| Quick Facts | Answer |
| Maximum / Limit | 1½ Months’ Rent |
| Receipt Requirement | None |
| Inventory Requirement | Required |
| Interest Requirement | None |
To learn about laws on security deposit returns in Michigan, click here.
Some cities and counties may have regulations which are more restrictive than those presented here. Always check local laws.
Maximum Security Deposit Allowed in Michigan
Michigan law limits the maximum security deposit to one and one-half month’s rent.
Can Landlords Charge an Additional Pet Deposit in Michigan?
In Michigan, landlords can charge a pet deposit, except for service dogs and emotional support animals. However, the total security deposit cannot exceed one and one-half month’s rent. Landlords cannot exceed the limit by giving them another name like “pet deposit” or “damage deposit.”
Although a landlord cannot charge a separate pet deposit, this does not prevent landlords from charging a monthly premium (“pet rent”) for the right to keep a pet on the property.
How Much Rent Can a Landlord Collect Upfront in Michigan?
In Michigan, if rent is collected in advance beyond the first full rental period (i.e. the time between payments), it is considered part of the security deposit, which is limited to one and one-half month’s rent.
Security Deposit Collections in Michigan
When collecting a security deposit, landlords in Michigan must provide the tenant with two copies of a blank inventory checklist to document the condition of the rental unit. Landlords must also provide a written notice to the tenant including:
- The name and address of the landlord
- The name and address of the financial institution or if there is a bond
- The following statement (word-for-word) in boldface type which is at least 4 points larger than the body of the notice or lease agreement (minimum 12-point type):
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.
Do Landlords Have To Provide a Receipt for the Security Deposit in Michigan?
While landlords in Michigan must provide a written notice to tenants containing information such as where the security deposit will be held, an additional receipt of the deposit is not required to be provided.
What Obligations Do Landlords Have To Establish the Condition at Move-in in Michigan?
When collecting a security deposit, landlords in Michigan must provide the tenant with two copies of a blank inventory checklist that lists all items in the rental unit (e.g. carpeting, oven, walls, doors, etc.). The tenant should describe the conditions of each item and return one copy to the landlord within seven days of obtaining the keys.
The landlord and tenant may agree to a different time period to return the inventory checklist. The inventory checklist must include the following statement 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.
Security Deposit Holdings in Michigan
Landlords in Michigan must hold security deposits in one of two places: a regulated financial institution or by posting a cash or surety bond.
Option 1: Regulated Financial Institution. The landlord may hold the security deposit in an account of a regulated financial institution. The money must be reserved for the tenant and not used by the landlord.
Option 2: Cash or Surety Bond. The landlord may post a cash or surety bond with the Secretary of State. The company must be licensed in the State of Michigan. The bond must be in the total amount of all security deposits held by the landlord. However, if the landlord holds more than $50,000 in security deposits, only 25% of the amount over $50,000 needs to be posted as a bond.
For example, if the landlord is holding $60,000 in security deposits, the bond should be for $52,500, which is $50,000 (for the first $50,000) plus $2,500 (25% of the $10,000 in excess of $50,000).
If the landlord posts a cash or surety bond, they may use the security deposit during the lease term as long as the security deposit is properly returned.
Are Tenants Entitled to Interest on Their Security Deposit in Michigan?
Michigan law does not require landlords to provide interest on held security deposits. If the security deposit is placed in an account that gains interest, it belongs to the landlord unless stated otherwise in the lease agreement.
How Are Security Deposits Accounted for in Michigan?
Security deposits are not considered taxable income when they are collected.
What Happens to a Security Deposit When the Property is Sold in Michigan?
When a property is sold in Michigan, the landlord in possession of the security deposit is liable until one of the following occurs:
- The security deposit is transferred to the successor and the tenant is notified by mail of the successor’s name and address
- The successor places the security deposit into a regulated financial institution or posts a cash or surety bond
- The security deposit is returned to the tenant
Sources
- 1 Mich. Comp. Laws § 554.602
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A landlord may require a security deposit for each rental unit. A security deposit shall be required and maintained in accordance with the terms of this act and shall not exceed 1 1/2 months’ rent.
Source Link - 2 Mich. Comp. Laws § 554.601(e)
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“Security deposit” means a deposit, in any amount, paid by the tenant to the landlord or his or her agent to be held for the term of the rental agreement, or any part of the term, and includes any required prepayment of rent other than the first full rental period of the lease agreement; any sum required to be paid as rent in any rental period in excess of the average rent for the term; and any other amount of money or property returnable to the tenant on condition of return of the rental unit by the tenant in condition as required by the rental agreement. Security deposit does not include either of the following:
(i) An amount paid for an option to purchase, pursuant to a lease with option to purchase, unless it is shown the intent was to evade this act.
(ii) An amount paid as a subscription for or purchase of a membership in a cooperative housing association incorporated under the laws of this state. As used in this subparagraph, “cooperative housing association” means a consumer cooperative that provides dwelling units to its members.
Source Link - 3 Mich. Comp. Laws § 554.603
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A landlord shall not require a security deposit unless he notifies the tenant no later than 14 days from the date a tenant assumes possession in a written instrument of the landlord’s name and address for receipt of communications under this act, the name and address of the financial institution or surety required by section 4 and the tenant’s obligation to provide in writing a forwarding mailing address to the landlord within 4 days after termination of occupancy. The notice shall include the following statement in 12 point boldface type which is at least 4 points larger than the body of the notice or lease agreement: “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.” Failure to provide the information relieves the tenant of his obligation relative to notification of the landlord of his forwarding mailing address.
- 4 Mich. Comp. Laws § 554.608
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(1) The landlord shall make use of inventory checklists both at the commencement and termination of occupancy for each rental unit which detail the condition of the rental unit for which a security deposit is required.
(2) At the commencement of the lease, the landlord shall furnish the tenant 2 blank copies of a commencement inventory checklist, which form shall be identical to the form used for the termination inventory checklist. The checklist shall include all items in the rental unit owned by the landlord including, but not limited to, carpeting, draperies, appliances, windows, furniture, walls, closets, shelves, paint, doors, plumbing fixtures and electrical fixtures.
(3) Unless the landlord and tenant agree to complete their inventory checklist within a shorter period, the tenant shall review the checklist, note the condition of the property and return 1 copy of the checklist to the landlord within 7 days after receiving possession of the premises.
(4) The checklist shall contain the following notice 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.”.
(5) At the termination of the occupancy, the landlord shall complete a termination inventory checklist listing all the damages he claims were caused by the tenant.
Source Link - 5 Mich. Comp. Laws § 554.604
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(1) The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00. The attorney general may find a bond unacceptable based only upon reasonable criteria relating to the sufficiency of the bond, and shall notify the landlord in writing of his reasons for the unacceptability of the bond.
(2) The bond shall be for the benefit of persons making security deposits with the landlord. A person for whose benefit the bond is written or his legal representative may bring an action in the district, common pleas or municipal court where the landlord resides or does business for collection on the bond.
Source Link - 6 Mich. Comp. Laws § 554.614
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Upon termination of a landlord’s interest in a rental unit whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or his agent is liable with respect to the security deposit, until the occurrence of any of the following:
(a) Transfer of the deposit to the landlord’s successor in interest and written notification to the tenant by ordinary mail of the transfer and of the successor’s name and address.
(b) Compliance with section 4 by the successor in interest.
(c) Return of the security deposit to the tenant.
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