Security Deposit Return Deadlines & Deductions in Michigan
At a glance
| Governing law | MCL §§ 554.601 to 554.616 (Landlord and Tenant Relationships Act, 1972 PA 348) |
|---|---|
| Deadline to return the deposit | 30 days after termination of occupancy to mail an itemized notice of damages; pay the undeducted balance with the notice by check/money order, or by qualifying electronic transfer into the tenant’s account within 10 days after mailing (§ 554.609, as amended effective Sept. 21, 2026). Missing the notice deadline requires immediate full return (§ 554.610); disputed claims face the separate 45-day judgment/exception process (§ 554.613). |
| Itemized statement required? | Yes. Mail the itemized notice within 30 days after occupancy ends, listing each damage item, estimated repair cost, and basis for assessment. Include the balance by check/money order unless using the new qualifying electronic-transfer route; the notice must carry the statutory bold 7-day mailed-response warning (§ 554.609). |
| What can be deducted | Actual damage to the unit that's the direct result of conduct not reasonably expected in the normal course of habitation (i.e., beyond normal wear and tear), rent in arrears, rent due from the tenant's premature termination, and unpaid utility bills. No other category is authorized. |
| Maximum deposit amount | One and one-half months' rent, regardless of the tenancy's length or type |
| Interest on the deposit? | No — nothing in the Act requires a landlord to pay interest on a held deposit |
| Penalty for a late/bad-faith withholding | Missing the 30-day itemized-notice deadline forfeits any damages claim and the full deposit is due immediately. Separately, if the landlord doesn't fully comply with the 45-day judgment/exception process for a disputed claim, the landlord waives all claimed damages and owes the tenant double the amount of the deposit actually retained. |
| Separate account or bond required? | Yes, by default — deposited in a regulated financial institution. As an alternative, a landlord may use the deposit funds for any purpose if it posts a cash or surety bond with the Secretary of State covering the deposits held, up to $50,000 plus 25% of any amount over that. |
Michigan amended its deposit-return statute effective September 21, 2026. The mailed damage notice still has a 30-day deadline. A landlord may now pay the balance through a qualifying electronic transfer under the conditions below. This page states Michigan law; local rules may add requirements.
Requirements one by one
Thirty-day damage notice and refund
When the landlord claims damage or another obligation against the deposit, MCL § 554.609(1) requires a mailed notice within 30 days after occupancy ends. It must itemize the claimed damage, estimated repair cost for each item, and the amounts and bases assessed. Under subsection (2), a check or money order for the balance accompanies the notice unless the electronic-payment route in subsection (3) is used. MCL § 554.610 says missing the notice requirement within that period means the landlord agrees no damages are due and must remit the full deposit immediately.
Permitted deductions and cap
MCL § 554.607 permits only actual damage directly caused by conduct not reasonably expected in ordinary habitation, rent in arrears, rent due from a premature termination, and unpaid utility bills. MCL § 554.602 caps the deposit at one and one-half months' rent. The damage category is limited to conduct beyond what is reasonably expected in ordinary habitation.
Disputed claims and the 45-day process
MCL § 554.613(1) requires the landlord to commence a court action for the claimed amount within 45 days after occupancy ends or return the balance, subject to its stated exceptions. A landlord retaining a disputed amount must obtain a money judgment, show inability to serve the tenant, or meet an enumerated exception. Under subsection (2), noncompliance waives the claimed damages and makes the landlord liable for double the deposit amount retained.
Deposit holding
MCL § 554.604(1) requires deposit in a regulated financial institution. A landlord may use those funds for another purpose after posting the specified cash or surety bond with the Secretary of State. The bond secures deposits up to $50,000 and 25% of the amount above that threshold.
What trips people up
- Electronic payment has its own clock. Since September 21, 2026, MCL § 554.609(3) permits direct deposit or electronic transfer to a bank, internet, or mobile payment account instead of a check with the notice. The balance must reach the tenant's account within 10 days after the notice is mailed. The notice itself still must be mailed within 30 days.
- The warning text changed too. MCL § 554.609(4) now requires a bold warning telling the tenant to respond by mail within seven days after receiving the notice of damages. The statute specifies its type size.
- A missing forwarding address is an exception to notice. Under MCL § 554.611, failing to give the required written forwarding address relieves the landlord of the damage-notice duty, but it does not defeat the tenant's later deposit claim.
Common questions
Does the deposit become the landlord's property when it is paid? No. MCL § 554.605 treats it as the tenant's lawful property until the landlord establishes a right to all or part of it.
Can both sides agree on the disputed balance? Yes. MCL § 554.613(1)(c) recognizes a written agreement on disposition of the balance as an exception to the usual judgment requirement.
Statutes and sources
- MCL § 554.602 — deposit cap. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-554-602 (accessed 2026-09-24)
- MCL § 554.604 — regulated institution and bond. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-554-604 (accessed 2026-09-24)
- MCL § 554.605 — tenant ownership of the deposit. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-554-605 (accessed 2026-09-24)
- MCL § 554.607 — permitted deductions. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-554-607 (accessed 2026-09-24)
- MCL § 554.609, as amended by 2026 PA 102 — mailed itemization and the electronic-payment option effective September 21, 2026. https://legislature.mi.gov/documents/2025-2026/publicact/pdf/2026-PA-0102.pdf (accessed 2026-09-24)
- MCL § 554.610 — missed notice consequence. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-554-610 (accessed 2026-09-24)
- MCL § 554.611 — missing forwarding address. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-554-611 (accessed 2026-09-24)
- MCL § 554.613 — judgment process, exceptions, and double retention liability. https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-554-613 (accessed 2026-09-24)
Source links
Every statute quoted above, linked, with the date we checked it.
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