Overview
Michigan security deposit laws are governed by the Landlord-Tenant Relationship Act (LTRA), MCL 554.601 et seq. Michigan has strict rules on deposit limits, storage requirements, and mandatory inventory checklists at both move-in and move-out. The law includes specific timelines for both landlords and tenants. Security deposit compliance software helps property managers meet these precise requirements.
Maximum Security Deposit
Under MCL 554.602, security deposits may not exceed one and one-half month's rent.
- This limit is statutory and cannot be waived
- Landlords cannot require a higher deposit even if the tenant agrees to it
Return Timeline
Michigan has a specific process for deposit returns: (Ohio follows comparable guidelines—see Ohio security deposit laws.)
Standard Timeline
Landlords must return the security deposit within 30 days after the tenant moves out.
- If any deductions are made, the landlord must provide an itemized list of damages
- Any undisputed amounts must be returned with the itemized list
Tenant Requirement
Important: Within 4 days of moving out, tenants must provide the landlord with written notice of a forwarding address (MCL 554.611).
If the tenant fails to provide a forwarding address, the landlord does not have to send notice of damages or sue before keeping the security deposit.
Lawsuit Deadline
If the landlord disputes any portion of the deposit, they must file a lawsuit within 45 days of the "termination of occupancy" (when the tenant moves out), regardless of when the lease actually expired.
Storage Requirements
Michigan has strict storage requirements for security deposits (MCL 554.604):
- Deposits must be held in a regulated financial institution (such as a bank)
- Alternatively, a cash or surety bond may be filed with the Secretary of State
- Deposits must not be commingled with the landlord's personal funds
Interest Requirements
Michigan does not require landlords to pay interest on security deposits. However, landlords must comply with the storage requirements above.
Inventory Checklist Requirements
Michigan requires detailed inventory checklists at both the beginning and end of tenancy:
Move-In Checklist
Within 14 days of the tenant taking possession, the landlord must provide:
- Written notice of the bank name and address where the deposit is held
- A detailed move-in inventory checklist
What the Checklist Must Include
Both move-in and move-out checklists should document the condition of:
- Carpeting and draperies
- Appliances
- Windows and doors
- Furniture (if furnished)
- Walls, closets, and shelves
- Paint condition
- Plumbing and electrical fixtures
- Other items in the unit
Allowable Deductions
Landlords may deduct from the security deposit for:
- Unpaid rent
- Damages beyond normal wear and tear
- Cleaning costs necessary to return the unit to move-in condition (excluding normal wear)
- Other lease violations
Ordinary wear and expected use are not valid reasons for withholding funds.
Penalties for Non-Compliance
Michigan has significant penalties for landlord violations:
Failure to Provide Itemized List
If the landlord does not provide the itemized deduction list within 30 days, they forfeit the right to withhold any portion of the deposit.
Failure to File Lawsuit
If the landlord fails to file suit within 45 days of move-out to claim disputed amounts:
- They must return the full balance of the security deposit, OR
- Pay the tenant twice the amount of the deposit they kept
Double Damages
Tenants may recover double the amount wrongfully withheld for serious violations of the act.
Common Compliance Questions
What counts as "normal wear and tear"?
Normal wear and tear includes minor scuffs on walls, slightly worn carpet in high-traffic areas, small nail holes from hanging pictures, and faded paint from sunlight. It does not include large holes in walls, stained or burned carpet, broken fixtures, or damage from pets. When in doubt, document the condition at move-in with dated photos.
How should I document the unit's condition?
Complete a detailed move-in checklist with the tenant, noting existing damage, appliance conditions, and overall cleanliness. Take timestamped photos or video of every room. At move-out, repeat the process. This documentation protects both parties and makes deduction decisions defensible if disputed. Request a demo to see how Passive streamlines inventory checklists.
Can I deduct for unpaid utility bills?
Only if your lease specifically allows it and the utilities are in your name. If utilities are in the tenant's name, contact the utility company directly—they have their own collection processes. Never make unauthorized deductions, even for amounts you believe the tenant owes.