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Michigan Security Deposit Laws

Michigan Security Deposit Laws

Are you a Michigan landlord feeling uncertain about the rules surrounding security deposits? Navigating these laws can be tricky, but understanding them is essential to protect your investment and maintain positive tenant relationships. 

Michigan's security deposit laws are designed to ensure fairness and clarity, helping landlords like you handle deposits confidently and legally. Whether it's knowing how much you can charge, what counts as normal wear and tear, or how to properly return deposits, being well-informed can save you time, money, and potential disputes. 

Let's explore these regulations together to ensure you're fully equipped to manage security deposits effectively.

Security Deposit Deductions in Michigan

In Michigan, landlords are allowed to deduct certain expenses from a tenant's security deposit. These deductions can be made for unpaid rent and utilities, as well as costs associated with damages that go beyond normal wear and tear. 

There is no legal limit on the amount a landlord can charge for these damages, provided the charges are reasonable. If the cost of damages exceeds the security deposit, landlords can seek additional compensation from the former tenant.

Permissible Deductions

  • Unpaid Rent and Utilities: If a tenant leaves without paying the full rent or outstanding utility bills, the landlord can use the security deposit to cover these costs.

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  • Damage Costs: Landlords can also deduct costs for damages that exceed normal wear and tear. This ensures that landlords are compensated for any significant harm caused to the property.

Reasonable Charges

There is no legal limit on how much a landlord can charge for damages, as long as the charges are deemed reasonable. This means the deductions should reflect the actual cost of repairs or replacements.

Seeking Additional Damages

Landlords have the right to demand more money from the former tenant if the cost of damages exceeds the security deposit. If necessary, legal channels can be used to do this.

What is Considered Normal Wear and Tear in Michigan?

"Normal wear and tear" refers to the natural deterioration that occurs when a tenant uses the property as intended. Gently used carpets, slightly chipped glass, fading paint and flooring, somewhat dirty grout, loose door knobs, and discolored bathroom fittings are a few examples. 

Conversely, "damage" is the result of conduct not reasonably expected in the normal course of living in a property. Damage can take many forms, such as holes in the wall, missing fixtures, shattered windows or tiles, and carpets that are severely burned, torn, or discolored.

Can the Landlord Charge for Nail Holes in Michigan?

If nail holes cause damage to the walls that is not typical of normal use, landlords may charge for them. 

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Tenants are permitted to utilize the walls in a reasonable manner, such as hanging pictures with thumbtacks or tiny nails. Huge drilling holes, numerous holes, large nail holes, and holes for hanging heavy objects, however, could be deemed damage and so be charged for.

Can the Landlord Charge a Cleaning Fee in Michigan?

Unless the tenant committed damage that needed to be cleaned, such as wine stains on the carpet, landlords are not allowed to remove cleaning costs from the security deposit. A non-refundable cleaning fee, however, may be assessed by landlords in addition to the security deposit.

Security Deposit Returns in Michigan

Landlords must return the security deposit as a check or money order to the tenant’s forwarding address, along with an itemized list of damages if deductions are made. This must be done within 30 days after the tenant vacates the rental unit.

Do Landlords Owe Interest on Security Deposits in Michigan?

Michigan law does not require landlords to pay interest on security deposits. If the security deposit is in an interest-bearing account, the interest belongs to the landlord unless otherwise specified in the lease agreement.

How Do Landlords Give Notice in Michigan?

Itemized List of Damages

If deductions are made from the security deposit, landlords must provide an itemized list of damages. This list should detail each damage and the corresponding cost of repair.

Mailing the Notice

The notice must be mailed to the tenant’s forwarding address. 

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This ensures the tenant receives the information promptly and can respond accordingly.

Tenant's Response

The tenant has seven days to respond in writing to the itemized list, indicating agreement or disagreement with the charges. This written response is crucial for addressing any disputes.

Landlord’s Options

If the tenant disagrees with the charges, the landlord must either:

  • Return the Disputed Amount: If the landlord decides not to contest the tenant's dispute.

  • File a Court Action: For a money judgment within 45 days after the tenant vacates the unit if the landlord wishes to pursue the disputed amount legally.

Exceptions to Filing a Court Case

Landlords are not required to file a court case to retain a portion of the security deposit if:

  • No Forwarding Address: The tenant did not provide a forwarding address.

  • No Response: The tenant failed to respond to the notice within seven days.

  • Agreement in Writing: The tenant agreed to the charges in writing.

  • Unpaid Rent: The amount withheld is entirely to cover unpaid rent.

Can a Security Deposit Be Used for Last Month’s Rent in Michigan?

Michigan law does not prohibit using the security deposit for outstanding rent. If a tenant wants to use the deposit instead of paying rent, the landlord can start the eviction process during the last month of the tenancy.

How Can Tenants File a Dispute for a Security Deposit in Michigan?

Tenants can file a dispute in the small claims division of District Court for damages under $6,500. For amounts greater than this, a civil case must be filed in District Court. 

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Cases involving small claims are filed in the county where the defendant resides or conducts business, and they must be submitted within six years. Small claims court does not require or permit the use of a counsel, with the exception of self-representing attorneys. The cost of filing fees varies from $30 to $70, based on the amount requested.

Conclusion

Understanding Michigan's security deposit laws is crucial for landlords to navigate rental agreements smoothly. BRS Property Management can assist by ensuring compliance with these regulations, from properly documenting deductions to promptly returning deposits. 

By partnering with BRS Property Management, landlords can confidently manage their properties while fostering positive tenant relationships and protecting their investments. Stay informed and proactive to maintain a fair and successful rental experience.

Contact BRS Property Management for more information about security deposits or to learn how we can streamline your rental business.

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