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How Much Can I Charge for a Security Deposit as a Landlord in Metro Detroit?

Heather Poyhonen - Tuesday, September 12, 2017

Michigan has landlord tenant laws that limit the amount of a security deposit that can be collected. You need to know how much to charge a tenant, and what to do with the security deposit once you have collected it. Refusing to follow the laws pertaining to security deposits can get you in legal trouble, so make sure you understand what’s required, or work with a professional property manager who can help you.

Landlord Security Deposit Limits

The most you can charge a tenant for a security deposit is the equivalent of one and one-half month’s rent. That means, if your rental amount is $1,200 per month, the most you can collect as a security deposit is $1,800. Just because you can charge that much doesn’t mean you have to. You can collect the equivalent of one month’s rent, or even less. When you’re asking how much should security deposits be, we recommend collecting the full amount that’s allowed by law. You never know what kind of damage you’ll find after a tenant moves out, and having that money protects your own financial interests.

Holding the Security Deposit

Once you collect the security deposit and the tenants move in, you need to let them know, in writing, where you are holding the deposit. Remember that this is still the tenants’ money, and you are not allowed to spend it until AFTER a tenant has moved out, and only to repair any damage caused by the tenants outside of normal wear and tear, payment of unpaid utilities that were tenant responsibility under the lease agreement or collection rent they did not pay.

Returning the Security Deposit

You have 30 days from the time the tenants move out to return the security deposit and/or provide an itemized list of deductions in writing to the forwarding address the tenants provided. If a tenant does not provide a forwarding address within 4 days of vacating the property you do not legally have to provide an itemized list of deductions. We do recommend that you still create the list and send to the home. It will either be forwarded by the Postal Service or returned to you. If it is returned you have the documentation that you did everything that you could to return the security deposit or provide an explanation to why it was not returned. If the tenants dispute any of the deductions you made from their security deposit, they have seven days to file that dispute in writing. Make sure you’re deducting for real damages, and have them all documented so you can prove that you withheld for the right reasons. Pictures, videos, and move in and move out inspections are all helpful in security deposit disputes.

If you have any questions about how much to charge a tenant or anything pertaining to Metro Detroit property management, please contact us at AG Management.
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