Michigan Law and Security Deposits: A FAQ

2015-02-28

Michigan Law and Security Deposits: A FAQ

Where does your security deposit go? What can it be used for? Learn it all here.

A fan of money changing hands.A security deposit is an amount of money taken from a prospective tenant and held in escrow until that tenant moves out. Many tenants believe that a security deposit is only used when they move out, and only used to make necessary repairs to the property before the next tenant moves in. At least in the State of Michigan, they are wrong: a security deposit is also the go-to pile of money to pay for any back rent or unpaid utility bills upon tenant Move-Out.

How Large Can a Security Deposit Be?
In Michigan — and in most states – there is a limit on the amount that can be charged for a security deposit. Michigan’s limit is one and a half times the amount of monthly rent. So if you’re paying $899/month in rent, you can charge up to $1348.50 in security deposit. Royal Rose Properties charges somewhere between 1 and 1.5 months’ rent in security deposits based on a variety of factors including the location and value of the property rented, the tenant’s qualifications, if there are pets, and more.

Many tenants misunderstand the term, “First & Last Month’s Rent” that’s used by many landlords when they advertise their rental properties. This is just a marketing term and the last month’s rent collected is legally considered a security deposit. Legally the term should be, “First Month’s Rent & Security Deposit”.

Who Owns the Money?
A landlord is required to place security deposits into an account and leave it there because they are technically still the tenant’s funds and the landlord is only allowed to have possession of them. This is called placing funds in escrow. In Michigan these funds are allowed to collect interest which can go to the landlord. Other states have different rules about interest on security deposits.

How Many of These Rules can be Changed in the Rental Agreement?
None. Michigan State law specifically forbids a landlord from creating a rental agreement that would waive any of the laws relevant to security deposits.

When Can a Security Deposit be Liquidated?
As mentioned above, a security deposit goes to pay for unpaid rent, unpaid utilities, and damages to the property — all at time of move-out. A tenant cannot use their security deposit to pay their rent if they intend to continue living in the rental; it is legally unavailable to the landlord until they are moving out. Even then, the landlord must be able to prove that the tenant has returned possession of the property and that there are unpaid bills or damage to the property to pay for before the landlord can liquidate the security deposit.

What can a Landlord Charge Against a Security Deposit?
In the case of unpaid rent or utility bills, it’s simple — they take out as much as a tenant owes. When it comes to paying for damages, it’s a bit more complex. When a tenant moves into a rental home, the landlord (in theory) is supposed to supply them with a Move-In Checklist on which the tenant can do two things:

  • Take an inventory of everything in the home, and
  • Made a list of any existing damages, no matter how small.



The tenant is then supposed to return this list to the landlord within a certain timeframe (seven days in Michigan). With this list, the landlord has a very solid record to rely on when they do a Move-Out Inspection. They will go through and look for every item on their inventory to make sure that it (or an item of equivalent purpose and value) is present, and they’ll go through their list of existing damage and note any and all new damage that they find. They’ll then take the list of new damages and calculate how much it will cost to repair all of it, and then they’ll subtract a reasonable amount to account for ‘normal wear and tear.’ Any amount left over legally can be deducted from the tenant’s security deposit. Michigan law does allow a tenant seven days to challenge any charges against their security deposit, but the tenant better have documentation to support any such challenge.

Keep in mind that if a tenant breaks a lease and moves out early, the unpaid portion of their lease may be considered unpaid rent and deducted from their security deposit — even if a tenant is current on everything else.

What Happens if Move-Out Charges Exceed the Security Deposit?
When all the past due rent, unpaid late fees, utilities and damages are totaled by the landlord and they exceed the amount of a tenant’s security deposit, the landlord typically will have to take the tenant to court. In Michigan, the landlord will typically go to small claims court to get a judgment against a tenant, if the damages are less than $5000. With a judgment in hand, the landlord is then legally allowed to garnish income and assets of the tenant.

Security deposits are a crucial part of tenancy. When turning over possession (not ownership) of their rental property to a tenant, they allow landlords some insurance that the tenant will be responsible, not only paying the rent and other association bills on time, but also taking care of the property so it maintains its value.

38 thoughts on “Michigan Law and Security Deposits: A FAQ

  1. I’m looking to move in a house on 3/5/21 and the rent is 650$, should it be 1275$ too move in. They saying it’s 1950….

    1. If this home is in Michigan, then they can only charge 150% of the monthly rent as a security deposit.

      So, $650 x 150% = $975 for the security deposit.

      Most landlords also require the first month’s rent upfront, which would equal $650 in this case.

      The total then would be $975 + $640 = $1625

      The $1950 you state they are requiring is ($1950 / $650) = 3 months of rent, which is half a month more than normal.

      Landlords are not allowed to collect “last month’s rent” SEPARATE from the security deposit.

      So, you should ask them for a very good explanation of what the extra half month of rent they want is for.

  2. Oh wow. My landlord made me pay first month’s rent $1350 1.5x first month’s rent = 3375 and a $250 non refundable cleaning fee. I’ve lived her about a year. 4 months ago he said he was upping the rent I got behind 2 months sadly said he won’t accept payments for that because I didn’t qualify for the place to begin with and he said I need to make an addition security deposit THEN he would decide if he would keep or terminate my lease. Mind you I have a 1yr lease here just not sure who to call about this

    1. We’re not following your timeline.

      Did you get behind in rent and then the landlord raised your rent?

      If so, check your lease as it may allow this. This is common.

      What is not common is your landlord also trying to raise your security deposit. What does your lease state about this?

      Please check with a local real estate attorney.

  3. If the landlord did not require me to pay a security deposit when I moved in (7years ago) can they make me pay it after 7 years?

  4. Hi,

    My rental company has charged a 1.5x security deposit, and a first & second months rent payment before move in. Strangely, I never have a skipped payment until the final month of the lease, where I do not pay the last months rent.
    1770 x 1.5 = 2655
    1770 x 2 (first and second month rent) = 3540
    6195 Paid before move in on Aug 15. Next payment is due Sep 15, and so on until final payment on June 15. The lease ends on Aug 5 of the following year – Is this legal to make us pay so much money upfront before moving into the apartment?

    1. You haven’t stated which state you are in.

      In Michigan, landlords are only allowed to collect first month’s rent + security deposit of 1.5 months.

      “Last month’s rent” is considered part of security deposit in Michigan.

      1. Hi. I am moving into Michigan (Ann Arbor). How do you advise that I approach my rental company about this?

      2. In Mich. if you are older than age 62 then they can only charge one months security dep.

  5. Michigan: after landlord sent a list of “damages” like “replace 1 light bulb” and “cleaned walls”, 8 disputed (within 7 days of receiving the list. Landlord still hasn’t returned the security deposit and has not filed an action to retain the security deposit. We are well beyond the 45 day requirement for him to commence action. If I file in district court (rather than small claims) can I also get attorney fee and court costs awarded against the landlord?

    1. Understand that if you did so, you would still have to appear in court and judges typically limit the amount of attorney fees that the losing party would be responsible for.

      Please check with an attorney to confirm.

  6. I have been living at my address for 19yrs. Last yr my rent increased by $35 upon lease renewal. This year at the end of my lease they want to increase my rent by $95, I am disabled and my only source of income is SSDI/SSI, When I initially moved in in 2002 I was an auto worker until I developed heart problems and lung cancer and was no longer able to work. They claim it’s because of market value when they own several other complexes in the area, also there are higher quality places that are newer and in better shape. Do I have any rights under the ADA? I’m not a problem tenant and for yrs I haven’t been late on my rent either.

    1. We understand your concern about your rent increases.

      Your landlord is in business to make money though. Unless there are local rent controls in place, when your lease term is up, they can charge whatever they want to renew it.

      Perhaps it would just be better for you to move to one of the higher quality places instead of renewing your lease.

  7. If I dispute the “damages” the previous landlord is claiming, can they still send it to collections before the 45 days concludes for them to take action? I am willing to go to court but do not want any adverse claims against my credit before we end up going. Another question, can the property management charge me for replacing carpet if they intended to remove the carpet during renovations? I was in a “older” unit and can verifiably confirm other units in the building do not have carpet.

    1. Depends on what you mean by “dispute”. Eventually, you may have to take them to court. Depending on the court and state you are in, a loss in court may show up on your credit report.

      Most states do not allow landlords oto charge tenants for “normal wear & tear”, which is a very subjective concept. UOften, what a tenant considers “normal wear & tear”, is very different than the perspective of a landlord. Ultimately, a judge may have to decide and their opion may differ from that of the tenant and landlord.

  8. The Landlord have advertised $700 as the Deposit and Fees. Yet when you go view the property they tell you it’s $3,500 to move in. Isn’t that illegal to ask for more than one and a half month rent? In Michigan Landlords are allowed to price gouge rent and security deposits. They’re charging 2 months rent plus a security deposit too which is ridiculously high in Michigan.

    1. Michigan allows a maximum security deposit of 1.5 times the rent.

      Included in this limit:
      – Security Deposit
      – Pet Deposit
      – Last Month’s Rent
      – Anything else labled deposit or not labeled a fee

      1. What do you mean is a pet fee part of the deposit or separate from a deposit please explain. I am In Michigan

  9. I moved into this apt 5yrs ago I paid$1000 first month rent and deposit now I’m finna move in a apt upstairs in the same building and they’re requesting I pay rent where I am staying now plus a prorated rent in the new apt the $1000 I paid 5yrs ago does it transfers and I should be able to move in at a credit balance?

    1. We’re not sure what you’re asking.

      Appears you are moving from one apartment to another within the same apartment (not condo) building.

      If so, you would normally be responsible for the prorated rent for your occupancy of your old unit, then the prorated rent for your occupancy for the new unit. If they are both the same rent amount, then you should only pay a total of one month of rent.

      There is also the issue of the security deposit. A landlord normally won’t just transfer a security deposit from one unit to another until they do a MoveOut walk-thru of your old unit and determine if there are any damages to charge you with. A landlord may even require that you pay the security deposit for the new unit upfront, and will then refund whatever remains of your security deposit for the old unit AFTER they complete their MoveOut Inspection and charges.

      Lastly, if the rent is higher in the new unit, you may need to pay whatever difference this has on any security deposit transfer.

  10. I’m from Michigan I am confused on what the landlord I’m trying to rent from is saying I asked for a total move in cost his response was first and last month security deposit 2,000 the rent is 1300 a month I’m not sure if he’s saying 2000 to move in or if he’s saying that’s the deposit and I still need to pay first and lasts month which would bring my moving in cost to around 4600 which seems like a ton of money any idea so I can make sure I know my rights as a tenant

    1. Michigan considers “last months rent” as part of the security deposit, which is limited to 1.5x the rent amount.

      So, if rent is $1300, the max security deposit would be $1950.

  11. Mich law says a landlord can’t charge more than one and a half months rent, if age 62 or older they can’t charge only one months dep. Call the AG ofc in Lansing and get a Landlord and Tenants Handbook,so you know the law

  12. I am a landlord own my property in Michigan and the tenants break the lease after 4 months for no alignment reason.
    Now they send me a 30 day notice to leave the property and they dont want to pay this month rent and want to use the security deposit as rent.
    Even they own me $220 late fees from last month and utility bill that refused to pay and I still didnt check the status of my property and what is the damage that they left me in the house.
    Can they do that and what Michigan laws said about the direct deposit use as rent if the tenants break the lease early for no reason.

    1. You need to get an attorney if you are not aware of Michigan landlord statutes.

      You should be discussing with an attorney about starting a nonpayment eviction case ASAP, before they move out.

      You should also be aware of your options regarding their breaking of the lease.

  13. I am a landlord own my property in Michigan and the tenants break the lease after 4 months for no alignment reason. Now they send me a 30 day notice to leave the property and they dont want to pay this month rent and want to use the security deposit as rent. Even they own me $220 late fees from last month and utility bill that refused to pay and I still didnt check the status of my property and what is the damage that they left me in the house. Can they do that and what Michigan laws said about the security deposit use as rent if the tenants break the lease early for no reason

  14. My landlord required me to pay first month rent and the servuirty deposit which equals first month rent. I gave them the money order of that amount plus other fees at the time of move in. However the apartment complex did not charge me a servuirty deposit when I sign the paper in person they only charged for first months rent and other fees, they did not include the security deposit. Now 5 months later the apartment complex is trying to charge me for the security deposit and also expects me to pay next month rent. Are they able to do that ? Am I able to take this to court.

    1. What does your lease state?

      If it states you were to pay first month’s rent and a security deposit to move in and they overlooked collecting it from you, then they have every legal right to require you to pay or pursue their legal options.

  15. My son leased an apt. for 10 years. Recently moving out, I asked him to mention to if his security deposit was placed into an interest bearing account during this time and the Office staff said no and seem unaware of this law. How does he proceed to get what he is due?

  16. Michigan, 49633. My future landlord is asking for $3,750. $1,250 for first month, $1,250 for security deposit and $1,250 for pet deposit. When I said that Michigan has a law that prevents her from charging me a deposit larger than 1.5 times rent, she said the security deposit is separate from the pet deposit. Is this correct or should we only be paying $3,125?

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