Tenants' Security Deposit Rights in Michigan

Michigan’s state landlord tenant rules include specific security deposit requirements that both landlords and tenants must follow. It is important that both tenants looking to rent an apartment and landlords looking to fill a vacancy completely understand their rights. Here are seven basic laws regarding security deposits in the state.

Security Deposit Limit in Michigan

Michigan landlords can charge tenants a maximum of one and a half month’s rent as a security deposit. It is illegal for a landlord to charge more than that.

2 Ways to Store Deposit in Michigan

In the state of Michigan, a landlord has two options for storing a tenant’s security deposit.

1. Escrow Account- The landlord can choose to place a tenant’s security deposit in an account in a regulated bank or financial institution.
2. Surety Bond- A landlord can post a cash bond or a surety bond for the amount of the tenant's security deposit. If a landlord does post this type of bond, the landlord is then free to use the tenant’s security deposit money as his or her own.

Is Written Receipt Required After Receiving Deposit?

Yes. A landlord must provide the tenant with written notice and with an inventory checklist after receiving the tenant's security deposit..

Written Notice: 

A landlord must send a tenant written notice withing 14 days of the tenant moving into the unit.This notice must include the following.

• Landlord’s name.
• Landlord’s address.
• Name of the bank, financial institution, or surety where the security deposit is being held.
• Address of the bank, financial institution, or surety where the security deposit is being held.
• The following statement, which details a tenant’s obligation to provide the landlord with the tenant’s forwarding address within four days of the tenant’s move out. This statement must be written in 12 point boldface type, which must be 4 points larger than the rest of the notice.
  • “You must notify your landlord in writing within 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.”
  • If a landlord does not provide a tenant with this written notice, a tenant is not legally bound to provide the landlord with their forwarding address.

Inventory Checklist:

The landlord must do the following when a tenant moves into a unit,

• Provide the tenant with two copies of an inventory checklist.
• This checklist must list all items in the unit including appliances, windows, carpet, etc.
• The tenant must review the checklist, make note of the condition of the property, and return one copy of the checklist to the landlord within seven days of move-in.
• The checklist must contain the following statement written in 12-point boldface type at the top of the first page:
  •  “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.”

4 Reasons to Take Deductions From the Deposit

In the state of Michigan, you may be able to take deductions from a tenant’s security deposit for the following reasons:

• Unpaid Rent
• Unpaid Utility Bills
• Damage in Excess of Normal Wear and Tear
• Breach of Lease

The Right to a Walk Through Inspection

Michigan tenants have the right to a walk-through inspection. At tenant move-out, the landlord must complete a termination inventory checklist and make note of any damage to the unit.

30 Days to Return Deposit in Michigan

30 Days: 

In the state of Michigan, a landlord has 30 days from tenant move-out to return the tenant’s security deposit* to the forwarding address provided**.

• If the landlord has taken deductions from the security deposit, the landlord must include an itemized list of the deductions along with the amount withheld or approximate cost to repair.
• This itemized list must include the following statement written in 12 point boldface type, and must be at least 4 points larger than the rest of the notice:
  “You must respond to this notice by mail within 7 days after receipt of same, otherwise you will forfeit the amount claimed for damages.”
• The landlord must include a check or money order for the difference between the tenant’s original security deposit and any deductions made.

*Landlords who do not provide tenants with notice within 30 days, forfeit the right to keep any of the tenant’s security deposit.

**Landlords are not required to provide a notice of damages to tenants who do not provide landlords with a forwarding address within four days of move-out (see exception under “written notice” above). The landlord is still responsible for returning the tenant’s portion of the security deposit.

Tenant Response:

• The tenant has seven days to respond to this notice and agree or contest the charges.
• .If the tenant disputes the amount of deposit kept for damages and the landlord and tenant cannot reach an agreement, the landlord must initiate a lawsuit in court within 45 days of tenant move-out in order to retain the portion of the security deposit they have kept.
• Failure of the landlord to file a suit when there is a dispute may result in the landlord owing the tenant two times the security deposit.

Transfer Security Deposit When Property Is Sold

Upon sale or other transfer of property in Michigan, the landlord must transfer all security deposits to the new owner and notify all tenants in writing of the transfer along with the name and address of the new owner.

What Is Michigan's Security Deposit Law?

For the actual text of Michigan’s security deposit law, please see Michigan Compiled Laws §§554.601-616.