What Is the Maximum Security Deposit in Indiana?
Indiana has no cap on a security deposit and does not let cities set one. Here is what the chapter regulates instead, what money counts as a deposit and what it may be used for.
Is there a maximum security deposit in Indiana?
No. Indiana’s deposit chapter, IC 32-31-3, sets no maximum amount for a security deposit (IC 32-31-3). A landlord may ask for one month, two or more, subject to the lease and any federal program rules. The Indiana security deposit limit calculator shows the deposit as months of rent.
Can a city or county set a cap?
No. A city, town or county “may not regulate, through an ordinance or otherwise” security deposits, lease applications, leasing terms or any fees charged by a landlord for privately owned property unless the General Assembly authorizes it, and an ordinance that does is void and unenforceable. The exception is privately owned property that receives government funds for the express purpose of providing reduced rents to low- or moderate-income tenants (IC 32-31-1-20).
What counts as a deposit?
A deposit paid by a tenant to be held for all or part of the term to secure performance of the tenant’s obligations, including a required prepayment of rent other than the first full rental period, a sum required as rent in any period above the average rent for the term and any other money or property returnable on condition of returning the unit in the condition the agreement requires (32-31-3-9).
What is the deposit for?
Only four things: actual damage beyond ordinary wear and tear, rent in arrears and rent due for premature termination, the last rent period if a written agreement says so, and unpaid utility or sewer charges the landlord paid (32-31-3-13). See Indiana security deposit deductions.
When must it come back?
An itemized list and the refund must be mailed within 45 days after the rental agreement ends and the tenant delivers possession, and the landlord is not liable until the tenant gives a mailing address in writing (32-31-3-12, 32-31-3-14). Use the return deadline calculator for the date.
What should a tenant ask before paying?
How much in total, what each payment is for, which are refundable, what the deposit may be used for under the lease and where it is held. Get the answers in writing, keep every receipt and photograph the unit at move-in.
Worked examples
| Monthly rent | Payment | Result |
|---|---|---|
| $1,200 | $1,200 deposit | One month; no cap |
| $1,200 | $3,600 deposit | Three months; no cap |
| $1,200 | $1,200 deposit plus $1,200 prepaid rent | Both are deposits |
A checklist for landlords
State in the lease what the deposit is for; keep a move-in condition record; mail the itemized list and refund within 45 days; never charge ordinary wear and tear; and do not rely on a city ordinance, because cities may not regulate deposits.
Why no cap does not mean no protection
Without a cap, a tenant’s protection comes from the use rules and the refund rules. The landlord may use the deposit only for the four listed purposes, must mail an itemized list within 45 days and must refund the rest, and a waiver of those rights in the lease is void. Read what the lease says the deposit covers, photograph the unit at move-in and keep the receipt.
A checklist for landlords
State in the lease what the deposit is for; keep a move-in condition record; hold the money so you can refund it; mail the itemized list and check within 45 days of termination and delivery of possession; never charge ordinary wear and tear; and do not rely on a city ordinance, because cities may not regulate deposits.
Where to get help
Legal aid and the county clerk can explain how a deposit dispute is brought. Bring the lease, every receipt and the date you delivered possession.
Frequently asked questions
How much can an Indiana landlord charge for a security deposit?
The chapter sets no maximum.
Can my city cap deposits?
No. Local governments may not regulate security deposits.
Is prepaid rent a deposit?
Prepaid rent other than the first full rental period is.
When must the deposit be refunded?
Within 45 days after the rental agreement ends and the tenant delivers possession.
Where is the rule written?
In IC 32-31-3 and 32-31-1-20.
Official sources
A local landlord-tenant attorney can review your situation — many offer a free consultation.
This is general information, not legal advice. It is based on the cited Indiana statutes, rules and court opinions, and every case turns on its own facts. Confirm how the law applies to your situation with a licensed Indiana attorney.