Research done by Fannie Mae found that 34% of renters struggle with finding the cash for their security deposit, and 19% face challenges in getting it back when moving out.
Security deposits are necessary, as landlords need protection against potential damages done to their property. However, they must be careful to not only follow laws, but to also keep their tenants happy.
Are you a landlord in Flint, Michigan, and would you like to learn more about security deposits? Then keep reading. Here's what you need to know.
Landlord Security Deposit Laws
The Michigan security deposit law says that you need to provide your tenants with a written lease or rental agreement that includes the details of the security deposit, which can help build strong tenant relations. The document should include the amount and the conditions under which it may be withheld.
Plus, the law sets a maximum amount for the amount charged, which means landlords can't pick a random number. You can only ask for an amount no more than 1.5 times the rent.
For example, let's say you're charging $1,000 for your rental unit. This means that the security deposit you ask for can't exceed $1,500.
In addition, this money must be held in an escrow account or a financial institution. You're required to notify your tenants in writing of where their deposit is being held; this must be done within 14 days of them moving in.
Deductions
Unfortunately, unscrupulous landlords take advantage of their renters by making unnecessary deductions or even keeping entire deposits. To combat this, there are legal restrictions in place for deductions, which you should follow.
Have you been struggling with difficult tenant rent collection situations? Then the good news is that you can take deductions from a tenant's rental security deposit to make up for unpaid months.
You can also take out money for damages beyond normal wear and tear. Or if the unit isn't clean, you can use the money to clean it to a reasonable condition too.
Security Deposit Return
Once your tenant moves out, you have 30 days to return their security deposit. If you've made any deductions, you'll have to provide a detailed list of any damages and the associated repair costs.
Should the renter want to dispute the deductions, they have seven days to do so in writing.
Make Sure You Follow the Law for Security Deposits
As a landlord, it's vital to have security deposits. That way, if you have bad tenants, you can use those funds to fix your property and make it suitable for the next renters.
However, you need to make sure that you're respecting tenant security deposit rights. Without doing so, not only will you break the law and face legal consequences, but you'll also earn a bad reputation as a landlord, which can affect your future income.
Get in touch with us today to get help managing your property in Flint. PMI Mid Michigan has almost 20 years of experience helping landlords navigate challenging issues like security deposit issues and more.
