Yes, the landlord is required by statute to return the security deposit. Here is the Indiana statute:

IC 32-7-5-12
Sec. 12. (a) Upon termination of a rental agreement, all of the security deposit held by the Indiana landlord shall be returned to the tenant, except for any amount applied to:
(1) the payment of accrued rent;
(2) the amount of damages that the landlord has 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 in a written notice delivered to the tenant together with the amount due within forty-five (45) days after termination of the rental agreement and delivery of possession. The landlord is not liable under this chapter until supplied by the tenant in writing with a mailing address to which to deliver the notice and amount prescribed by this subsection. Unless otherwise agreed, the tenant is not entitled to apply a security deposit to rent.
(b) If the landlord fails to comply with subsection (a), the 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.

Expert:	MShore
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Answered:	10/5/2009

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