The Landlord’s Guide to Security Deposits - Charging a Security Deposit Upon Renting

  1. Charging a Security Deposit Upon Renting
    • A landlord cannot charge a security deposit to a tenant unless the tenant is given the required written notice “no later than 14 days from the date a tenant assumes possession.” MCL 554.603
    • By statute, the maximum security deposit allowable is a 1½ times the monthly rent.
      • This amount includes pet and other similar deposits.
      • This amount does NOT include NONREFUNDABLE fees, such as cleaning and preparation fees.
    • There are a number of other statutory notices that are required prior to lawfully being allowed to charge and accept a security deposit – contact your attorney to find out if you are in compliance.
  2. What you Can and Cannot Charge Against a Security Deposit
    • A landlord can charge only a limited number of items against a tenant’s security deposit MCL 554.607:
      • Actual damages to the unit or ancillary facility (garage, shed, etc);
      • Reimbursement for back rent;
      • Reimbursement for rent due to premature termination; and
      • Reimbursement for accrued and unpaid utilities.
    • A landlord can NOT charge cleaning expenses against a security deposit.
    • A landlord should not charge trash and debris removal against a security deposit.
  3. Time Limitations for Charging Against a Security Deposit
    • Upon the termination of the tenancy, the landlord should inspect the property and detail any amounts they intend to charge against the security deposit on a move-out checklist.
    • If there is going to be any charge against the security deposit, the landlord must send a statement to the tenant detailing the charges against the security deposit within thirty (30) days.
      • This requirement is extinguished if the tenant fails to provide a forwarding address within four (4) days.
    • If the tenant objects to the landlord’s notice of damages within seven days, the landlord is going to withhold any money from a tenant’s security deposit, then the landlord must file a claim in court within 45 days of the termination of occupancy.
      • Failure to do so will act as a waiver of ALL damages claimed by the landlord against the security deposit and could potentially result in further liability.
      • The claim is filed as a general civil claim, generally in a district court with jurisdiction.
      • A landlord is not required to file a claim against the tenant’s security deposit if one of the following events exist:

        • The tenant fails to provide a forwarding address within four (4) days;
        • The tenant does not dispute the security deposit charges in writing within seven (7) days;
        • The landlord and tenant agree in writing as to the disposition of the security deposit;
        • The amount claimed is entirely for accrued and unpaid rent for the rental period, or portion thereof, which the tenant had actual or constructive possession; or
          • This does not include lost profit or future utility bills due to premature termination.
        • The security deposit is being held as total or partial satisfaction of a money judgment.

* This letter is intended only as a cursory review of a portion of the laws applicable to landlord and tenant dealings and is not intended to replace the counsel of an attorney. Before taking any action in any landlord tenant matter contact an attorney.