Security Deposits

Amount of Security Deposit

A security deposit shall not exceed one and one-half month's rent.

Note: It has been ruled in Stutelberg v. Practical Management, Michigan Court of Appeals (1976), that a non refundable cleaning fee is not a security deposit, therefore it is not covered by Public Act 348. The court further ruled that a landlord can demand a non refundable cleaning fee if the following conditions are satisfied:

1. The fee is set at the beginning of the tenancy and the tenant is informed of and agrees to the charge in writing.

2. The fee is for the defrayment of cleaning expenses between tenancies, and

3. The fee is absolutely non refundable.

Notice to Tenant

Within 14 days from the date of occupancy the landlord must provide the following information in writing to the tenant:

1. The landlord's name and address.

2. The name and address of the financial institution.

3. The following notice in 12 point bold face 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.

Disposition of Security Deposit

The security deposit shall be deposited in a financial institution. Landlords may use it if they deposit a bond with the Security of State.

Use of Security Deposit

A security deposit can be used only for the following purposes:

• Reimburse the landlord for actual damages not reasonably expected in the normal course of habitation.

• Pay the landlord for rent in arrearage, rent due for the premature termination of the rental agreement, and for utility bills not paid by the tenant.

Note: It has been ruled in Smolen v. Dahlmann, Michigan Court of Appeals, (1983), that cleaning expenses are not actual damages. Therefore, cleaning expenses cannot be withheld from a tenant's security deposit.

Beginning Inventory Checklist

At the beginning of the lease the landlord must furnish the tenant two blank copies of an inventory checklist which will list everything in the unit owned by the landlord and provide space for the tenant to note the condition of the property. The checklist must contain the following notice in 12 point bold face 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.

Ending Inventory Checklist

At the termination of the occupancy the landlord must complete a termination inventory checklist listing all the damages he/she claims were caused by the tenant.

Notice of Damages

In the case of damages to the rental unit or other obligation against the security deposit, the landlord must mail to the tenant, within 30 days after the termination of occupancy, an itemized list of charges, including the cost of repair of each damaged item.

The list must be accompanied by a check for the difference between the charges claimed and the amount of the security deposit.

The notice of damages must include the following statement in 12 point boldface type:

YOU MUST RESPOND TO THIS NOTICE BY MAIL WITHIN 7 DAYS AFTER RECEIPT OF SAME, OTHERWISE YOU WILL FORFEIT THE AMOUNT CLAIMED FOR DAMAGES.

Failure to Send Notice of Damages

Failure by the landlord to comply with the notice of damages requirement within 30 days after termination of occupancy constitutes agreement by the landlord that no damages are due and he/she must remit to the tenant immediately the full security deposit.

Suit To Retain A Disputed Security Deposit

If a landlord wants to keep part or all of a security deposit after the tenant has disputed charges claimed by the landlord, the landlord has 45 days after the termination of tenancy to bring suit against the tenant in order to keep the disputed money.

The security deposit is considered the tenant's property until a landlord obtains a money judgement from the court for the disputed amount.

The 45 day limit for the landlord to file suit to keep the security deposit will not apply where:

1. The landlord has filed with the court satisfactory proof of an inability to obtain service on the tenant.

2. The tenant has failed to provide his/her written forwarding address.

3. The tenant has failed to respond to the notice of damages within the seven day limit.

4. The parties have agreed in writing to the disposition of the balance of the deposit claimed by the landlord.

5. The amount claimed is entirely based upon unpaid rent equal to the actual rental period or portion thereof during which the tenant had possession of the premises.

Failure of the Landlord to Sue Within 45 Days

Failure of the landlord to comply fully with the 45 day limit on an action to retain a security deposit constitutes waiver of all claimed damages and makes him/her liable to the tenant for double the amount of the security deposit retained.

Note: In Martinez v. O'Brien, (1975), the Ingham County Circuit Court ruled that the double damages provision in section 13, Public Act 348 is mandatory, not discretionary.

Termination of Landlord's Interest

Upon termination of a landlord's interest in a rental unit, he/she is still liable for the security deposit until the occurrence of any of the following:

1. He/she transfers the deposit to the successor and notifies the tenant in writing of the transfer and of the successor's name and address.

2. The successor deposits the security deposit in a regulated financial institution.

3. The return of the security deposit to the tenant.