AN ACT to regulate relationships between landlords and tenants relative to rental agreements for rental units; to regulate the payment, repayment, use and investment of security deposits; to provide for commencement and termination inventories of rental units; to provide for termination arrangements relative to rental units; to provide for legal remedies; and to provide penalties.

Definitions. [M.S.A. 26.1138(1) ]
Sec. 1. As used in this act:
(a) “Rental unit” means a structure or part of a structure used as a home, residence, or sleeping unit by a single person or household unit, or any grounds, or other facilities or area promised for the use of a residential tenant and includes, but without limitation, apartment units, boarding houses, rooming houses, mobile home spaces, and single and 2-family dwellings.

(b) “Rental agreement” means an agreement that establishes or modifies the terms, conditions, rules, regulations, or any other provisions concerning the use and occupancy of a rental unit.

(c) “Landlord” means the owner, lessor, or sublessor of the rental unit or the property of which it is a part and, in addition, means a person authorized to exercise any aspect of the management of the premises, including a person who, directly or indirectly, acts as a rental agent, receives rent, other than as a bona fide purchaser, and who has no obligation to deliver the receipts to another person.

(d) “Tenant” means a person who occupies a rental unit for residential purposes with the landlord's consent for an agreed upon consideration.

 (e) “Security deposit” means a deposit, in any amount, paid by the tenant to the landlord or his or her agent to be held for the term of the  rental agreement, or any part of the term, and includes any required prepayment of rent other than the first full rental period of the lease agreement; any sum required to be paid as rent in any rental period in  excess of the average rent for the term; and any other amount of money or property returnable to the tenant on condition of return of the rental unit by the tenant in condition as required by the rental agreement. Security deposit does not include either of the following: (i) An amount paid for an option to purchase, pursuant to a lease with option to purchase, unless it is shown the intent was to evade this act.
(ii) An amount paid as a subscription for or purchase of a membership in a cooperative housing association incorporated under the laws of this state. As used in this subparagraph, “cooperative housing association” means a consumer cooperative that provides dwelling units to its members.

(f) “Senior citizen housing” means housing for individuals 62 years of age or older that is subsidized in whole or in part under any local, state, or federal program. Act, 348, §554.601

Termination of lease; conditions; applicability of section to leases entered into, renewed, or renegotiated after effective date. [M.S.A. 26.1138(1a) ]
Sec. 1a.
(1) A rental agreement shall provide that a tenant who has occupied a rental unit for more than 13 months may terminate a lease 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.

(2) This section applies only to leases entered into, renewed, or renegotiated after the effective date of this section, in accordance with the constitutional prohibition against impairment of contracts provided by section 10 of article I of the state constitution of 1963 . Act 348, §554.601a

Security deposit; amount. [M.S.A. 26.1138(2) ]
Sec. 2.
    A landlord may require a security deposit for each rental unit.
A security deposit shall be required and maintained in accordance with
the terms of this act and shall not exceed 1 1/2 months' rent. Act 348, §554.602

Security deposit; notice. [M.S.A. 26.1138(3) ]
Sec. 3.
    A landlord shall not require a security deposit unless he 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 this act, the name and address of the financial institution or surety required by section 4 and the tenant's obligation to provide in writing a forwarding mailing address to the landlord within 4 days after termination of occupancy. The notice shall 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.” Failure to provide the information relieves the tenant of his obligation relative to notification of the landlord of his forwarding mailing address.  Act 348, §554.603

Security deposit, disposition; bond. [M.S.A. 26.1138(4)]
Sec. 4.
(1) The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00. The attorney general may find a bond unacceptable based only upon reasonable criteria relating to the sufficiency of the bond, and shall notify the landlord in writing of his reasons for the unacceptability of the bond.

(2) The bond shall be for the benefit of persons making security deposits with the landlord. A person for whose benefit the bond is  written or his legal representative may bring an action in the district, common pleas or municipal court where the landlord resides or does business for collection on the bond. Act 348, §554.604

Security deposit as property of tenant. [M.S.A. 26.1138(5) ]
Sec. 5.
    For the purposes of this act 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 desires. Act 348, §554.605

Waiving requirements of act. [M.S.A. 26.1138(6) ]
Sec. 6.
    The requirements of this act may not be waived by the parties to a rental agreement except as specifically provided herein. Act 348, §554.606

Security deposit; permissible uses. [M.S.A. 26.1138(7) ]
Sec. 7.
    A security deposit may be used only for the following purposes:
(a) Reimburse the landlord for actual damages to the rental unit or any ancillary facility that are the direct result of conduct not reasonably expected in the normal course of habitation of a dwelling.

(b) Pay the landlord for all rent in arrearage under the rental agreement, rent due for premature termination of the rental agreement by the tenant and for utility bills not paid by the tenant.  Act 348, §554.607

Inventory checklists. [M.S.A. 26.1138(8) ]
Sec. 8.
(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 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 claims were caused by the tenant. Act 348, §554.608

Itemized list of damages; check or money order;  contents of notice of damages. [M.S.A. 26.1138(9) ]
Sec. 9.
    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  section 7, including the estimated cost of repair of each property damaged item and the amounts and bases on which he 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.”.  Act 348, §554.609

Effect of noncompliance with notice of damages  requirement. [M.S.A. 26.1138(10) ]
Sec. 10.
    Failure by the landlord to comply with the notice of damages requirement within the 30 days after the termination of occupancy, constitutes agreement by the landlord that no damages are due and he shall remit to the tenant immediately the full security deposit.  Act 348, §554.610

Notice of forwarding address; effect of noncompliance. [M.S.A. 26.1138(11) ]
Sec. 11.
    The tenant shall notify the landlord in writing at the address given under section 4 within 4 days after termination of his occupancy of an address at which communications pursuant to this act may be  received. Failure to comply with this requirement relieves the landlord  of the requirement of notice of damages but does not prejudice a  tenant's subsequent claim for the security deposit. Act 348, §554.611

Response to notice of damages. [M.S.A. 26.1138(12) ]
Sec. 12.
    If a landlord claims damages to a rental unit and gives notice of damages as required, the tenant upon receipt of the list of damages shall respond by ordinary mail to the address provided by the landlord  as required by section 3 within 7 days, indicating in detail his agreement or disagreement to the damage charges listed. For the purposes of this section the date of mailing shall be considered the date of the tenant's response.  Act 348, §554.612

Action for damages; retention of security deposit;  waiver. [M.S.A. 26.1138(13) ]
Sec. 13.
(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 has claimed or in lieu thereof return the balance of the security deposit  held by him 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 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 section 11.

(b) The tenant has failed to respond to the notice of damages as  required by section 12.

(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.

(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 chapter 57 of Act No. 236 of the Public Acts of 1961, as amended,  being sections 600.5701 to 600.5759 of the Compiled Laws of 1948 or other proceedings at law. Failure of the landlord to comply fully  with this section constitutes waiver of all claimed damages and makes  him liable to the tenant for double the amount of the security deposit  retained.  Act 348, §554.613

Termination of landlord's interest; liability for security deposit. [M.S.A. 26.1138(14) ]
Sec. 14.
    Upon termination of a landlord's interest in a rental unit whether by sale, assignment, death, appointment of receiver or  otherwise, the landlord or his agent is liable with respect to the security deposit, until the occurrence of any of the following:

(a) Transfer of the deposit to the landlord's successor in interest and written notification to the tenant by ordinary mail of the transfer and of the successor's name and address.

(b) Compliance with section 4 by the successor in interest.

(c) Return of the security deposit to the tenant.  Act 348, §554.614

Action to enforce act. [M.S.A. 26.1138(15) ]
Sec. 15.
    The attorney general or any affected individual may bring an  action to enforce this act in a court of competent jurisdiction in the county where the defendant resides or does business.  Act 348, §554.615

Effective date and applicability of act. [M.S.A.  26.1138(16) ]
Sec. 16.
    This act takes effect April 1, 1973 and applies only to security deposits held pursuant to leases entered into, renewed or  renegotiated after April 1, 1973.  Act 348, §554.616

Short title. [M.S.A. 26.1138(31) ]
Sec. 1.
    This act shall be known and may be cited as the “truth in renting act”. Act 348, §554.631

Definitions. [M.S.A. 26.1138(32) ]
Sec. 2.
    As used in this act:
(a) “Rental agreement” means a written  agreement embodying the terms and conditions concerning the use and occupancy of residential premises, but does not include an agreement the terms of which are limited to 1 or more of the following: the identity of the parties, a description of the premises, the rental period, the total  rental amount due, the amount of rental payments, and the times at which payments are due.

(b) “Residential premises” means a house, building, structure, shelter,  or mobile home, or portion thereof, used as a dwelling, home,  residence, or living place by 1 or more human beings. “Residential  premises” includes an apartment unit, a boardinghouse, a rooming  house, a mobile home, a mobile home space, and a single or multiple family dwelling, but does not include a hotel, a motel, motor home, or other tourist accommodation, when used as a temporary  accommodation for guests or tourists, or premises used as the principal place of residence of the owner and rented occasionally during temporary absences including vacation or sabbatical leave.  Act 348, §554.632

Rental agreement; prohibited provisions or clauses;  violation.
Sec. 3.
(1) A rental agreement shall not include a provision that does 1 or more of the following:

(a) Waives or alters a remedy available to the parties when the premises are in a condition that violates the covenants of fitness and habitability required pursuant to section 39 of 1846 RS 84, MCL 554.139.

(b) Provides that the parties waive a right established by 1972 PA 348, MCL 554.601 to 554.616, which regulates security deposits.

(c) Excludes or discriminates against a person in violation of the  Elliott-Larsen civil rights act, 1976 PA 453, MCL 37.2101 to 37.2804, or the persons with disabilities civil rights act, 1976 PA 220,  MCL 37.1101 to 37.1607.

(d) Provides for a confession of judgment by a party.

(e) Exculpates the lessor from liability for the lessor's failure to  perform, or negligent performance of, a duty imposed by law. This subdivision does not apply to a provision that releases a party from  liability arising from loss, damage, or injury caused by fire or other  casualty for which insurance is carried by the other party, under a  policy that permits waiver of liability and waives the insurer's rights of subrogation, to the extent of any recovery by the insured party under  the policy.

(f) Waives or alters a party's right to demand a trial by jury or any other right of notice or procedure required by law in a judicial  proceeding arising under the rental agreement.

(g) Provides that a party is liable for legal costs or attorney's fees  incurred by another party, in connection with a dispute arising under the rental agreement, in excess of costs or fees specifically permitted by statute.

(h) Provides for the acquisition by the lessor of a security interest in any personal property of the tenant to assure payment of rent or other charges arising under the rental agreement, except as specifically allowed by law.

(i) Provides that rental payments may be accelerated if the rental  agreement is breached by the tenant, unless the provision also includes  a statement that the tenant may not be liable for the total accelerated amount because of the landlord's obligation to minimize damages, and that either party may have a court determine the actual amount owed,  if any.

(j) Waives or alters a party's rights with respect to possession or  eviction proceedings provided in section 2918 of the revised judicature act of 1961, 1961 PA 236, MCL 600.2918, or with  respect to summary proceedings to recover possession as provided in  chapter 57 of the revised judicature act of 1961, 1961 PA 236, MCL 600.5701 to 600.5759.

(k) Releases a party from a duty to mitigate damages.

(l) Provides that a lessor may alter a provision of the rental agreement after its commencement without the written consent of the tenant, or, in  the case of a rental agreement between a consumer cooperative that  provides housing and a member of the consumer cooperative, without  the approval of the board of directors of the cooperative or other  appropriate body elected by members who are also tenants of the cooperative, except that an agreement may provide for the following  types of adjustments to be made upon written notice of not less than 30 days: (i) Changes required by federal, state, or local law or rule or regulation.
 

(ii) Changes in rules relating to the property that are required to  protect the physical health, safety, or peaceful enjoyment of tenants and guests.

(iii) Changes in the amount of rental payments to cover additional costs  in operating the rental premises incurred by the lessor because of  increases in ad valorem property taxes, charges for the electricity,  heating fuel, water, or sanitary sewer services consumed at the property, or increases in premiums paid for liability, fire, or worker compensation insurance.
 

(n) Requires the tenant to give the lessor a power of attorney.

(2) A rental agreement shall not include a clause or provision that, not  less than 90 days before the execution of the rental agreement, has  been prohibited by statute or declared unenforceable by a published decision of the supreme court of this state or the United States supreme court relating to the law of this state.

(3) A provision or clause of a rental agreement that violates this  section is void. Act 348, §554.633

Rental agreement; mandatory statements. [M.S.A.  26.1138(34) ]
Sec. 4.
(1) A rental agreement shall state the name and address at  which notice required under this act shall be given to the lessor.

(2) A rental agreement shall state in a prominent place in type not  smaller than the size of 12-point type, or in legible print with letters not  smaller than 1/8 inch, a notice in substantially the following form:
“NOTICE: Michigan law establishes rights and obligations for parties  to rental agreements. This agreement is required to comply with the Truth in Renting Act. If you have a question about the interpretation or legality of a provision of this agreement, you may want to seek assistance from a lawyer or other qualified person.”  Act 348, §554.634

Notices. [M.S.A. 26.1138(35) ]
Sec. 5.
(1) A lessor may cure a violation of section 3 by giving written  notice to all tenants who are currently parties, with the lessor, to a  rental agreement which contains a prohibited provision. The notice shall state that the provision is void and unenforceable or alter the  provision to bring it into compliance with this act.

(2) A lessor may cure a violation of section 4 by giving written notice to all tenants who are currently parties, with the lessor, to a rental  agreement which does not include a required statement. The notice  shall set forth the statement as provided in section 4.

(3) Notices under this section may be given personally or sent by first class or certified mail to the tenant at the address of the leased premises.
Act 348, §554.635

Actions; court costs and attorney fees; joinder; actual damages; effect of judicial construction; “tenant” defined. [M.S.A. 26.1138(36) ]
Sec. 6.
(1) If a rental agreement contains a provision which violates section 3, and if the landlord fails to cure the violation by exercising the notice provisions of section 5 within 20 days after the tenant gives  written notice to the landlord of the provision believed to be in violation and the reason therefor, a tenant may bring an action for any of the following relief: (a) To void the rental agreement and terminate the tenancy.

(b) To enjoin the lessor from including the provision in any rental agreement subsequently entered into and to require the lessor to exercise the notice procedure provided in section 5 to cure the  violation in all rental agreements in which the provision occurs and to which the lessor is currently a party.

(c) To recover damages in the amount of $250.00 per action, or actual damages, whichever is greater.

(2) If a rental agreement fails to contain a provision as required by section 4 or contains a provision which is explicitly and unambiguously prohibited by section 3, and if the landlord fails to cure the violation by  exercising the notice provisions of section 5 within 20 days after the  tenant, or, where there is more than one plaintiff, each tenant, gives  written notice to the landlord of the provision required by section 4 or  absence of a provision believed to be in violation and the reason therefor, a tenant may bring an action for any of the following relief: (a)  To avoid the rental agreement and terminate the tenancy.

(b) To enjoin the lessor from including the provision which violates  section 3 in any rental agreement subsequently entered into and to require the lessor to exercise the notice procedure provided in section 5 to cure the violation in all rental agreements in which the provision occurs and to which the lessor is currently a party.

(c) To enjoin the lessor from failing to comply with section 4 in any rental agreement subsequently entered into and to require the lessor to exercise the notice procedure provided in section 5 to cure the  violation.

(d) To recover damages in the amount of $500.00, or actual damages, whichever is greater.

(3) A tenant may exercise the remedies of this section without the prior  notice to the landlord required by subsections (1) and (2) under any of  the following circumstances:

(a) If a rental agreement contains a provision which has previously been determined by a court of record to be in violation of section 3 in an action to which the lessor was a party.

(b) If a rental agreement contains a provision which the lessor actually  knew was in violation of section 3 at the time the rental agreement was entered into.

(c) If a rental agreement does not include a provision as required by section 4 and the lessor actually knew that the provision was not  included as required at the time the rental agreement was entered into. As used in subdivisions (b) and (c), “actual knowledge” shall be established by written documentation, evidencing the actual  knowledge, written or issued by the lessor or an agent of the lessor  who is authorized to execute rental agreements or by an admission,  evidencing the actual knowledge, made by the lessor or an agent of the lessor who is authorized to execute rental agreements or by showing  the lessor has previously given notice under section 5 relating to the same provision which is the subject of the current action.

(4) A party who prevails in an action under this section is entitled to recover court costs plus statutory attorney fees.

(5) All actions brought under subsection (1) with respect to a  particular provision of a rental agreement shall be joined, and only 1 judgment for damages of $250.00 shall be awarded with respect to a particular provision even if there are multiple actions or multiple plaintiffs if, before judgment in the initial action and before the passage of 30 days after service of process in any second action, the lessor gives written notice to all tenants who are currently subject to that provision, stating that the enforceability of the provision is under dispute and may be determined by a court of law. However, this subsection does not prohibit a tenant from recovering actual damages,  if any, with respect to an unlawful provision of a rental agreement. As used in this subsection, “action” means a court action instituted by a single plaintiff, a representative plaintiff, or multiple plaintiffs.

(6) If a rental agreement contains the provisions as required by section  4 but contains a provision which violates this act, solely because of a judicial construction by a court of record of a provision of a statute cited in section 3 in an action to which the lessor was a party, the lessor shall not be subject to the penalties of this act unless the lessor fails to cure the violation by exercising the notice provisions of section 5 within 30 days following the final determination by the court. For purposes of this subsection, section 39(2) of chapter 66 of the Revised Statutes of 1846, being section 554.139 of the Michigan Compiled Laws, shall not be considered to have been judicially construed as of the effective date of this act.

(7) For purposes of this section, “tenant” means a person who is currently a party to a rental agreement with the lessor.  Act 348, §554.636

Remedies cumulative. [M.S.A. 26.1138(37) ]
Sec. 7.
    The remedies provided by this act shall be in addition to any other remedies provided by law, and the provisions of this act shall not limit a person's right to use any other cause of action available under law.  Act 348, §554.637

Printed rental agreement form; sale; violation;  damages. [M.S.A. 26.1138(38) ]
Sec. 8.
    A printed rental agreement form which fails to include a provision required by section 4, which contains a provision which expressly and unambiguously violates section 3, or which contains a provision which, not less than 90 days before the sale, has been prohibited by statute or declared unenforceable by a published decision of the supreme court of this state or the United States supreme court relating to the law of this state shall not be offered for sale in this state by a commercial seller. A commercial seller who violates this section shall be liable for damages suffered by a purchaser of such a form in an action brought against the purchaser by a tenant under this act. Act 348, §554.638

Waiver prohibited. [M.S.A. 26.1138(39) ]
Sec. 9.
    The requirements of this act may not be waived.  Act 348, §554.639

Exception. [M.S.A. 26.1138(40) ]
Sec. 10.
    This act shall not apply to a rental agreement entered into before the effective date of this act.  Act 348, §554.640

Effective date. [M.S.A. 26.1138(41) ]
Sec. 11.
    This act shall not take effect until July 1, 1979.  Act 348, §554.641 

Need Help? Visit our free online discussion forum