Security Deposit Law
What Michigan landlords must do with security deposits — the cap, interest, return deadline, account rules, and penalties — with citations to the statute itself.
Verified as of June 11, 2026
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Deposit cap
1½ months' rent maximum.
Interest
No interest owed to tenants.
Return deadline
Within 30 days after the tenant moves out, mail an itemized list of damages plus a check for the rest of the deposit.
Michigan caps security deposits at one and one-half months' rent. The Act's definition of 'security deposit' is broad — it includes required prepayments of rent beyond the first full rental period and any other money returnable on condition of the unit's return, so relabeled fees can count toward the cap.
Michigan's Landlord-Tenant Act (1972 PA 348, MCL 554.601–554.616) contains no provision requiring landlords to pay interest on security deposits. The Act only regulates where the deposit is held, not earnings on it.
The 30-day itemized notice must include the estimated repair cost of each damaged item, a check or money order for the difference, and a 12-point boldface 7-day response warning (MCL 554.609). The tenant must give you a written forwarding address within 4 days of moving out; if the tenant fails to, you are relieved of the damage-notice requirement, though the tenant can still later claim the deposit (MCL 554.611). But if you never gave the tenant the Section 3 deposit notice, the statute itself excuses the tenant: 'Failure to provide the information relieves the tenant of his obligation relative to notification of the landlord of his forwarding mailing address' (MCL 554.603, final sentence).
Deposits must be placed in a regulated financial institution. Alternatively, a landlord may use the funds freely by filing a cash or surety bond with the Secretary of State covering all deposits up to $50,000 plus 25% of any amount above that; until you establish a right to it, the deposit remains the tenant's property.
Failing the 30-day itemized notice 'constitutes agreement by the landlord that no damages are due' and requires immediate remittance of the full deposit (MCL 554.610). Failing to comply fully with the section 13 retention rules (sue within 45 days or fit an exception) 'constitutes waiver of all claimed damages and makes him liable to the tenant for double the amount of the security deposit retained' (MCL 554.613(2)).
None identified. Michigan's Landlord-Tenant Act (1972 PA 348) applies statewide, and research surfaced no Michigan municipal ordinance imposing additional security-deposit caps, interest, or return rules. Verify your city's housing code before relying on this.
You may require a deposit, but it 'shall not exceed 1 1/2 months' rent.' Required prepaid rent beyond the first full rental period counts as part of the security deposit under the Act's definition.
You cannot require a deposit unless, no later than 14 days from the date the tenant assumes possession, you give a written notice with your name and address, the financial institution or surety holding the deposit, and the tenant's 4-day forwarding-address obligation — including the statute's exact warning in 12-point boldface type at least 4 points larger than the body text.
You must use inventory checklists at both commencement and termination of occupancy detailing the unit's condition, give the tenant two blank copies at move-in, and complete a termination inventory listing claimed damages. The tenant gets 7 days to review and return one copy, and the checklist must carry the statute's 12-point boldface notice of that deadline and the tenant's right to request the prior tenant's termination checklist.
The deposit may be used only to (a) reimburse actual damages to the unit that are 'the direct result of conduct not reasonably expected in the normal course of habitation' and (b) pay rent in arrears, rent due for premature termination by the tenant, and 'utility bills not paid by the tenant.' Note: being a permitted use under section 7 does NOT by itself let you keep the money — the section 13 retention rules below still apply.
Within 45 days after termination of occupancy 'and not thereafter' you must either sue for a money judgment on your damage claim or return the deposit balance. You may keep disputed amounts without suing only if you '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 if: (a) the tenant failed to provide a forwarding address under section 11; (b) the tenant failed to respond to the damage notice under section 12; (c) the parties agreed in writing to the disposition of the balance; or (d) the claim '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.' Unpaid rent only — unpaid utility bills are NOT in this list, so a utilities claim needs a judgment or another exception.
The statute deems you to have agreed 'that no damages are due' and you 'shall remit to the tenant immediately the full security deposit'; continued retention then violates section 13 and exposes you to waiver of all claims plus double the deposit retained.
Utilities are a permitted USE under MCL 554.607(b), but the only rent-related exception to the 45-day suit requirement is a claim 'entirely based upon accrued and unpaid rent' — utilities don't qualify, so retaining for utilities without a money judgment (or another 554.613 exception) risks waiver of all claimed damages and double damages.
The itemized list 'shall not include any damages that were claimed on a previous termination inventory checklist prior to the tenant's occupancy of the rental unit' — double-dipping invalidates the claim and invites the double-damages remedy.
Without the section 3 notice you cannot lawfully require a deposit at all, and the statute relieves the tenant of the 4-day forwarding-address obligation — undercutting one of your main 554.613 retention exceptions. These requirements cannot be waived by lease clause.
No more than 1½ months' rent (MCL 554.602). Watch the definition: required prepaid rent beyond the first full rental period and other refundable move-in money count as part of the 'security deposit,' so they eat into the cap.
You must mail an itemized list of claimed damages — with a check or money order for the rest of the deposit — within 30 days after termination of occupancy (MCL 554.609). If you claim nothing, return the full deposit within that window. Miss it and the law treats you as agreeing no damages are due (MCL 554.610).
Usually yes, and fast: within 45 days after the tenant leaves you must either file suit for a money judgment or return the balance (MCL 554.613). You can keep disputed amounts without suing only if you already have a money judgment, you filed proof with the court that the tenant couldn't be served, the tenant skipped the 4-day forwarding address or the 7-day response to your damage notice, the tenant agreed in writing, or the claim is entirely accrued unpaid rent.
Yes — but only if 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' (MCL 554.613(1)(d)). Unpaid utility bills do NOT qualify for this exception even though they're a permitted deposit use under MCL 554.607(b); to keep money for utilities you need a money judgment, court-filed proof you couldn't serve the tenant, a written agreement, or a tenant default on the forwarding-address/response steps.
Missing the 30-day notice means you owe the entire deposit back immediately. Failing to comply fully with the 45-day retention rules waives all your damage claims and makes you liable for double the amount of the deposit you retained (MCL 554.613(2)).
No interest is owed to tenants. The deposit must be held in a regulated financial institution, unless you post a cash or surety bond with the Secretary of State (covering deposits up to $50,000 plus 25% of the excess), in which case you may use the funds (MCL 554.604).
This page is general information, not legal advice. Statutes change — verify with the cited sources or an attorney.
Statute facts on this page were verified against the cited official sources on June 11, 2026.
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