Michigan security deposit laws for landlords: the move-in notice, the damages notice and the 45 day rule
Michigan caps a security deposit at one and a half months' rent and conditions it on a written notice within 14 days after the tenant takes possession. At move-out the landlord mails a notice of damages within 30 days, the tenant has 7 days to answer, and the landlord who wants to keep money in a dispute must go to court within 45 days. Failing the court step makes the landlord liable for double the deposit retained. The rules are in Michigan Compiled Laws 554.601 to 554.616.
What must I do before I can require a Michigan deposit?
MCL 554.602 allows a deposit of up to one and a half months' rent per rental unit. MCL 554.601 defines the deposit broadly: it includes any required prepayment of rent other than the first full rental period, so a required last month's rent counts toward the cap. MCL 554.603 then says a landlord shall not require a security deposit unless the landlord notifies the tenant, in writing and no later than 14 days from the date the tenant assumes possession, of three things: the landlord's name and address for communications under the act, the name and address of the financial institution or surety, and the tenant's obligation to give a forwarding address in writing within 4 days after moving out.
The notice must include a specific statement about the forwarding address, in 12 point boldface type at least 4 points larger than the body of the notice or lease. Many leases print it in a box on the first page.
Example a made-up unit rents for $1,200 a month. The most the act allows as a deposit is $1,800. A landlord who requires both a $1,200 deposit and a $1,200 last month's rent up front is asking for $2,400 of security deposit as the act defines it, which is $600 over the $1,800 cap.
Where does the deposit go?
MCL 554.604 requires the deposit to be placed in a regulated financial institution. A landlord may use the deposited money for any purpose he or she desires only by depositing a cash bond or surety bond with the secretary of state to secure the deposits, up to $50,000, and 25% of any amount above that. MCL 554.605 treats the deposit as the tenant's lawful property until the landlord establishes a right to it. The act has no interest requirement in the sections read.
What are the inventory checklists?
MCL 554.608 requires inventory checklists at the start and end of occupancy. At the start, you give the tenant two blank copies of a commencement checklist that is identical in form to the termination checklist, listing items you own such as carpeting, appliances, windows and fixtures. The tenant has 7 days after receiving possession to review, note the condition and return one copy, and the checklist must carry a notice in 12 point boldface type at the top of the first page. At the end you complete a termination checklist listing every damage you say the tenant caused.
What happens at move-out, step by step?
- The tenant has 4 days after moving out to give a forwarding address in writing (554.611). If the tenant fails to, you do not have to send the notice of damages, though the tenant can still claim the deposit later.
- Within 30 days after termination of occupancy, mail a notice of damages with an itemized list of damages and the estimated repair cost of each item (554.609(1)). It cannot include damage already on a prior termination checklist from before this tenant moved in.
- Send the difference between the damages and the deposit with the notice, by check or money order, or by direct deposit or electronic transfer to the tenant's account within 10 days after mailing the notice, a method added by a 2026 amendment (554.609(2) and (3)).
- Include the required statement in 12 point boldface type that the tenant must respond by mail within 7 days or forfeit the amount claimed (554.609(4)).
- The tenant has 7 days to respond by ordinary mail, in detail, agreeing or disagreeing (554.612).
Deposit use is limited to actual damages that are the direct result of conduct not reasonably expected in the normal course of habitation of a dwelling, plus rent in arrears, rent due for premature termination and unpaid utility bills (554.607). Normal wear is outside that list.
Example a made-up tenant leaves a $1,800 deposit. The landlord lists a $450 stained carpet repair and $150 of unpaid water bill, $600 in all, and mails the notice 20 days after move-out with a $1,200 refund. The notice carries the 7 day response sentence. The tenant answers in 4 days agreeing, so the matter ends with no court filing.
What is the 45 day court rule?
Under MCL 554.613, within 45 days after termination of occupancy, and not after, the landlord may start a court action for a money judgment for the damages claimed, or instead return the balance of the deposit or an amount agreed in writing. Without a judgment, a landlord cannot keep a deposit for damages unless the tenant did not give a forwarding address, did not respond to the notice of damages, the parties agreed in writing, or the claim is entirely for accrued unpaid rent for a rental period during which the tenant had possession.
The penalty is stated in the same section: failure of the landlord to comply fully constitutes waiver of all claimed damages and makes the landlord liable to the tenant for double the amount of the security deposit retained. A landlord who skips the 30 day notice altogether is treated by MCL 554.610 as agreeing that no damages are due and must immediately remit the full deposit.
What happens to a deposit when the landlord sells?
The old landlord stays liable under MCL 554.614 until the deposit is transferred to the successor with written notice to the tenant by ordinary mail of the successor's name and address, the successor complies with the bond or institution rule, or the deposit is returned. The attorney general or an affected individual may sue to enforce the act (554.615). The act cannot be waived by the parties (554.606).
How DoorKeeping handles it
Each Michigan property in DoorKeeping has its own books, and the deposit for each tenant appears there as an amount owed back, which is the figure your notice of damages starts from. Leases are e-signed, and signed notices and checklists can be filed with the property's documents. You send any refund from your own bank; DoorKeeping never holds the money and gives no legal advice.
Sources
Questions
- What is the maximum security deposit in Michigan?
- One and a half months' rent (MCL 554.602). The definition includes required prepayment of rent beyond the first full rental period.
- How long does a Michigan landlord have to send the damages notice?
- Thirty days after the termination of occupancy. Missing it means the landlord is treated as agreeing no damages are due and must return the full deposit immediately.
- What must a Michigan landlord tell a tenant at move-in about the deposit?
- Within 14 days after the tenant takes possession: the landlord's name and address, the name and address of the financial institution or surety, and the duty to give a forwarding address within 4 days of moving out, with the boldface statement.
- What is the penalty in Michigan for not following the court rule?
- Waiver of all claimed damages and liability for double the amount of the deposit retained (MCL 554.613).