A Guide To Security Deposits
A security deposit is money paid by the tenant at move in beyond the first month's rent. This is the tenant's money until the landlord can prove otherwise
What is a Security Deposit?
A security deposit, or damage deposit, is money, beyond your first month’s rent, that you have to pay your landlord when you move in. Your landlord holds this money as long as you live in the place. When you move out, if you have paid all your rent and utility bills and you have not damaged the place, the landlord has to give you back your money.
Remember, a security deposit is any money over and above your first month’s rent. It does not matter what the landlord calls the money, it still is a security deposit. If you pay your first and last month’s rent when you move in, the last month’s rent is really a security deposit. The only recognized exception to this rule in Michigan is a non-refundable fee, such as a cleaning fee paid at the beginning of a tenancy.
What is a Non-refundable Cleaning Fee?
Some landlords demand an up-front fee for clean-up of the rental unit after a tenant moves out. They charge everybody the same amount and you know when you pay it that, even if you are the world’s cleanest tenant, you will not get the money back. A Michigan court decision said that this sort of fee is not a security deposit.
But if your landlord gives you the idea that you might get the money back if you keep the place up or if other people in your building get their money back, then it really is a security deposit.
What Can a Security Deposit Be Used For?
A security deposit is like an insurance policy for the landlord. It helps:
Pay the landlord if you move out owing rent or utilities, or:
Have damaged the rental unit beyond normal wear and tear.
In Michigan, this is all a deposit can be used for. If you do not owe rent or utilities when you move out, and you have not been damaged the place, the landlord has to give you your money back.
What is “Normal Wear and Tear”?
We all know that things like furniture, appliances, and carpets wear out after a while just from being used. We also know that walls get dirty and need to be painted from time to time. This is normal “wear and tear”.
A landlord cannot use your security deposit to fix “normal wear and tear”. This means that he cannot keep your deposit to do things like shampoo the carpets or clean and paint the walls for the next tenant unless you have really damaged them. Naturally, landlords and tenants often disagree on whether something is “normal wear and tear” or damages. Sometimes a judge or mediator has to decide.
How Much Can a Landlord Charge for a Security Deposit?
In Michigan, a landlord cannot charge more than one and a half (1½) times your monthly rent for a security deposit. So, for example, if you pay $500.00 a month in rent, the landlord cannot ask for more than $750.00 as a deposit. This is true no matter what she calls the deposit money. If you landlord wants the last month’s rent plus a security deposit, it cannot come to more than one and a half (1½) times your monthly rent.
Who Does the Security Deposit Belong To?
The deposit belongs to you, the tenant. The landlord is just holding your money for you, and must deposit the money in a financial institution, such as a bank or credit union. If you follow the law, the landlord has to sue you before he can legally keep any of the deposit.
What is Michigan's Security Deposit Law?
Michigan’s security deposit law, sometimes called the Security Deposit Act, tells landlords and tenants what their rights and responsibilities are concerning security deposits. This law was written to protect tenants, but you have to be sure to follow it if you want to get your deposit back. At the Michigan Legislature site, you can find a full text of the act.
What Does the Law Say?
The law is a bit complicated, but here are some of the important parts of the law beyond what was said in the previous sections.
To require you to pay a security deposit, within 14 days of your moving in, a landlord must inform you in writing about both the name and address of her business and the financial institution where the security deposit will be held, and also, in large type, about your responsibility to provide a forwarding address within 4 days of moving out to ensure your rights under the law (see more below)
As soon as you move in, the landlord must give you two copies of an inventory move-in check-list. The check-list is a form that you should really fill out. Go through your apartment room by room with the form and write down what kind of shape each item was in when you moved in. You should make sure that you look at everything like the walls, floors/carpeting, windows, storms and screens, doors, plumbing, furnace, paint, stove, refrigerator, furniture and so on. You have 7 days to fill out the forms and give one of them to your landlord. Be sure to keep one of them for yourself. You may need it. If you do not fill out the forms and give one to your landlord, you are agreeing that nothing was wrong with your place when you moved in. (see section 8 of the law)
Within (30) days after you move out your (former) landlord either has to return your deposit or send you a list of the things that she claims as damages (a “notice of damages”). If the landlord does not do this, the law says that she gives up any right to keep your security deposit. But, if you did not give your landlord your forwarding address within 4 days after moving out (assuming your landlord told you in writing of this responsibility), your landlord does not have to give you a notice of damages. (see sections 9 & 10 of the act and Sample letter #2, p. 15)
The notice of damages must say in large type that “you must respond to this notice by mail within 7 days after receipt of same, otherwise you will forfeit the amount claimed for damages.”
So, if your landlord sends you a notice of damages, and you disagree with it, you have 7 days to mail a response to your landlord (see section 12 of the act and Sample letter #3, p. 16)
If you dispute the notice of damage, and you and your landlord can reach an agreement, your landlord has to start a court case against you within(45) days after you move out. If he does not do this, he has to return your deposit. But remember that this is only true if:
1.) You gave the landlord your forwarding address within (4) days after you moved out; and
2.) You answered your landlord’s list of damages in writing within (7) days after you got it; and
3.) Your landlord wants to keep the deposit for damage to the place or utility bills and not just for back rent. (see section 13 of the act and sample letter #4, p. 16)
If your landlord is keeping your deposit only for unpaid rent and not for damages or utility bills, she does not have to sue you within 45 days. If you think you do not owe as much rent as he says, YOU have to sue him to get your deposit back. (see section 13 of the act)
What is I Do Not Meet One Of My Obligations Under the Security Deposit Law?
If your landlord properly informed you about your responsibility to provide a forwarding address within 4 days of moving out, or if you do not respond to your landlord’s notice of damages within 7 days, you lose some of the protections of the law, as outlined above, but you should still have the right to sue your landlord for return of your security deposit if it has been wrongly withheld.
What If My Landlord Does Not Send Me a List of Damages On Time?
If your landlord has your forwarding address but he still does not send you a list of damages within (30) days of the day you move out, the law says that your landlord gives up his right to the security deposit. You can sue him to get it back.
What If My Landlord Does Not Sue Me Within (45) Days?
Your landlord does not have to sue you if he is keeping your deposit only for back rent. But if he is keeping it for damages to the place or for utilities, he has to sue you. Otherwise he gives up any legal right to the deposit. If you have done everything that you are supposed to do under the law, like answer the list of damages within (7) days, but your landlord still does not sue you within (45) days, you can sue your landlord for two times your deposit. This is a special penalty on landlords who do not follow the law. (see section 13, subsection 2 of the act).
NOTE: Some Judges do not follow this part of the law. If you do sue your landlord, be sure to point out this part of the law to the Judge. If he or she does not give you twice your deposit back, ask the Judge to tell you why.
Also, even if you are entitled to the return of 2 times your security deposit, Michigan courts will probably still allow your landlord to make claims for unpaid rent and damages against you. For example, if your security deposit was $500, and you disagreed in writing with your landlord’s notice of damages, but your landlord did not sue you within 45 days of your moving out, you would have a claim for $1000. But, if your landlord proves that you owed rent of $200 and caused damages to the unit totaling $300, your recovery would be $500. ($500 x 2 - $200 - $300 = $500)
How Can I Sue My Landlord?
If your landlord owes you three thousand dollars ($3,000.00) or less, you can sue him in Small Claims Court. This is a special court where people cannot have lawyers. If your landlord owes you more than three thousand dollars (3,000.00) you can still sue him in Small Claims Court, but you will have to give up everything over the Small Claims Court limit. To find our more about Small Claims Court visit the Small Claims Self Help website. Unlike most other court decisions, a small claims court decision cannot be appealed. If your landlord objects to small claims for this reason or because she wants to have an attorney, the case will be transferred to the general district court
If you want to sue for more than the Small Claims Court limit or otherwise do not want to be in small claims court , you will have to sue in the District Court’s trial court division. Suing in the trial court division may be more complicated than suing in Small Claims Court, so you might need a lawyer.
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This article appears courtesy of Western Michigan Legal Services and the Michigan Poverty Law Program.