Indiana’s 45-Day Letter Rule

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Indiana, like many states, has a law governing the return of a residential tenant’s security deposit. This article is written for landlords and property managers who accept a tenant’s security deposit and must, therefore, comply with the Indiana law.

Indiana’s security deposit statute governs how and when a landlord must return a tenant’s security deposit.  This law only governs residential leases, not commercial lease agreements. The law is officially called the Security Deposit Statute, but it is commonly known as the “45-Day Letter Rule,” because the law imposes a 45-day deadline on landlords. The essence of the law is this-

A landlord must, within 45 days after getting possession of the rental unit from the tenant for any reason, return any portion of the security deposit owed to the tenant and an itemized written list of damages that reduced the amount of the deposit returned to the tenant.

Although we can summarize this rule of law in one sentence, the rule is often ignored, forgotten, misunderstood and misapplied.  Here are some details about how the courts apply the law.

The Law is a Zero-Sum Game

For the landlord, the law is a zero-sum game. If a landlord fails to follow the 45-Day Rule, the landlord must return all the tenant’s deposit, withholding nothing for damages caused by the tenant, and the landlord is barred from suing the tenant for anything owed under the lease, except unpaid rent.  Until recently, our Indiana courts treated unpaid rent damages in the same fashion as the courts treated a tenant’s physical damages to the rental unit.  In other words, when applying the 45-Day Rule, the courts did not distinguish between unpaid rent and damages to the physical structure of a rental unit.

More recently, Indiana’s appellate courts have given landlords some relief by treating unpaid rent as separate from the application of the 45-Day Letter Rule.  This was a significant change in how the courts apply the law. Today, if a tenant fails to pay rent in an amount equal to or exceeding the amount of the security deposit, a landlord can still sue for damages, even if the landlord fails to send a 45-Day Letter. Otherwise, if a landlord fails to send the 45-Day Letter, the tenant can sue the landlord and collect the entire security deposit, attorneys’ fees, interest and costs. In those cases, the landlord takes nothing.

45 Days Means 45 Days

The landlord must mail the 45-Day Letter within 45 days after repossession, and the letter is to be mailed to the tenant’s forwarding address. A tenant must give the landlord a forwarding address, and the landlord’s obligation to mail the letter is tolled until the tenant provides the forwarding address.

Unfortunately, tenants routinely lie in court and falsely testify that the landlord was given the forwarding address.  So, we recommend that landlords, who do not have the tenant’s forwarding address, mail the 45-Day Letter to some address, just to show the court that the landlord was making a good faith effort to comply with the law.  If the landlord has no address, then the landlord should send the letter to the address of the rental unit in dispute with a postal request for a forwarding address.  The landlord should write “FORWARDING ADDRESS REQUESTED” on the envelope, which will be returned to the landlord with a new address or no address.  That envelope is evidence, so landlords should keep it and bring it to court.  If a new address is received from the Postal Service, a new 45-Day Letter should be mailed to that new address.

Re-possession for ANY Reason.

The 45-day deadline to send the 45-Day Letter starts the day the landlord gets possession of the leased property back from the tenant.  One challenge for landlords is that tenants often move out without notifying the landlord. If the tenant abandons the property without notifying the landlord, the courts will try to determine when the landlord reasonably should have known that the landlord could re-possess the property.  In other situations, such as these listed below, it should be easier to determine the date of repossession:

  • A court orders re-possession on a date certain.
  • The building is destroyed by fire, storm, etc.
  • The lease expires.
  • The tenant abandons the property with the landlord’s knowledge.
  • The tenant dies.

Occasionally, a landlord will send the letter a few days late and then attempt to cover up the error. Landlords who attempt to manipulate the requirements of this law will often find themselves wishing they had not.  45 days means 45 days, and it is precarious to attempt extend or avoid the 45-day deadline.

Got the Right Form?

It is important for landlords to use a 45-Day Letter form that conforms to the requirements established by case law. There have been appellate decisions in which the courts have criticized the form of the 45-day letter used by the landlord.  Some landlords have been unable to collect damages against a tenant, because the landlord used a bad legal form.

We have used the 45-Day Letter form available through Indiana Virtual Law in thousands of eviction cases over the past twenty years. Having a court-accepted, trial-tested legal form could be the difference in winning a lawsuit against a tenant who has damaged your rental property. See the form here.


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