Residential lease agreements are the most common types of rental contracts. Though you may have an oral agreement with a tenant, putting it in writing affords both you and your tenants a clear understanding of what your duties, obligations and rights are under local, state and federal laws.
Only a handful of states have passed the Uniform Residential Landlord Tenant Act and Michigan is not one of them. This means that you may put any provision you wish in your Michigan residential lease agreement subject to certain restrictions under state and federal laws, including discrimination, and standards of reasonableness. There are also provisions that you must avoid including or be subject to increased penalties.
When considering a potential tenant you may not discriminate in refusing to rent, or in treating present tenants differently, on the basis of color, gender, ancestry, religion, familial status and disability.
What to Include in your Lease
As a landlord, you will want certain provisions in your lease agreement to ensure you are in compliance with all applicable laws as well as those that set the rent, lease term, termination, security deposits and other routine terms. Consider including these terms in your residential lease agreement, some of which are required by law:
- Name and address of landlord and where rent payments, notices, service of process and other legal documents can be sent and served
- Names of the tenants who will occupy the premises
- Lease term-weekly, monthly, yearly or other and ending date if fixed term
- Rent amount
- Due date and grace period if any
- Provision that the rent may increase upon 30-days’ notice to allow for changes in local, state or federal laws; changes to rules relating to the property to protect health, safety and peaceful enjoyment; or to cover additional costs incurred by the landlord due to increases in property taxes, utilities, and property insurance premiums
- Joint and several liability provision
- Landlord’s obligation to keep the common areas clean and sanitary, to keep the premises in a habitable condition and in reasonable repair and to comply with all housing codes
- Tenant’s right to quiet enjoyment
- Tenant’s responsibilities regarding maintenance
- Notice of entry by landlord to make repairs and to show prospective buyers, tenants or contractors—reasonable time, usually 24-hours
- Security deposit—no more than one and one-half times the rent
- Name of financial institution where deposit is kept
- Obligation of tenant to provide forwarding address to landlord within 4 days of terminating the lease regarding the security deposit return
- Responsibility for the utilities
- No commercial use of the premises
- No unlawful use of controlled substances
- Notice to quit process—7 days or 30 days
- Inventory checklist at beginning of lease and at termination—tenant to complete within 7 days after moving in
- Pet clause
- No smoking clause
- Subletting clause
- Special termination regarding senior citizens
- Disclosure of the presence of any lead-based paint or hazards on the property for rental property built before 1978—both landlord and tenant must sign an EPA-approved disclosure form and the tenant provided an EPA pamphlet entitled “Protect Your Family from Lead in Your Home.”
- In 12-point font size and in a prominent part of the lease, the following statement: “NOTICE: Michigan law establishes rights and obligations for parties to rental agreements. This agreement is required to comply with the Truth in Renting Act. If you have a question about the interpretation or legality of a provision of this agreement, you may want to seek the assistance from a lawyer or other qualified person.”
What Not to Include in the Lease
As landlord, you may not include any provision the forces the tenant to waive a civil or other right established by law. This includes:
- Right to remedies against the landlord
- Right to damages
- Right to any viable cause of action including injuries sustained on the premises caused by the landlord’s negligence
- Relieving the landlord from liability for failure to perform a duty or for any negligence conduct
- A clause that accelerates payment from the tenant for breach of lease provision
- Waiving the tenant’s right to possession if certain circumstances exist
- Waiving the landlord’s duty to mitigate damages
- Waiving the tenant’s right to request a jury trial or any right of notice
- Giving the landlord a security interest in the tenant’s personal property in case of nonpayment of rent
- Right to alter any part of the lease during the tenancy without consent of the tenant
A landlord has 20-days to remove the prohibited provisions or those that violate the Truth in Renting Law, including the above prohibited provisions, or the omission to include mandatory disclosures once the tenant has brought this to the attention of the landlord. A failure to do can subject to landlord to pay the tenant $250 per prohibited provision or $500 per omitted mandatory disclosure or actual damages, whichever is greater.
Issues over security deposits as well as failure to pay rent are two main issues in landlord/tenant disputes. You are required to advise the tenant of the name and address where the deposit is kept within 14 days of the tenant moving in and that the tenant has 4 days after terminating the lease to send a forwarding address where the deposit is to be sent. This should already be in the written lease. If not, provide the notice in writing at least on the day the tenant vacates.
You do have to provide the tenant with a blank check-out list, similar to the one provided at the beginning of the tenancy. The tenant must be advised that he/she has 7 days to respond to your list of damages. Your failure to do any of this forfeits your right to withhold any of the deposit for damages. Any damage must not be due to normal wear or tear.
Any unclaimed portion of the deposit must be returned within 30-days after the tenant vacates or you also forfeit your claim to any portion of the deposit. The security deposit can be used for any rent arrearages or unpaid utility bills owed by the tenant.
Termination of the Lease
A lease automatically terminates at the end of a fixed term lease and may continue as a month-to-month if you continue to accept the monthly rent without executing a new lease. You can move to evict a tenant before the lease terminates for:
- Nonpayment of rent
- Causing a health hazard that is not abated
- Causing significant damage
- Engaging in illegal activities
- Violating any other part of the lease
7-Day Notice to Quit
You can use a 7-Day Notice to Quit or a 30-Day. The 7-day Notice to Quit is used for nonpayment of rent, damage to the premises or for engaging in activities prohibited under the lease such as using illegal controlled substances. The notice does allow the tenant 7 days to cure the breach.
30-Day Notice to Quit
A 30-day Notice is used if the tenant holds over after the lease expires, if the tenant is creating a nuisance or for violating any other term provision other than nonpayment of rent or creating a health hazard such as having an unauthorized pet or allowing persons not in the lease to live in the unit or for engaging in any other illegal or prohibited activities other than illegally using controlled substances.
Termination Rules for Seniors
Regarding senior citizens who have occupied the premises for at least 13-months, they may elect to terminate a lease upon 3-days’ written notice if they become eligible to move into senior citizen housing subsidized by an any governmental program or becomes incapable of independent living as certified by a physician.
Withholding of Rent
Michigan residential tenants are allowed under Michigan law to withhold rent if repairs requested to be made to the landlord are not done within a reasonable time. The request must be in writing and the rent withholding cannot be done unless the landlord has failed to maintain the unit. The tenant will need to show when the letter was sent, usually with a return receipt requested, and that it was sent before the rent was due. The rent funds should be kept in an escrow account. The tenant needs to call 3 companies for repair estimates that are mailed to the landlord, or show cost of repairs if a do-it-yourself, and advise the landlord that the costs will be deducted from the rent held in escrow unless the landlord does the repairs by a set date.
Subleasing is a contract between the tenant and a subtenant to rent the unit, though the original tenant remains obligated to the landlord for the rent and damages to the unit. It is permitted unless the lease specifically prohibits it. If the rent is not paid, the landlord can use the security deposit to pay for the arrearages and move to evict the tenant with a 7-Day Notice.
Tenants can have the subtenant sign a lease agreement with them and require a security deposit as well. If this is done, the tenant must adhere to the same laws and rules governing security deposits as the landlord or forfeit the right to retain any portion of it should the sublessee damage the property or not pay the rent.
No Retaliatory Eviction
A landlord is not permitted to take action to force a tenant to vacate without a valid eviction order. This includes such measures as turning off utilities, changing the locks, removing the tenant’s personal property or belongings or any other offensive conduct. .
This conduct is known as retaliatory eviction and it takes place when the landlord does any of the above or increases the rent because tenant had exercised his/her rights. This includes making a complaint to a governmental authority about the landlord’s failure to perform a legal duty, joining a tenants’ union or any other civil right. A landlord may be liable for 3 times the amount of the tenant’s actual damages or $200, whichever is greater, as well as recovering possession of the premises.
In drafting your Michigan residential lease agreement, carefully note what provisions and disclosures are required and what provisions you may add or not include. Also, be aware of your rights and duties as a landlord and what to expect from your tenant. Having a comprehensive agreement and carefully reviewing it with your tenants can save you valuable time and expenses.