In Michigan security deposits are regulated by the Landlord and Tenant Relationships Act. (Act 348 of 1972) This act regulates landlord and tenant relationships and rental agreements. Specifically sections 554.602 to 554.616 of the Michigan Compiled Laws regulate security deposits. It is important that landlords know and comply with these laws to protect their interests.

The Act allows Landlords to require security deposits that do not exceed 1 ½ month’s rent. (MCL 554.603)

A landlord must notify the tenant of the security deposit no later than 14 days from the date the tenant assumes possession. This notice must be written and include the landlords name, address and the following statement printed in 12-point boldface font, which is at least 4 points larger than the body of the notice or lease agreement:

“You must notify the 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.” (MCL 554.603)

The landlord is required to make use of inventory checklists both at the beginning and end of the tenant’s occupancy for each rental unit which detail the condition of the rental unit for which the security deposit is required. (MCL 554.608)

Once the landlord receives the security deposit it is considered the lawful property of the tenant until the landlord establishes a right to deposit it. (MCL 554.605)

If the premises is damaged, the landlord shall mail to the tenant, within 30 days after termination of occupancy, an itemized list of damages claimed for which the security deposit may be used, this list should include the estimated cost of repairs and the amount of the damage assessed to the tenant. The notice of damages shall include the following statement in 12-point boldface type, which shall be at least 4 points larger than the body of the notice:

“You must respond to this notice by mail within 7 days after receipt of same, otherwise you will forfeit the amount claimed for damages.” (MCL 554.609)

Not complying with the above notice of damages requirement within 30 days constitutes the Landlord waiving his rights to the security deposit. If this occurs the landlord must immediately remit the full security deposit to the tenant. (MCL 554.610)

More information can be found at the Michigan Legislature website: http://www.legislature.mi.gov/documents/mcl/pdf/mcl-act-348-of-1972.pdf