Disclaimer: This blog post is meant for informational purposes only and does not constitute legal advice. Consult with a licensed attorney in Michigan for specific legal guidance.
In Michigan, lease agreements act as a source of stability and organization for property managers—from urban apartments in the streets of Detroit to lakeside cottages on the shores of the Upper Peninsula. They help property managers run their businesses and manage rentals that are compliant with complex local and federal laws, providing all the parties engaged in a lease with clear responsibilities and expectations.
For all these reasons, a well-crafted lease agreement is the foundation for successful property management and the starting point for reliable, long-term rental income. This guide will cover the details you need to know to create your own Michigan lease agreements, including the key components, types of agreements, and important legal considerations to stay aware of.
Once you’ve learned all the relevant information, you can download a free sample Michigan lease agreement template using the “Download Sample Form” button above that can give you a headstart on creating your own leases.
What Is a Michigan Lease Agreement?
A Michigan lease agreement is a legally binding contract between an owner and a tenant, outlining the terms and conditions under which a rental property is leased. These agreements detail aspects such as the duration of the lease, rent amount, payment schedules, and security deposit information. This comprehensive document not only sets the stage for the rental relationship but outlines the rights and responsibilities of each party involved, as well.
Additionally, they offer legal protection to both the owner and the tenant. In case of disputes or misunderstandings, the lease agreement serves as a reference point, helping resolve issues based on agreed-upon terms. Taken as a whole, a Michigan lease agreement is integral to successful property management and a transparent rental process in the state.
Who Needs a Michigan Lease Agreement?
In Michigan’s varied residential rental market, a lease agreement is a fundamental document for several key groups, including property managers, owners, and tenants.
For property management companies, a Michigan lease agreement is much more than just a formality; it’s a structured framework that governs the rental relationship. This document sets out clear terms and conditions, such as rent amounts, payment deadlines, and responsibilities for maintenance and repairs. Having these details in writing is beneficial for effectively managing properties and ensuring smooth operations.
For owners, this document outlines what owners expect from their tenants and what tenants can expect in return, covering everything from rent payments to property usage rules. It’s a protective measure that can serve as legal evidence should disputes arise.
For tenants, a lease spells out their rights and obligations within the rental arrangement, such as their responsibility to pay rent on time and keep the property in good condition. Understanding these terms can help tenants avoid potential issues and misunderstandings.
Types of Michigan Lease Agreements
In Michigan, residential property management involves a variety of lease agreements, each tailored to different rental needs and situations.
Fixed-Term Lease Agreement: A fixed-term lease is quite common in Michigan and involves an agreement that lasts for a specified period, often one year. This type of lease outlines clear start and end dates, rent amounts, and other terms that remain consistent throughout the lease period. It’s ideal for tenants seeking stability and owners looking for consistent occupancy. At the end of the term, the lease may be renewed or transition to a month-to-month arrangement if both parties agree.
Month-to-Month Lease Agreement: Offering flexibility, the month-to-month lease renews automatically each month and can be terminated by either party with proper notice, typically 30 days in Michigan. This lease type is well-suited for tenants who need short-term housing or for owners who might be considering changes to the property, such as renovations or sale.
Sublease Agreement: A sublease agreement comes into play when the original tenant (the sublessor) rents out the property to another tenant (the sublessee). This is useful when the original tenant needs to vacate the property temporarily but doesn’t want to break their lease. It’s important to note that the original lease terms still apply, and the original tenant remains responsible for the property.
Roommate Agreement: While not a lease agreement in the traditional sense, a roommate agreement outlines the responsibilities and expectations of each roommate, covering rent division, utility payments, and other living arrangements. This agreement helps maintain order and understanding among roommates.
Commercial Lease Agreement: The commercial lease is used for business properties. These leases are more complex and often include longer lease terms and specific provisions about renovations, signage, and business activities. They differ from residential leases and are structured to accommodate the unique needs of commercial tenants.
What Should a Michigan Lease Agreement Include?
In Michigan, creating a lease agreement starts with knowing what sections to include and the specific details for each component. Here’s are some of the building blocks of every Michigan lease agreement:
Parties Involved
The lease agreement must start with the identification of all parties. This includes the full legal names of the owner or property management company and the tenant(s).
Lease Duration Dates
This section of the agreement defines the lease term, detailing the start and end dates. Options might include a fixed-term lease, usually for a set period such as one year, or a month-to-month lease for greater flexibility.
Rent and Security Deposit Information
This part outlines the rent amount, payment schedule, and accepted payment methods. It also covers details about the security deposit, including the amount, conditions for return, and circumstances that might lead to the retention of a portion of the deposit.
Occupancy Limits
Setting occupancy limits helps maintain safety standards and the condition of the property. The lease should state the maximum number of occupants, preventing overcrowding and excess wear and tear.
Property Management Company & Tenant Responsibilities
This section should outline the responsibilities of the property management company (or owner) and the tenant. Responsibilities for property managers might include maintenance and repairs, while tenants typically are responsible for upkeep of the property, following noise regulations, and respecting rules about property changes.
Pet Policies
For properties allowing pets, the lease should include a clear pet policy. This policy should specify allowed pet types, size or breed limitations, and any additional fees or deposits.
Michigan Lease Agreement Addenda and Disclosures
Crafting legally sound lease agreements in Michigan requires a comprehensive understanding of various addenda and disclosures. These not only comply with state laws but also provide clarity and protection for both owners and tenants. Below are some of the addenda and disclosures that should be part of every lease agreement. This list is not exhaustive, so consult a legal professional if you’re unsure about what to include in your own agreements.
Truth in Renting Act
This act requires that lease agreements must not include clauses that waive a tenant’s rights. Owners must inform tenants about their legal rights and responsibilities under this act. Owners must also disclose the name and address of the property owner or the person authorized to act on behalf of the owner so tenants to know where and to whom they can direct concerns or legal notices.
Lead-Based Paint Disclosure
For properties built before 1978, federal law mandates the inclusion of a Lead-Based Paint Disclosure to inform them about the potential presence of lead in the property and provide guidelines for managing any associated risks. It should also include any known information about the presence of lead-based paint in the property and provide tenants with an EPA-approved pamphlet about lead poisoning prevention.
Domestic Violence Disclosure
In Michigan, owners must provide a notice to tenants about their rights concerning domestic violence. This includes the tenant’s right to request locks be changed if they have a personal protection order or if they are at risk of domestic violence.
Move-In Checklist/Security Deposit Notice
Michigan law requires owners to use a move-in checklist when collecting a security deposit. This checklist is used to note the condition of the property at move-in and should be referred to again at move-out to determine if any portion of the security deposit should be retained for damages.
Optional Disclosures & Addenda
Beyond mandatory disclosures, owners in Michigan might choose to include additional addenda in the lease agreement:
- Property Maintenance: Clear guidelines regarding the maintenance responsibilities of the tenant and the owner
- Noise Policy: Rules to ensure a peaceful living environment, especially in multi-unit buildings
- Smoking Policy: Information about restrictions on smoking in the property
Consequences for Not Including Mandatory Disclosures
Failing to include the required disclosures can have significant repercussions. Tenants might take legal action against owners for failure to provide mandatory disclosures. This can result in fines or other penalties.
Certain provisions in the lease might be rendered unenforceable if they violate required disclosures or tenant rights. Owners can face challenges in eviction proceedings if they haven’t complied with disclosure requirements.
Michigan Lease Agreement Laws and Regulations
Managing residential properties in Michigan requires a solid grasp of the state’s lease agreement laws and regulations, beyond these disclosures. These laws are formulated to balance the interests of owners and tenants while ensuring a transparent and fair rental process. Let’s explore some of the key aspects of Michigan lease agreement laws and regulations.
Unique Lease Agreement Laws and Regulations in Michigan
Michigan’s lease agreements have distinctive features. Notably, the state does not have a statute on the maximum amount that can be charged for rent. Michigan permits verbal lease agreements for terms less than one year, as well, but written leases are recommended for clarity and legal protection.
Security Deposits
Michigan law regulates the handling of security deposits. The maximum security deposit an owner can charge is 1.5 times the monthly rent. Owners must provide tenants with a written notice of the security deposit terms and keep the deposit in a financial institution.
After the tenant moves out, the deposit must be returned within 30 days, minus any deductions for damages or unpaid rent. Owners are required to provide an itemized list of any deductions.
Right of Entry
The right of entry for owners in Michigan is governed by reasonable practices, although there is no specified notice period in the state law. It’s recommended that owners provide at least a 24-hour notice before entering a property for inspections, repairs, or showings. This respects the tenant’s privacy while allowing owners to maintain and manage their property.
Grace Period and Late Fees
In Michigan, there is no state-mandated grace period for rent payments. Therefore, unless specified in the lease, rent is typically due on the agreed-upon date. If a grace period is included in the lease, it should outline the duration and conditions clearly.
Regarding late fees, Michigan does not specify a limit on the amount an owner can charge for late rent payments. However, any late fees should be reasonable and outlined in the lease agreement. They should reflect fair compensation for the inconvenience and potential financial impact of late payments.
Taking the Next Steps with Your Michigan Lease Agreement
In Michigan, a lease agreement is indispensable for anyone involved in the residential rental process. With a well-planned lease you can create a better rental experience for the tenants and the owners that you work with, while easing the burden on your own business.
To get started creating your own lease agreements, download our free sample Michigan lease agreement template using the “Download Sample Form” button above.
