Michigan Truth in Renting Act: What Landlords Need to Know Before Selling

The Michigan Truth in Renting Act (TIRA), codified at MCL 554.631 through 554.641, governs what your residential leases can and cannot say. When you sell a rental, every active lease conveys with the property. TIRA violations baked into your leases become the new owner’s liability and a price-reduction lever during due diligence.

What TIRA Actually Prohibits

TIRA bans lease provisions that waive or alter rights given to Michigan tenants: clauses waiving jury trial rights, confession of judgment, exculpation from landlord negligence, waiver of security deposit itemization, and clauses making the tenant responsible for landlord’s attorney fees regardless of who prevails.

Penalties for Non-Compliant Leases

Under MCL 554.633, a tenant or the Attorney General can sue for $250 per violation plus actual damages and reasonable attorney fees if the landlord uses a non-compliant lease. For a 20-unit portfolio, exposure reaches five figures.

Pre-Sale Lease Audit Checklist

Security deposit held in separate regulated financial institution account (MCL 554.604)
No prohibited TIRA clauses
Move-in checklist provided in duplicate within 7 days (MCL 554.608)
Late fees are reasonable
Required TIRA notice included or provided within 20 days of tenant request

Security Deposit Handoff Mechanics

At closing, deposits do not stay with the seller. Michigan practice is to transfer deposits via closing credit, notify each tenant in writing of the new holder’s identity and the bank where the deposit is held. Failure exposes both seller and buyer to double damages under MCL 554.613.

Selling to a Buyer Who Handles This For You

Cash investors who buy Michigan rentals routinely (including Offer Now Michigan) underwrite the lease file with the assumption that something is off, and price accordingly without dragging you through a 30-day diligence redline. Call (810) 547-1135.