Access Property Management Group, LLC • Grand Rapids, MI (616) 301-9450

Deposits, Damages, and Charging Tenants

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Anyone who has ever rented — or rented to someone — knows that there can be a lot of negativity surrounding the security deposit. As a landlord, knowing what goes into it can save you some bickering or even a lawsuit.

We’ve assembled some quick-hit facts according to Michigan state laws about security deposits in every step of the process — from signing the lease to move out day.

What is a security deposit?

The first thing to know about security deposits is that, according to law, they are the property of tenants held by landlords to ensure rent is paid, utility bills are paid, and the property is kept in the same condition in which it was first rented. After a lease is up, the tenant is due back their deposit unless they (1) owe unpaid rent, (2) owe unpaid utility bills, or (3) caused damages — other than wear and tear — to the property.

The beginning

In order to understand what landlords can charge for once the tenant is out, it’s first important to understand the legality of collecting a deposit. First of all, a landlord cannot ask for a deposit that is larger than one and a half month’s rent.

While there can be fees for things like pets, credit checks, storage, mailboxes, and keys, all of these fees are still considered a security deposit depending on certain verbiage. If fees are labeled “refundable fees,” they are considered part of the security deposit. If they are labeled “non-refundable fees,” they are additional to the security deposit.

Proper notices

There are three notices landlords and tenants are both required to provide regarding security deposits. Generally, these notices are in the lease.

  1. By 14 days after the tenant moves in, the landlord must provide the name, address, and receipt of communications regarding the tenancy.
  2. The name and address of the bank where the deposit is being held or who filed the bond with the Secretary of State.
  3. The landlord must tell the tenant it’s their obligation to provide a forwarding address within four days after move-out date.

The Inventory Checklist

While it’s not illegal not to have an inventory checklist done for your property, it can save some trouble in disputes over deposits. If a checklist isn’t done, it becomes one person’s word over another.

It must state on the first page of the checklist that the tenant is required to return the filled-out list to the landlord seven days after moving in. The checklist should include everything that is in the unit — such as appliances and carpeting.

It is also recommended that the tenant and the landlord both take photos or video of the property prior to when the tenant moves in. It’s a good idea to have a newspaper with the day’s date in some of the shots.

A landlord’s responsibility when the lease is up

Thirty days after the tenant moves out, the landlord must:

  1. Return the entire amount of the deposit by mail — which the tenant should have provided four days after moving out. OR
  2. Mail a list of damages and the remaining security deposit or additional charges. The notice has to state the tenant has seven days to respond to the receipt, otherwise the amount for damages will be forfeited.

If a tenant chooses to dispute charges, the landlord must either negotiate them or decide to go to court.

What is wear-and-tear vs. damages?

Things like smudges on walls as well as the wearing of appliances are considered normal wear and tear. The landlord cannot charge for things like painting walls or shampooing carpets — unless excessive cleaning is needed in which it is then considered damage.

An example of things that a landlord can charge for, however, would be holes in walls, broken windows, broken blinds, or a broken appliance that is relatively new.

For more information on deposits, you can read more on Michigan’s government website.

4 Good Tips for Great Rental Upgrades

Here at AccessProperty Management we urge property owners to take considerations before diving into their next round of renovations. Your best results will come from putting in some planning before you pull out the cash. See some great approaches to rental community upgrades in the paragraphs below.

 

4 Good Tips for Great Rental Upgrades

 

Tip #1 – Decide on an interior or exterior upgrade.

Many income-property owners favor interior renovations, since that is what their applicants and renters will notice the most. Beware of neglecting important exterior projects, though. You may be overlooking them to your community’s detriment. A weatherworn, weed-framed apartment community sign by the road, for example, can make the most luxurious rental property appear drab to casual passersby.

 

Tip #2 – Go direct to the source.

When trying to decide which project or new appliance might be the best choice, ask your present renters. They are the ones who really know, so you can usually trust their response, especially if it is nearly unanimous. Try sending out a questionnaire with multiple choices, instead of simply inviting ideas.

 

Tip #3 – Go simple.

Residents often receive smaller upgrades just as well as the larger, more costly ones. Consider which small upgrade might be most welcome in your income property community. A big-screen television in the fitness center is a good example.

 

Tip #4 – Look before leaping.

Our experts property managers in Grand Rapids, Michigan suggest testing an upgrade in one or two apartments before sinking cash into a property-wide project. This will give you a chance to see the actual versus projected costs, as well as gauge resident reaction on a small scale.

 

We hope these tips help you in making your decision on which renovations to make now and which ones to hold off on.

Inspection Suggestions from Access Property Management Group

Gone are the days when landlords and Grand Rapids property management companies simply rented out apartments and welcomed the new resident, never to see the rental again until move-out time. Ongoing inspections of your rental property are now recognized as one of the most important tasks carried out by your property manager, a task that, if left undone, can prove to be an extremely costly one.

Inspection Suggestions from Access Property Management Experts:

  1. The initial walk-through – Traditionally, our property managers will perform a walk-through inspection, detailing the precise condition of the apartment and its contents. At Access Property Management we document this important inspection with a camara, taking photos of the property to ensure reliability of documentation. Our property managers create a report detailing the apartment’s condition as well.
  2. Have the resident complete an Inventory Checklist – At Access Property Management we have our residents complete this checklist within 7 days of their move in, which they can then sign off on via electronic signatures to make this process easier for everyone. This report should be signed and dated by both the new resident and the manager or landlord.
  3. The once-yearly inspection – The usual period between inspections is approximately one year, unless other factors are involved. We make sure to give the resident the correct amount of notice and are considerate of their privacy during this annual inspection. It is an excellent policy to do this inspection with a camera also, and report any potential problems to the resident, so they can avoid losing money on their security deposit.
  4. The move-out walk-through – Our property managers repeat the initial walk-through process at move-out time to assess possible damages once we have possession of the keys and the unit has been vacated.

These tips will help make it easier for property managers to effectively manage and maintain properties which in turn makes it easier for owners to have ease of mind that their property is in good hands.