Security Deposit Laws in Michigan Explained

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The security deposit is intended to cover property damage resulting from a tenant’s negligence or carelessness. Also, it helps cushion the landlord from financial ruin when a tenant moves out without paying rent.

If you are a landlord looking to fill a vacancy, or a renter looking to rent real estate in Michigan, understanding Michigan’s security deposit law is important.

Here is an overview of the landlord-tenant laws in Michigan that cover security deposits’ use and return.

 

1.   What happens to the security deposit if property ownership changes?

In case of a change in property ownership, the landlord must transfer all of the deposits to the new owner. Next, they must notify the tenant of the change. In the Change of Ownership/Management notice, they must state the deposit transferred as well as the new owner’s address.

Once this is done, the new owner becomes responsible for all liabilities regarding the renter’s security deposit.

 

2.   When should a landlord return the tenant’s security deposit?

Michigan rental laws state that the landlord has 30 days to return the tenant’s security deposit once they move out. If the landlord must make deductions, then they have to include an itemized list of those deductions and their costs.

In addition, the landlord must include a money order or a check for the portion of the security deposit being returned. The tenant will then have seven days to respond.

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If the renter disputes the deductions, then they should notify the landlord with a written notice. If the landlord disagrees and both parties cannot reach an agreement, then the landlord should take legal action. This should be done within 45 days.

If the property owner fails to file the lawsuit on time, the court may rule in favor of the renter. Oftentimes, the court will give the renter twice the security deposit amount.

 

3.   Is a walk-through inspection necessary under Michigan’s Security Deposit Law?

Yes. A walk-through inspection is required under the Michigan security deposit laws. This inspection helps to reduce any misunderstandings between landlords and tenants that result from the return of security deposits.

The tenant may think that they left the property in pristine condition, but the landlord may disagree.

So, what exactly does a walk-through inspection entail? Well, it entails both the renter and the landlord going through the rental unit to inspect for damage or unsanctioned changes to the property.

Essentially, the landlord is comparing the existing condition of the property to its initial state. If the renter has caused damage exceeding “normal wear and tear” reduction can be made. The Michigan landlord-tenant laws specify that the landlord has the right to deduct the appropriate amount from their security deposit amount.

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The following table gives a few examples of excessive property damage and normal wear and tear.

Examples of excessive property damage Examples of normal wear and tear
Carpet soaked with pet urine A couple of small stains on a carpet
Missing or damaged door locks or handles Loose door handles
A hole in the middle of the door A couple of dings or scrapes in a wood floor
Broken toilet seat Dirty grout
A smashed bathroom mirror Silver finish on bathroom fixture starting to wear away

 

4.   When can a Michigan landlord keep part of a tenant’s security deposit?

Landlords in Michigan can keep a portion of the tenant’s security deposit for various reasons. Common reasons include:

  • Failure to pay rent
  • Failure to pay utility bills
  • Excessive property damage
  • Gross violation of the lease

 

5.   Does the landlord need to acknowledge receipt of the tenant’s security deposit?

Yes. In Michigan, the landlord must notify the tenant of receipt of their security deposit. In addition, the landlord must provide the tenant with an inventory checklist. Specifically:

  • The landlord must issue two copies of an inventory checklist to the tenant
  • The checklist must include all items in the unit including carpet, windows, appliances, and so on.
  • The tenant must review the checklist as well as the property’s condition. Once this is done, they must then return a copy of the checklist to the landlord. This must be done within one week of moving in.

Besides an inventory checklist, the notice must also include:

  • The name and address of the landlord
  • The name of the financial institution where the renter’s security deposit is stored
  • A statement asking for the renter’s forwarding address

 

6.   How should a Michigan landlord store a tenant’s security deposit?

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A landlord in Michigan has two options when it comes to storing a tenant’s security deposit. One, to post it as a surety bond or a cash bond for the security deposit amount. Or two, to place the tenant’s security deposit in an escrow account.

 

7.   What is the maximum security deposit amount in the state of Michigan?

The maximum amount a landlord can ask as a security deposit is equivalent to the rent of one and a half month.

 

There you have it. The security deposit law in Michigan explained. If you need help with the security deposit laws in Michigan don’t hesitate to talk to a professional.

 

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