Lapeer County Government
71-A District Court
255 Clay Street
Lapeer, MI  48446

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Deposits And Checklists In 1972, the Michigan Legislature passed a law which regulates security deposits.  The law sets forth the procedures governing the collection, management, and return of security deposits.  A security deposit is a deposit, in any amount, paid by the tenant to the landlord or an agent to be held for the term of the rental agreement, or any part thereof, 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 under conditions required by the rental agreement.  "Security deposit" does not include an amount paid for an option to purchase, unless it is shown the intent was to evade this act, nor does it include an amount paid as a subscription for or purchase of a membership in a cooperative housing association which provides dwelling units to its members. Always remember that the tenant has a right to the security deposit when he/she moves from the rental unit if the tenant:  (1) does not owe the landlord any rent; (2) does not owe for utilities; and (3) leaves the rental unit in the same condition, excluding normal wear and tear, as when the tenant moved in.  Security deposits are considered the tenant's property until the landlord establishes a claim on that money through court action or through mutual agreement with the tenant.  If there is a dispute over this money, the landlord must go to court to establish his or her claim to the disputed portion of the security deposit. Second, a security deposit includes any money the tenant gives the landlord beyond the first month's rent (except for specifically stated nonrefundable fees), whether or not the landlord defines that money as a security deposit.  State law puts a limit on how much a landlord may collect for a security deposit, but some landlords attempt to circumvent that law by giving deposits other names.  This is why the definition of a security deposit must be understood. Third, the Michigan security deposit law is quite specific about the procedures governing deposits, and it is important that these procedures be followed closely.  This law assigns tenant and landlord responsibilities the moment the lease is signed or a unit is occupied; knowing and following the procedures from the start prevents misunderstanding. Rights and Responsibilities Landlord May not require a security deposit that is greater than 1 1/2 month's rent. Remains responsible for the security deposit unit (1) the landlord transfers the deposit to his/her successor and by mail notifies the tenant of the successor's name and address, (2) the successor deposits the tenant's security deposit in a regulated financial institution or posts a bond or, (3) the security deposit is returned to the tenant. Must notify tenant in writing, within 14 days after the tenant's occupancy of his/her address, where the security deposit is being held (it must be in a regulated financial institution), and of the tenant's duty to supply a forwarding address, in writing, within four days after vacancy.  This is often included in the body of the lease. Can use the security deposit for the duration of the lease if he/she posts a surety bond with the Michigan Secretary of State. Must give two blank tenant inventory checklist forms to the tenant at the beginning of occupancy and must fill one out at the end of occupancy.  May request a receipt from the tenant for these checklists. Must return unclaimed portion of security deposit within 30 days after the tenant completely vacates and inform the tenant that the tenant must respond to the landlord's list of damages within seven days after receiving it.  (Failure on the part of the landlord to comply with this dual requirement forfeits his/her right to claim damages.)  The landlord should allow for mailing time.  It is a good practice to retain some type of proof of mailing. Must take the tenant to court within 45 days of the end of occupancy to collect any disputed portion of the security deposit. Is entitled to part of all of the amount of the deposit if the tenant has failed to pay rent or utility bills, or continues to occupy the premises in whole or in part, entitling the landlord to additional rent. Tenant Must complete an inventory checklist at the start of occupancy (within seven days of moving in). Must give the landlord a forwarding address within four days after moving out.  If the tenant does not do this, the right to an itemized list of damages from the landlord is forfeited.  However, the requirement only applies if the landlord informed the tenant of the requirement in writing within 14 days after the tenant has moved in. Must respond in writing, if he or she disputes the charges against the security deposit, within seven days of receipt of notice.  The tenant should allow for mailing time.  It is a good practice to retain some type of proof of mailing. Has a right to the refund of the security deposit if the landlord does not send a list of damages within 30 days of the end of the occupancy and does not file the case within 45 days of the end of occupancy. Remember, there may be other charges at the time tenancy begins that are reasonable and nonrefundable, such as a cleaning charge or fee for wall washing, carpet cleaning, drapery cleaning, etc.  A cleaning fee does not negate the obligation of the tenant to maintain the unit in a normal sanitary manner.  These nonrefundable fees or charges are separate items from the security deposit and, as such, are not covered by the security deposit law. Upon receiving possession of the rented premises, the landlord must also furnish a new tenant with two blank copies of a commencement inventory checklist including all the items in the rental unit owed by the landlord, as mentioned above.  Within seven days the tenant should review the checklist by noting the condition of the landlord's property and return one copy to the landlord.  The tenant has a right to request and receive a copy of the termination inventory checklist (also mentioned above), showing the claims chargeable to the last prior tenants.  At the end of the occupancy, the landlord should complete a termination checklist of any damages which were caused by the tenant.  This procedure will protect both the landlord and the tenant. How To Get Your Security Deposit Back Remember, within four days after moving out of the rental unit, the tenant must inform the landlord in writing of a forwarding address.  Within 30 days after the tenant has vacated, the landlord must mail to the tenant's new address an itemized list of any damages claimed against the tenant's security deposit.  At the same time, the landlord must list the estimated cost of repair for each damaged item, the amounts and basis on which the tenant is assessed, and enclose a check or money order for the difference between damages claimed and the amount of the security deposit held by the landlord.  It is important that both landlord and tenant perform their duties within the allotted time.  Public Act 348 of 1972 provides guidelines for both landlord and tenants.  Failure by either party to comply may result in the loss of a claim to the security deposit.  If, no later than 45 days after the tenant has physically moved out and surrendered the keys, the landlord and the tenant cannot reach agreement on damage charges, the landlord must sue the tenant and secure a court judgment covering damage charges in order to rightfully retain any portion of the security deposit being withheld for physical damage or unpaid utilities.  Failure of the landlord to comply with the requirement constitutes a waiver of all claimed damages and makes the landlord liable to the tenant for double the amount of the security deposit retained.