Day Letter Rule applies whenever any landlord takes any "security deposit" from any residential tenant in Indiana.

A "security deposit" is anything beyond the first month’s rent.  So, if you take the first and last months’ rent, you have a security deposit in the form of the last month’s rent.

What’s CIREIA?   

cireia_logo_rgb1

It is the Central Indiana Real Estate Investors Association.  I’ve been its Legal Affairs Chairman for more than 15 years.  For more information on CIREIA, go to its website- CIREIA’s Website.  If you are serious about owning investment real estate in Indiana, you should be a member of CIREIA.  Joining CIREIA for $150/year-  that’s a “no-brainer.”

 

 

 

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Category: Contracts, Real Estate
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Comments

17 Responses to “Indiana’s Security Deposit Law”

  1. Orit
    May 13th, 2009 @ 2:32 pm

    hi,
    my family came from aboard and rent a room for 15 days only. according to the rental agreement they need to give 30 days written notice to vacate prior to moving out.
    Is this a reasonable/legal request?!

    thanks for your time,
    Orit

  2. Residential Landlord-Tenant Rules | Ask Matt Online
    July 14th, 2009 @ 12:13 pm

    [...] You might want to read this post-  Indiana’s Security Deposit Law [...]

  3. Bob
    September 29th, 2010 @ 10:04 pm

    Hi Matt: I rented an apartment in Richmond Indiana. I won’t say who the landlord was, but I stayed with them over five years. After living with nighbors who were constantly beating on each other, I had a seziure. I asked to be put on a month to month lease. I was. After I was hospitalized for my seziure, I misplaced my lease, but I know I signed a six month lease. I finally got enough money to move out, so I gave the manager 30 days notice, steam cleaned the aparatment. I moved out on 8-2-2010 which is when I returned the keys. They said that I moved out 8-6-2010 and that they are keeping my $400 security deposit for rent. I had called them and they never returned my phone calls about my security deposit. So I finally sent them a registered letter and told them I was going to pursue the matter in small claims court. That is when they gave me a bill for past due rent of August and carpet cleaning of $55.

    They state on their statement that I moved out 8/6/2010. They say that my lease expiration date was supposed to be 8/31/2010. The letter also states that I gave them 30 days notice on 7/6/2010.

    Does this sound legal to you by the leasing company? Is it something worth hirig an attourney over?

  4. Matt
    October 5th, 2010 @ 5:27 pm

    Bob- I understand your frustration. Your situation is extremely fact sensitive. You might be right, but, if you’re wrong, it will cost you more in fees to sue them. You’ll receive a counter-lawsuit as soon as you file, and you might have to pay the landlord’s attorney’s fees. It’s a close call. I’d have to really study your facts and documents to advise you specifically. Without having the facts, I can only suggest that you be cautious.

  5. Rose Nelson
    March 8th, 2011 @ 9:26 am

    I am an Indiana Landlord and require 1st and last month’s rent, plus a security deposit. I understand after the tenant moves that I must mail the security dep to Tenant less any damages with a detailed explanation of same.
    But how does last month’s rent work? It is a 1 year lease. Does it apply to the final month of the term, and if so, then what happens if tenant remains in possession of property and begins a month to month? I want to protect myself in case tenant tries to skip out on last month. Also, is it required in Indiana that I keep sec deposit and last month’s rent in separate accounts? Thanks for your time

  6. Matt
    March 19th, 2011 @ 12:07 am

    Unpaid rent can be satisfied with a security deposit, if the lease permits it.

    No, you don’t need to segregate the deposit funds from your operating funds.

  7. Liz
    June 9th, 2011 @ 7:00 pm

    Hi Matt,

    I could really use your advice. We rented a home in Indianapolis from April 2010-April 20, 2011. Our lease was up April 2012 but due to a job transfer we were forced to move. We spoke with the leasing agency in March as soon as we found out we would be moving and provided them with a letter from my husbands company proving that our move was work related (per their request). At that time we were told that we would have to pay rent until the home was re-leased. The lease buyout was going to be paid for us, so we needed an exact amount, we offered to pay 6 months in full regardless of if the house was re-leased or not, our offer was accepted. This was the last we heard from the leasing agency until my walk through with them on April 20, the day we moved out. At that time I was told I would be getting an email shortly regarding our security deposit and that she could see no reason based on our situation and the condition of the home why we would not receive it in full. I gave her our new address in Wisconsin at that time. After that I never heard anything from them, I called about once a week to leave a message and never heard anything more. By my calculations based on our April 20th walk through 45 days was June 4th. Monday June 6th I called and demanded that my security deposit be refunded. After leaving several voicemails I finally got a call back on Tuesday June 7th and was told that we would not be getting it back because we broke our lease. I was told that a letter was mailed to us in March to that effect, a letter which we never received. Now today I received a letter dated June 5th which says that I will not get my security deposit back, along with a letter dated March 24th stating the same thing, but this is the first time I have seen such a letter. Our actually lease does not say anything about breaking a lease early, so there is nothing to go on there, and in fact today when I got out the lease again, I found a separate packet of information with a lease buy out option if necessary which states that if you must buy out your lease with 6 months or more left you would have to pay only 3 months of rent, half as much as we offered to (and did!) pay. To further complicate things in February our original leasing company was bought out by the company I am currently dealing with. Please help as I don’t know where to go from here!

    Thank you for your time, it is really appreciated.

  8. Matt
    June 21st, 2011 @ 12:12 pm

    Hi Liz.

    I cannot give you legal advice online, and you’re not yet my client. Additionally, I might represent the property manager.

    If you’d like to discuss your situation privately, please send me an email at Matt@IndyBizlaw.com.

    Thanks.

    -Matt

  9. Tammy
    June 26th, 2011 @ 8:10 pm

    Hi Matt. My daughter and 2 friends were to move into a house. My daughter and 1 friend signed the lease and paid $260 each for the deposit. The third person never signed the lease and ended up backing out so the girls were never able to take posession of the house. All of this happened within a matter of 1 week. Their lease was due to begin on 06/01/11. The leasing agent was able to rent the house to someone else who took over on 06/01/11. Both girls signed a letter stating that they were not going to lease the property and that they would like their deposit returned along with a forwarding address for each of them. I had the leasing agent sign and date that he received this letter. He has refused to return their deposit money (which he had no reason to keep as they never took possession of the property so there could be no damage) and he rented the property to someone else beginning the same date as their lease was to begin so he lost nothing by them not renting the property. 07/08/11 will be 45 days from the date the leasing agent and both girls signed the paper releasing them from the lease (and asked for their deposit money to be returned to their forwarding addresses) and we have yet to hear from him. I was advised by another attorney that the girls could sue for 3 times the amount of the deposit plus attorney fees and court costs but have been unable to find anything on line to confirm this. Everything I have read on line says if the landlord does not send them an itemized statement within 30 days he is liable for return of the full deposit amount as well as attorney fees and court costs, but I do not see anything stating they can sue for 3 times the deposit amount. Can you tell me if Indiana is a state that allows to sue for more than the actual deposit amount? I have watched enough People’s Court to know that some states to have this clause. Thanks!

  10. Cathy Marsh
    August 23rd, 2011 @ 12:08 pm

    Hi Matt,

    My family rented a lake house for 4 nights and it stated that the deposit woould be returned 14 days after the rental. What is the law in regards to vacation type rental properties and returning the deposit with written notice if additional charges are made against the deposit? I also got over charged for jet ski rental by over 5 hours of use because I tracked it myself and feel I have no way to get my money back from the deposit because they said we rented it longer than we did (the jet skis were at the house).

  11. Nicholas Aquila
    August 23rd, 2011 @ 8:00 pm

    Matt,
    I need to know how much of a security deposit a landlord can ask for by law that applies to someone with not perfect credit like a bankruptcy. Also, too this landlord wants to have a 500k liablity policy with the owner named as the insured. Can this be done? Please let me know ASAP.

    Nick

  12. Matt
    August 30th, 2011 @ 4:46 pm

    Nicholas-

    The landlord can request whatever security the landlord deems reasonable. Yes, the insurance you described is available. You’ll need to find a good insurance agent.

    -Matt

  13. Matt
    August 30th, 2011 @ 4:49 pm

    Cathy-

    I cannot give legal advice on this website. I can only give information of a general nature that is educational in nature. If you need legal counsel, please feel free to contact me through my law office. http://www.IndyBizLaw.com 317-663-0650.

    Thanks.

    -Matt

  14. Jess
    November 4th, 2011 @ 9:20 pm

    Hi Matt,

    I lived at this apartment at a school campus and I moved to California after graduation. My lease is a one year contract starting in Aug. I stayed for one semester so I left in Dec. after getting a sublease.
    Now that the year is over, I was expecting my deposit check. I called them to tell them my new address so they could send the check to the right place. Three weeks have gone by and I have gotten nothing. No 45-day letter.

    I did call them and they told me that instead of putting LA as the city, they accidentally put the city they were situated in on the address. But they said because of the zip code that the post office would know that it was Los Angeles.

    I called them recently and they claim that they have sent the check but theres really no way of me being 100% sure of that. They then offered to send the check to me again BUT that I would have to pay a $36 check cancellation fee and it would come out of my deposit.

    I think this is a little ridiculous. They already have a bad reputation when it comes to security deposits. I have a very clean roommate and she told me that she spent an entire weekend cleaning the apartment before the lease was up. Of course, we were charged a substantial amount for cleaning fees.

    I called to ask how much was left on my deposit and they refused to tell me over the phone.
    Can you tell me how I can go about dealing with this?

  15. Matt
    November 7th, 2011 @ 9:35 pm

    Hi Jess. I am sorry but cannot legal advice on this blog site. You would have to contact me at my law office for personal help. Best wishes to you in any event.

    -Matt

  16. Mary
    January 25th, 2012 @ 12:34 am

    Hi Matt,

    I have a roommate living in my house that I never signed a lease with so it’s month-month. She’s moving out in March but wants to know if she can use her security deposit towards her last month’s rent. At first I said I don’t care but that is probably not a smart move. What I wanna know is, can she do that or is it against the Indiana law? Thanks!

  17. Matt
    January 25th, 2012 @ 12:08 pm

    Hi Mary-

    I cannot give legal advice on this blog site. However, I’ll share with you my general thoughts on the topics you raised.

    I think it is always a mistake to use a verbal/oral lease. It is more difficult to prove the terms of an oral lease. Generally speaking, the security deposit is not the last month’s rent. The last month’s rent should be paid timely. The landlord then must follow the 45-Day Letter Rules. Read this blog article for more info. on the topic. http://www.askmattonline.com/real-estate/45-day-letter-rule-indianas-security-deposit-law/

    -Matt

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