Common Landlord-Tenant Disputes Part 1: The Security Deposit

As attorneys who frequently handle disputes arising out of residential leases, the following are the three topics we are asked about most frequently by landlords and tenants:

• Security deposit issues;
• Late fees;
• Repairs that the landlord must make.

Each of these issues will be covered in two separate blog posts, starting with the security deposit.

The Landlord and Tenant Relationships Act governs residential leases and tenancies in Michigan. Sections 2 through 14 of the Act are commonly referred to as the “Security Deposit Statute.” Generally, a security deposit can only be used for damages that result from conduct not reasonably expected during a tenancy, or for unpaid rent.

Two key provisions of the “Security Deposit Statute” are Section 9 and Section 13.  Section 9 requires a landlord to send an itemized list of damages to a tenant within 30 days of the termination of tenancy, which must include specific statutory language informing the tenant that they must respond to the notice within 7 days, otherwise the tenant will forfeit the amount of claimed damages. Failure by a landlord to send an itemized list of damages, with the proper notice, waives any claim by the landlord for the cost of repairs, and the landlord will have to return the security deposit in full.

However, according to Section 13 of the “Security Deposit Statute,” within 45 days after a tenant vacates a property, a landlord is able to file an action for money damages, which could include damage to a rental property. That being said, a landlord cannot retain any of the security deposit unless one of the following requirements is met:

• Landlord has obtained a money judgment for the disputed amount;
• Tenant has failed to provide the landlord with a forwarding address;
• Tenant failed to respond to landlord’s notice of damages within 7 days as required by Section 9;
• The Parties have agreed in writing to the disposition of the balance of the security deposit; or,
• The amount claimed is based on unpaid rent.

If a landlord fails to fully comply with Section 13 of the “Security Deposit Statute,” illegally withholding a portion of a security deposit, the court will view it as a waiver of all claimed damages and the court could require a landlord pay the tenant double the security deposit amount. Needless to say, this is an important law for all tenants and landlords to understand.

The attorneys at Pear Sperling Eggan & Daniels, P.C. are experienced in handling disputes arising out residential and commercial leases. PSED Law represents both landlords and tenants. If you have questions about your rights under a lease agreement please call PSED Law at our Ypsilanti office at 734-483-3626, or our Ann Arbor location at 734-665-4441.