Required Landlord Disclosures
As a landlord, you know that your tenants have many rights enshrined by law under federal, state, and local government. However, your tenants may not be aware of their rights. This is where required landlord disclosures come into play.
As we note in 8 Important Landlord Legal Responsibilities in Michigan, there are serious ramifications for neglecting to make all legally required disclosures to tenants. These ramifications can include large financial penalties and even lawful termination of the lease by the tenant. As a best practice, it’s good to have all disclosures in mind and on paper when crafting your lease or rental agreement with the tenant.
As a landlord, it’s probably a good thing to be aware of all of the most common types of legal disclosures that your state may require you to make, regardless of what state you’re working in. The following is a list of examples that are found across the United States; keep in mind that not all of these disclosures are required in every state. For Michigan specifics, read on beyond the list.
Examples of Landlord Disclosures
- Important details about security deposits, including the landlord’s use and return of the deposit, timetable for return after the tenant has moved out, where the deposit will be held in the interim, and any interest rate that will be paid on it.
- Any nonrefundable fees you may be imposing – where they are permitted.
- Any shared-utility arrangements. This would apply when, for example, the tenant is required to pay a portion of a building’s metered utility, such as gas.
- The tenant’s right to move-in checklists that document all pre-existing damages to the rental property.
- The tenant’s right to be present at a moving-out inspection of the rental property.
- The identity of the landlord, as well as anyone authorized to manage legal papers and the property itself, such as a property manager.
- Pertinent details about landlord-tenant law, including local rent control laws and registered sex offender database.
- Any smoking policies.
- Important details about installation and maintenance of safety equipment such as alarms and smoke detectors.
- All availability of fire protection equipment.
- Location of any former federal or state military ordnance in the area.
- The presence of any environmental health hazards, including mold, radon, and bedbugs. Most importantly: lead-based paint, which is a federal landlord disclosure requirement.
- Any recent flooding in the rental unit itself, in addition to its location in a frequent flood zone, if applicable.
- The former presence of a methamphetamine laboratory in the premises.
- Any planned condominium conversions, intention to demolish/rebuild the rental unit, or foreclosure proceedings on the property.
- Any outstanding building inspection or housing code violations, including condemnation orders.
- All rights of domestic violence victims with regard to housing.
Not all of the above listed disclosures will be legal requirements, depending on where you operate your rental property. However, all are recommended as best practices for an optimal tenant-landlord relationship. There’s no downside to going the extra mile in clarifying everything possible, but the benefits are manifold.
We mentioned lead as a federal landlord disclosure requirement above. Let’s elaborate, because this is one of the most important disclosure requirements in the US.
Property owners, landlords, and managers of rental properties are in a crucial position to ensure the protection of health and safety of their tenants. Because nearly all buildings built before 1978 are more likely to contain lead-based paint, federal law requires that important relevant information be provided to prospective tenants before any final agreements are signed.
If your rental property was built before 1978, you must provide prospective tenants with the following:
- An EPA-approved pamphlet detailing information on identifying and controlling any lead-based paint hazards in the building, called Protect Your Family From Lead In Your Home (print the PDF from the EPA in multiple languages).
- Any and all known information regarding lead-based paint and related hazards pertaining to your specific building. For buildings with multiple units, this requirement includes any records concerning common areas and other units, when the information was discovered as a result of a full-building evaluation.
- An attachment to the lease agreement, or inserted into the lease, including a “Lead Warning Statement” confirming that you have complied with all legal disclosure requirements. Helpfully, the EPA provides a sample statement here.
Now, let’s look at Michigan-specific required landlord disclosures.
Landlord Disclosures in Michigan
- Dishonored payment fees. As a landlord, you must disclose dishonored payment fees in the lease or rental agreement. These fees must be set at $25 if paid within seven days and $35 if paid within thirty days. For the exact legal language on this disclosure, see Comp. Laws 600.2952.
- Marijuana use policy. Michigan state law already allows marijuana for medical use – and the law has recently been expanded to include recreational use. Landlords are encouraged to disclose any related policies in the lease agreement. Being proactive with this policy will help keep you ahead of the new law, which is still being fine tuned. Having a clear set of rules known by both the landlord and tenant will preclude any legal problems with regards to marijuana use.
- Domestic violence. Under Mich. Comp. Laws 554.601b, your lease or rental agreement is required to include the following disclosure: “A tenant who has a reasonable apprehension of present danger to him or her or his or her child from domestic violence, sexual assault, or stalking may have special statutory rights to seek a release of rental obligation under MCL 554.601b.” The statutory rights within this law include early termination of the lease by the tenant as long as written notice is delivered to the landlord by certified mail, with proof of domestic violence victim status. At the very latest, the tenant’s obligation ends on the first day of the second month that rent is due after notice has been given – which should be under 31 days. This law is designed to help ensure the safety and well-being of domestic violence victims, allowing them to leave a dangerous situation without incurring financial hardship. Note that if the rental or lease agreement does not have this information stated, you must post the provision – in a place clearly visible to any reasonable person – within the property management office. Failing that, the statement must be delivered to the tenant at the time of signing their lease or rental agreement.
These final two disclosures are not required by Michigan law but are still considered highly recommended:
- Late fees. Disclosure of any late fees the tenant may incur should be done up-front as part of the rental agreement, to ensure that the tenant knows all consequences for late payment before signing.
- Shared utilities arrangements. In the event that full-building utilities will be split proportionally between tenants, you are highly encouraged to disclose the exact ratio that will be used to determine the tenant’s utility costs per month.
Landlord Disclosures in Grand Rapids
As of November 7, 2018, the City of Grand Rapids has adopted a residential rental application fee ordinance. This ordinance establishes rules for the collection and return of rental application fees and contains requirements regarding documentation and disclosures in addition to all those required by state and federal law.
Note that this ordinance only applies if an application fee is being charged to prospective tenants. If you do not charge a fee, there is nothing to do here apart from minding all related state and federal laws. Click here to read the full ordinance.
The specific segment covering disclosures clarifies the following important information:
Rental property owners must provide an applicant with a disclosure statement at the time each application is made. This disclosure statement must:
- Clearly state the criteria on which the application will be judged.
- Contain a description of the screening process utilized and the name and contact information of the person, screening agency, or third party used – if any – in the screening process.
- Contain the amount of the fee that will be charged with the application.
- Contain an itemized explanation for the disposition and use of the application fee.
You must also provide the applicant with any paperwork or electronic correspondence generated as a result of the screening process, to the extent permitted by state and federal law. The disclosure statement must also include the following passage:
Within thirty (30) days of receipt of a denial, the applicant may, if he or she believes this ordinance has been violated, file a written complaint with the City Manager or the City Manager’s Designee, addressed to City Manager, City of Grand Rapids, 300 Monroe Ave NW, Grand Rapids, Michigan 49503, 6th Floor, Attention: Rental Application Fee Ordinance Complaint.
Truth in Renting Act
Under the Truth in Renting Act – Mich. Comp. Laws §554.634 – all lease and rental agreements are required to clearly state the following: “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 assistance from a lawyer or other qualified person.”
The law requires that this notice must be prominent, no smaller than size 12-point type, or be in easily legible print with letters not smaller than one-eighth inch. The Truth in Renting Act is designed to ensure that all legally required disclosures are made and that tenants know their rights. Failure to comply gives the tenant the right to sue to void the rental agreement, force the landlord to include the required notice statement in all rental agreements he or she enters into in the future, and recover $500 or actual damages, whichever is greater. The penalties, of course, are meant to ensure compliance – so it’s always a best practice to follow the letter of the law, for the good of both your tenants and yourself.
A note about disclosure requirements specific to clauses in a lease:
Any provision or clause included in a lease that violates the Truth in Renting Act is void. However, it’s important to note that the entire lease is not void – only the prohibited clause is void. However, within 20 days of the tenant bringing the deficiency to you in writing, you are required to fix the prohibited provision or add the required disclosure language. If you fail to fix it within the time specified, the tenant may bring an action to do the following:
- Void the entire lease agreement.
- Force the landlord to remove the prohibited provision from all lease agreements in which it is included.
- Recover $250 per action, for prohibited provisions, or $500 per action for missing legally required disclosure provisions – or actual damages, whichever is greater.
So to summarize and put it simply as possible: always follow the letter of the law when it comes to disclosures, for the best protection of both your clients and yourself.