Overview
Michigan’s security deposit laws establish detailed rules for how landlords can collect, hold, and return deposits. These laws aim to protect tenants from unfair practices while giving landlords tools to recover costs due to lease violations.
Under Michigan Compiled Laws § 554.601 to § 554.616, landlords must follow specific procedures or risk losing the right to retain any portion of the security deposit.
This guide covers:
How much landlords can charge
Where deposits must be stored
Rules for returning security deposits
Penalties for non-compliance
Related Statute: MCL § 554.601–554.616
1. Security Deposit Limits & Storage Requirements
Maximum deposit: Landlords may charge a maximum of one and a half months’ rent as a security deposit.
Storage requirements: Deposits must be held in a regulated financial institution and must not be commingled with the landlord’s personal funds.
Tenant notification: Within 14 days of the tenant taking possession, the landlord must provide written notice of the bank name and address, along with a detailed move-in inventory checklist.
Law Reference: MCL § 554.603, § 554.608
2. Security Deposit Returns & Allowable Deductions
Return deadline: Landlords must return the deposit, or the portion not withheld, within 30 days after termination of occupancy.
Permissible deductions: Deductions are permitted for unpaid rent, damages beyond ordinary wear and tear, and other lease violations.
What landlords cannot deduct: Normal wear and tear, such as faded paint or worn carpeting, may not be deducted.
Itemized statement required: A detailed list of damages must be sent to the tenant within 30 days. Tenants have 7 days to respond in writing to dispute any claims.
Law Reference: MCL § 554.609–554.611
3. Interest Payments & Documentation Requirements
Interest payments: Michigan does not require landlords to pay interest on security deposits.
Move-in condition report: Landlords must provide a two-part inventory checklist at move-in detailing the condition of the unit, which the tenant can complete and return within 7 days.
Tenant review period: Tenants are encouraged to keep a copy of the inventory checklist and document any discrepancies.
Failure to provide documentation: Failure to provide the required move-in documentation or follow notice timelines may forfeit the landlord’s right to retain any deposit funds.
Law Reference: MCL § 554.608–554.610
4. Penalties for Mishandling Security Deposits
Michigan law enforces consequences for mishandling deposits.
Failure to return the deposit within the 30-day deadline may result in the landlord losing the right to withhold any part of the deposit.
Failure to provide an itemized list or move-in inventory checklist may also bar the landlord from making claims against the deposit.
Law Reference: MCL § 554.613–554.615
Key Takeaways
Landlords may charge no more than one and a half months’ rent as a security deposit.
Deposits must be held in a separate account and tenants must be notified of the bank and receive a condition checklist within 14 days.
Deposits must be returned within 30 days, with a full itemized statement of any deductions.
No interest is required, but documentation is strictly mandated.
Non-compliance may result in forfeiture of the deposit and legal action.
By understanding and following Michigan security deposit laws, landlords can protect their rights while ensuring tenants receive fair treatment and timely returns.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. Readers should not act or refrain from acting based on any information included in this post without seeking legal counsel or other professional guidance specific to their situation. The information is provided “as is” without any representations or warranties of any kind, express or implied, including but not limited to the accuracy, completeness, or reliability of the content. Laws and regulations may change and vary by jurisdiction.
