Chapter 2: Specific Landlord-Tenant Laws 
2.1Security Deposits and Early Lease Termination: Landlord-Tenant Relationship Act1
The practices and procedures relating to the collection, holding, and return of a tenant’s security deposit are regulated by the Landlord-Tenant Relationship Act of 1973 (LTRA), MCL 554.601 et seq. The LTRA details the parties’ duties and obligations with regard to the amount of a tenant’s security deposit, its use, the transmission of information between the landlord and the tenant, and the settlement of disputes. The LTRA also briefly addresses special circumstances of early lease termination.
Unless otherwise noted in the applicable statutes, parties to a rental agreement cannot waive the requirements of the LTRA. MCL 554.606.
A.General Security Deposit Requirements
A landlord cannot collect a security deposit from a residential tenant
“unless he [or she] notifies the tenant no later than 14 days from the date a tenant assumes possession in a written instrument of the landlord’s name and address for receipt of communications under [the LTRA], the name and address of the financial institution or surety required by [MCL 554.604] and the tenant’s obligation to provide in writing a forwarding mailing address to the landlord within 4 days after termination of occupancy.” MCL 554.603.
“A security deposit . . . shall not exceed 1-1/2 months’ rent.” MCL 554.602. However, “the first full rental period of the lease agreement” may not be made part of the security deposit. MCL 554.601(e).
“[E]xcept for the first month’s rent, [a] landlord cannot require any tenant to pay any portion of rent prior to the first day of the rental period to which the rent is applied, unless the prepayment is a security deposit which satisfies the landlord-tenant relationship act.” Sobel v Trony Associates, 91 Mich App 294, 297-298 (1979).
3.Use of the Deposit
The LTRA requires the landlord to deposit the tenant’s security deposit in a “regulated financial institution.” MCL 554.604(1). The name and address of that institution must be given to the tenant. MCL 554.603.
a.Posting Bond—Use For Any Purpose
The security deposit may be used by the landlord only if a bond is posted in its place, insuring that the money will be available for the return of a tenant’s deposit. MCL 554.604(1). If that is done, the money may be withdrawn and used by the landlord for whatever purposes he or she desires, even though the deposit legally remains the property of the tenant until termination of the lease. MCL 554.604(1); MCL 554.605. MCL 554.605 states:
“ For the purposes of [the LTRA] and any litigation arising thereunder, the security deposit is considered the lawful property of the tenant until the landlord establishes a right to the deposit or portions thereof as long as the bond provision is fulfilled, the landlord may use this fund for any purposes he [or she] desires.”
b.Retaining Deposit After Damage to Rental Property
“Under the [LTRA], a security deposit may be used solely (1) to reimburse a landlord for actual damages to a rental unit, (2) to pay for rent due under the lease, (3) to pay utility bills, or (4) to compensate the landlord for rent lost from a tenant’s premature termination of a lease.” Hovanesian v Nam, 213 Mich App 231, 235 (1995). See also MCL 554.607.
If a landlord determines that there are damages to the rental unit, the landlord must follow a statutory process of notifying the tenant of these damages. This notice represents a complete accounting by the landlord of any portion of the security deposit not refunded to the tenant. MCL 554.609 states:
“In case of damage to the rental unit or other obligation against the security deposit, the landlord shall mail to the tenant, within 30 days after the termination of occupancy, an itemized list of damages claimed for which the security deposit may be used as provided in [MCL 554.607], including the estimated cost of repair of each property damaged item and the amounts and bases on which he [or she] intends to assess the tenant. The list shall be accompanied by a check or money order for the difference between the damages claimed and the amount of the security deposit held by the landlord and shall not include any damages that were claimed on a previous termination inventory checklist prior to the tenant’s occupancy of the rental unit. 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.”
A landlord’s failure to notify a tenant within 30 days after the tenant has vacated the rental unit of any damages as required by MCL 554.609, “constitutes agreement by the landlord that no damages are due and he [or she] shall remit to the tenant immediately the full security deposit.” MCL 554.610.
For purposes of MCL 554.607(a), actual damages do not include ordinary cleaning costs. Smolen v Dahlmann Apts, Ltd, 127 Mich App 108, 115 (1983). The Court stated: “While a grimy kitchen wall, a soiled carpet and a stained couch are all unattractive, the wall, carpet and couch themselves have not been injured. Thus, the Legislature could not have intended that a rental unit needing cleaning has suffered ‘damages’ under the statute.” Smolen, 127 Mich App at 115.
If the tenant responds to the landlord’s notice of damages, he or she must “indicat[e] in detail his [or her] agreement or disagreement to the damage charges listed.” MCL 554.612. For purposes of MCL 554.609 and MCL 554.612, the date of mailing is considered the date the tenant responded.
A tenant who fails to respond only forfeits the amount of claimed damages allowable under MCL 554.607; he or she does not forfeit any amount wrongfully retained by the landlord. Smolen, 127 Mich App at 118-119.
B.Required Transmittal of Information
In addition to requiring the landlord to send notice of his or her intent to collect a security deposit, MCL 554.603, the LTRA requires the tenant to notify the landlord of an address at which the tenant may be reached after termination of his or her occupancy, MCL 554.611. MCL 554.611 states that “[t]he tenant shall notify the landlord in writing at the address given under [MCL 554.6032] within 4 days after termination of his [or her] occupancy of an address at which communications pursuant to [the LTRA] may be received.”
A tenant’s failure to provide a forwarding address “relieves the landlord of the requirement of notice of damages but does not prejudice a tenant’s subsequent claim for the security deposit.” MCL 554.611. See Oak Park Village v Gorton, 128 Mich App 671, 677 (1983).
However, a tenant is relieved of his or her obligation to provide a forwarding address if the landlord’s notice under MCL 554.603 does not
“include the following statement in 12 point boldface type which is at least 4 points larger than the body of the notice or lease agreement: ‘You must notify your 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.
Notification of the condition of property at the time of entry is through the use of inventory checklists. See MCL 554.608. The checklists, to be provided at the time the tenant assumes possession, should include all items in the rental unit and notice that the tenant can request copies of the completed checklists of the previous tenant. MCL 554.608.
MCL 554.608 states:
“(1) The landlord shall make use of inventory checklists both at the commencement and termination of occupancy for each rental unit which detail the condition of the rental unit for which a security deposit is required.
(2) At the commencement of the lease, the landlord shall furnish the tenant 2 blank copies of a commencement inventory checklist, which form shall be identical to the form used for the termination inventory checklist. The checklist shall include all items in the rental unit owned by the landlord including, but not limited to, carpeting, draperies, appliances, windows, furniture, walls, closets, shelves, paint, doors, plumbing fixtures and electrical fixtures.
(3) Unless the landlord and the tenant agree to complete their inventory checklist within a shorter period, the tenant shall review the checklist, note the condition of the property and return 1 copy of the checklist to the landlord within 7 days after receiving possession of the premises.
(4) The checklist shall contain the following notice in 12 point boldface type at the top of the first page: ‘You should complete this checklist, noting the condition of the rental property, and return it to the landlord within 7 days after obtaining possession of the rental unit. You are also entitled to request and receive a copy of the last termination inventory checklist which shows what claims were chargeable to the last prior tenants.’
(5) At the termination of the occupancy, the landlord shall complete a termination inventory checklist listing all the damages he [or she] claims were caused by the tenant.”
When more than one person occupies the premises with the landlord’s consent and the landlord requires all of them to sign the rental agreement and the checklist, all signators are responsible for the conditions of items on the checklist until the last of them has terminated the occupancy. See Opinion of the Attorney General, No. 5318, June 21, 1978.
D.Landlord’s Action for Damages
If a landlord brings an action to retain a tenant’s security deposit for damages, he or she must do so within 45 days of the tenant’s termination of occupancy. MCL 554.613(1). A landlord who fails to comply with the requirement of “this section” waives “all claimed damages and [is] liable to the tenant for double the amount of the security deposit retained.” MCL 554.613(2); Tree City Props, LLC v Perkey, 327 Mich App 244, 250 (2019) (“[t]he term ‘this section’ is plainly self-referential and is thus read to mean that compliance with MCL 554.613 is required and that it is the noncompliance with the requirements of MCL 554.613(1) that creates the double penalty liability set forth in MCL 554.613(2)”). MCL 554.613(1) states:
“(1) Within 45 days after termination of the occupancy and not thereafter the landlord may commence an action in a court of competent jurisdiction for a money judgment for damages which he [or she] has claimed or in lieu thereof return the balance of the security deposit held by him [or her] to the tenant or any amount mutually agreed upon in writing by the parties. A landlord shall not be entitled to retain any portion of a security deposit for damages claimed unless he [or she] has first obtained a money judgment for the disputed amount or filed with the court satisfactory proof of an inability to obtain service on the tenant or unless:
(a) The tenant has failed to provide a forwarding address as required by [MCL 554.611].
(b) The tenant has failed to respond to the notice of damages as required by [MCL 554.612].
(c) The parties have agreed in writing to the disposition of the balance of the deposit claimed by the landlord.
(d) The amount claimed is entirely based upon accrued and unpaid rent equal to the actual rent for any full rental period or portion thereof during which the tenant has had actual or constructive possession of the premises.”
“[MCL 554.613(1)] deals strictly with claims for damages to be secured out of security deposits, and does not in any way enhance, restrict, or affect preexisting statutory and common[-]law remedies for damages or for unpaid rent.” Oak Park Village, 128 Mich App at 681. MCL 554.613(2) states:
“(2) This section does not prejudice a landlord’s right to retain any security deposit funds as satisfaction or partial satisfaction of a money judgment obtained pursuant to summary proceedings filed pursuant to [MCL 600.5701 to MCL 600.57593] or other proceedings at law. Failure of the landlord to comply fully with this section constitutes waiver of all claimed damages [against the security deposit] and makes him [or her] liable to the tenant for double the amount of the security deposit retained.”
E.Checklist for Operation of Security Deposits
•Tenant begins occupying rental property.
•Within 14 days, the landlord provides notice to the tenant of the name and address of the financial institution where the security deposit is held or of the surety, and of the tenant’s duty to provide the landlord with a forwarding address after termination of tenancy. MCL 554.603.
•The amount of the security deposit is limited to 1-1/2 months’ rent. MCL 554.602.
•Within seven days, the tenant completes an inventory checklist and forwards a copy to the landlord. MCL 554.608(3).
•Tenant vacates the rental property.
•Within four days of vacating the property, the tenant informs the landlord of an address at which the tenant may be reached. MCL 554.611.
•Within 30 days of termination, the landlord returns the full deposit or sends to the tenant an itemized list of damages and any undisputed moneys, with notice to the tenant that he or she must respond. MCL 554.609.
•Within seven days of receiving the itemized list of damages from the landlord, the tenant responds to the landlord’s claims. MCL 554.612.
•Within 45 days of the tenant’s vacation of the property, the landlord sues for a judgment to retain any deposit moneys in dispute, unless:
•the tenant failed, without excuse, to provide a forwarding address, or
•the tenant failed to respond to the list of damages, or
•the parties have agreed in writing to the disposition of the deposit, or
•the deposit amount retained equals any
•outstanding money judgments, or
•rent due for a period of time the tenant was actually or constructively in possession of the property. MCL 554.613(1).
F.Termination of a Lease Under the LTRA
There are two statutes under the LTRA that specifically address special circumstances for lease terminations.
•Eligibility for subsidized senior citizen housing or inability to live independently.
MCL 554.601a states:
“(1) A rental agreement shall provide that a tenant who has occupied a rental unit for more than 13 months may terminate a lease by a 60-day written notice to the landlord if 1 of the following occurs:
(a) The tenant becomes eligible during the lease term to take possession of a subsidized rental unit in senior citizen housing and provides the landlord with written proof of that eligibility.
(b) The tenant becomes incapable during the lease term of living independently, as certified by a physician in a notarized statement.”4
•Reasonable apprehension of present danger.
Subject to the requirements of MCL 554.601b,5 a tenant who
“has a reasonable apprehension of present danger to the tenant or his or her child from domestic violence, sexual assault, or stalking while that person is a tenant shall be released from his or her rental payment obligation in accordance with the requirements of this section after submittal of written notice of his or her intent to seek a release and written documentation that the tenant has a reasonable apprehension of present danger to the tenant or his or her child from domestic violence, sexual assault, or stalking.” MCL 554.601b(1).
•If a rental agreement does not contain a provision stating the circumstances in MCL 554.601b under which a tenant may “seek a release of rental obligation[,]” the information must be posted in writing or delivered to a tenant when a lease is signed. MCL 554.601b(1).
•The tenant’s notice to seek release from his or her rental obligation for a reason specified under MCL 554.601b must be in writing and delivered by certified mail. MCL 554.601b(1).
•The documentation required by MCL 554.601b must include a written statement of the tenant’s reasonable apprehension of present danger. MCL 554.601b(2). The statement may be satisfied by supplying the landlord with one or more of the following:
•A valid personal protection order. MCL 554.601b(3)(a).
•A valid probation or parole order, or a conditional release order. MCL 554.601b(3)(b).
•A written police report that resulted in filed charges not more than 14 days before the tenant’s submission of written notice. MCL 554.601b(3)(c).
•A written police report that resulted in filed charges more than 14 days before the tenant’s submission of written notice, provided that the tenant “demonstrate[s] a verifiable threat of present danger from domestic violence, sexual assault, or stalking.” MCL 554.601b(3)(d).6
•The tenant’s forwarding address may not be revealed unless “reasonably necessary to accomplish the landlord’s regular and ordinary business purpose.” MCL 554.601b(4). “The landlord shall not intentionally reveal forwarding address information or documentation submitted by the tenant under [MCL 554.601b] to the person that the tenant has identified as the source of the reasonable apprehension of domestic violence, sexual assault, or stalking.” MCL 554.601b(4).
If multiple parties are liable under the lease for rental obligations, those parties remain liable for the obligations. MCL 554.601b(5).