As we all know, a security deposit is the money given to a property owner when a tenant moves into a rented unit. The tenant gets this money back when the resident moves out, unless the property owner has a good reason for retaining the money.
For instance, if you haven’t paid all of your rent, the landlord can keep the deposit to cover that loss.
As a renter, there is so much about security deposits, especially if you’re from Michigan, that you should know.
Here, we explore the Michigan law, as it pertains to security deposits, and all you need to know.
Michigan Security Deposit Law
Let’s look at what you need to know about Michigan landlord-tenant deposit law:
Fee or Deposit?
Any amount you give to your landlord that is refundable is a security deposit, regardless of what your landlord calls it. If the money isn’t refundable, then it’s a fee.
You should read your lease to determine whether the money you have paid will be given back to you after the lease expires, or not.
Take an instance where you pay an upfront fee for your dog. If the property owner agrees to give back your money if the dog doesn’t do any damage, the money is part of the security deposits category. The money will be a fee if the property owner keeps the money, regardless of your dog’s behavior.
As per the Michigan security law, your deposit can’t exceed one and a half times your rent.
Deposit Applies to Your Home
Michigan security deposit law involves agreements for rental units. A rental unit is any physical structure used, by a family or single person, as a home. This can be a mobile home space, rooming house, boarding house, or apartment.
The law applies if you’re renting an apartment or home. You should sign a rental agreement/lease after paying your deposit to a landlord.
A lease is an agreement that changes or creates the conditions, terms, or provisions about the occupancy and use of any rental unit.
Before Signing the Lease
As we have seen, Michigan law requires a landlord-tenant agreement through the signing of a lease. However, before you sign the lease, ensure that you know how much the security deposit is.
If you’re to pay a security deposit, the landlord must send you a notice in writing within 14 days after you move into the apartment or before the lease starts, that says:
“You must notify your landlord in writing within four (4) days, after you move, of a forwarding address where you can be reached and where you will receive mail; otherwise your landlord shall be relieved of sending you an itemized list of damages and the penalties adherent to that failure.”
This notice should also have the name and address of where you can send any communications. The notice is part of the lease and must also inform you where your deposit is being held.
Your Move-In Checklist
A move-in checklist is a very important element of the security deposit process. Michigan landlords should provide two move-in checklists or copies of an inventory sheet.
The first page must say in 12 point boldface type:
“You should complete this checklist, noting the condition of the rental property, and return it to the landlord within 7-days after obtaining possession of the rental unit. You are also entitled to request and receive a copy of the last termination inventory checklist, which shows what claims were chargeable to the last prior tenants.”
If your landlord forgets to give you a checklist, you should ask for one. However, if the property owner refuses to give you a checklist, do a self-inspection of your home and note any problems.
After inspection, give one checklist to your landlord and keep one for yourself. Remember to take videos of the damages you identify, and never sign a move-in checklist if you disagree with it.
Your Move-Out Checklist
When you decide to move out of your home or apartment, use the checklist to assess and record the current condition. Again, keep a copy for yourself and give one to the property owner.
Getting Back the Tenant’s Security Deposit
Your landlord must give the tenant’s security deposit unless they have a good reason to hold onto it.
Some of these reasons include:
- If you don’t pay all your rent
- You haven’t paid your utilities and want to leave the rental unit
- You have left the rental unit in a condition that is beyond normal wear and tear
The process of getting your security deposit back starts after you leave the rental unit.
The steps of this process include:
Give the Property Owner Your Forwarding Address in Writing
Within four days after leaving your old rental unit, you should give your former landlord your new forwarding address. As per Michigan law, your landlord has 30 days to either return the security deposit or send you a list of damages.
The List of Damages
The list of damages that the landlord sends you has to be itemized and must include the estimated repair costs, or copies of receipts, for each damaged item.
You should respond to the list of damages notice by mail within seven days. If you don’t, you’ll forfeit the amount claimed.
Objecting to the List of Damages
If you don’t agree with the itemized list of damages you receive, you’ll have at least seven days to respond to this notice of damages. If you don’t, you’ll have agreed to the notice of damages as per the Michigan laws.
If you don’t agree with the itemized list of damages or costs, the property owner has 45–days to file a suit. The judge will then decide on the amount you’re owed.
Normal Wear and Tear
The damage that can be deducted from your security deposit involves harm caused to an apartment or home that is deemed beyond normal wear.
For instance, carpets, flooring, appliances, and furniture can wear or tear from just being used. Dirtiness is also another form of wear and tear that your landlord must not charge you from the deposit, unless of course it is excessive.
Some of the damages you might be forced to pay include a burn mark on your counter, a broken window, or damage from a leak that went unreported.
30-Days and then…
If you provide your landlord with your new forwarding address, but don’t receive a list of damages or your deposit within 30 days of moving out, the landlord has no right to claim damages against your deposit.
You might have unpaid rent, but the landlord can’t get that money from your security deposit.
45-Days or Double
As mentioned above, your old landlord will have 45-days to file for damages in court. If all of the following happens, you can sue the landlord for double the amount of your security deposit:
- Your landlord refuses to give back your security deposit or initiate a suit within 45 days
- You supplied your forwarding address at least four days before moving out
- You replied to the notice of damages within 7-days after getting it
Owing More than the Security Deposits
There are times when you might be owing your landlord more money than the amount of your security deposit. For instance, your security deposit could be $600, while you owe the landlord damages of $900.
Here, the landlord could keep the $600 and still demand the remaining $300.
Heading to Court to Claim Your Security Deposit Back
You can sue your landlord if they don’t return your security deposit. If the landlord owes you less than $6,000, you can sue in a small claims court.
You should file your case in a district court if your landlord owes you more than $6,000. However, talk to a lawyer before you sue your landlord.
What to Expect in Court
If your case heads to the courts, each side will get an opportunity to tell their story. The plaintiff gets the chance to speak first. They will also have to produce evidence in court and call their witnesses.
The defendant will also get an equal chance to show evidence and call witnesses. After listening to both sides, the jury or judge will decide the amount owed.
Does the Michigan Law Require a Landlord to Have Security Deposits Held in a Separate Account?
Yes. The landlord must have the tenant’s security deposit in a regulated financial institution. The money can only be used if the landlord deposits a surety or cash bond with the secretary of state.
Michigan is one state that has some of the best real estate laws in the country. As we have seen above, if you rent a home in Michigan, you should ensure that you sign a landlord-tenant lease agreement.
A lease agreement will ensure that your deposit is secure if you want to move out. If a misunderstanding arises with your landlord, you can file a case in court for a solution.
Understanding the Michigan security deposit law is key to leading a peaceful life and finding the best apartment.