If you are a landlord, what can you do with the tenant's security deposit check

I own 2 rental homes and GF has one. My 2 I have owned for 3 months and 1 month repectively. I still have the securtity deposit checks(refundable) . I was told that I could not cash them. I think I can only deposit them into an non-interest bearing account or something like that.

Not that I plan on doing anything with them but I figure I better get them out of check form before the checks become too old.

What is the legal way to handle this?

google.com, it's different in every state. Florida you can put it in interest bearing account but you have to pay a percentage of interest to tenant.

I don't know what state you are in but,if you took a security deposit you must put it an interest bearing account and return the original deposit plus the interest to the tenant at the end of the lease.If you want to get around that,instead of calling it a security deposit,word your lease to read 1st and last months rent.I'm only speaking for maryland,I'm sure the laws vary state to state.There should be a landlord/tenant website for your state that can help.

sl55 said:

instead of calling it a security deposit,word your lease to read 1st and last months rent.

Click to expand...

See, and that is illegal in Florida.

As I said, google.com, you're not going to get any good advice unless somebody from Michigan knows.

Just go cash it.

You seem to be worrying about a rather petty thing here considering its a few single family homes.

A better question would be what types of things you are allowed to legally deduct from a security deposit.

Agree with the previous post, all states are different and you are going to get different answers from people you ask this type of question and probably not the real laws from people that arent attorneys or very familiar with your states laws.

I just want to do the right/normal thing. I assume just cashing it should be fine but don't want any problems.

When I rented back in the day I think all my landlord's cashed my check.

did they sign a lease or a rental agreement?

you know for about $500 or less you can take a course in Real Estate and get licensed.

I think in VA if they live there for over a year I think they are due interest.
I rented out my townhouse for a yearand just took the security deposit and threw it in a 12-month CD, then gave the principal back to the tenants when they moved out.

Michigan SECURITY DEPOSIT

554.601 Definitions "Security deposit" means a deposit, in any amount, paid by the tenant to the landlord or his or her agent to be held for the term of the rental agreement, or any part of the term, and includes any required prepayment of rent other than the first full rental period of the lease agreement; any sum required to be paid as rent in any rental period in excess of the average rent for the term; and any other amount of money or property returnable to the tenant on condition of return of the rental unit by the tenant in condition as required by the rental agreement.
Security deposit does not include either of the following:

(i) An amount paid for an option to purchase, pursuant to a lease with option to purchase, unless it is shown the intent was to evade this act.

(ii) An amount paid as a subscription for or purchase of a membership in a cooperative housing association incorporated under the laws of this state. As used in this subparagraph, "cooperative housing association" means a consumer cooperative that provides dwelling units to its members. (f) "Senior citizen housing" means housing for individuals 62 years of age or older that is subsidized in whole or in part under any local, state, or federal program.


A security deposit is made to protect the landlord against the tenant's failure to follow his or her responsibilities as stated in the lease. This includes nonpayment of rent, or damage done to the apartment by the tenant, other than ordinary wear and tear (normal).

Limit in Michigan Security Deposits

554.602 Security deposit; amount. Sec. 2. A landlord may require a security deposit for each rental unit. A security deposit shall be required and maintained in accordance with the terms of this act and shall not exceed 1 1/2 months' rent.



Landlord Tenant Notices, Mail

554.603 Security deposit; notice. Sec. 3. A landlord shall not require a security deposit unless he notifies the tenant no later than 14 days from the date a tenant assumes possession in a written instrument of the landlord's name and address for receipt of communications under this act, the name and address of the financial institution or surety required by section 4 and the tenant's obligation to provide in writing a forwarding mailing address to the landlord within 4 days after termination of occupancy. The notice shall include the following statement in 12 point boldface type which is at least 4 points larger than the body of the notice or lease agreement: "You must notify your landlord in writing within 4 days after you move of a forwarding address where you can be reached and where you will receive mail; otherwise your landlord shall be relieved of sending you an itemized list of damages and the penalties adherent to that failure." Failure to provide the information relieves the tenant of his obligation relative to notification of the landlord of his forwarding mailing address.

554.607 Security deposit; permissible uses. Sec. 7. A security deposit may be used only for the following purposes: (a) Reimburse the landlord for actual damages to the rental unit or any ancillary facility that are the direct result of conduct not reasonably expected in the normal course of habitation of a dwelling. (b) Pay the landlord for all rent in arrearage under the rental agreement, rent due for premature termination of the rental agreement by the tenant and for utility bills not paid by the tenant.

554.604 Security deposit, disposition; bond.

Sec. 4.

(1) The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00. The attorney general may find a bond unacceptable based only upon reasonable criteria relating to the sufficiency of the bond, and shall notify the landlord in writing of his reasons for the unacceptability of the bond.

(2) The bond shall be for the benefit of persons making security deposits with the landlord. A person for whose benefit the bond is written or his legal representative may bring an action in the district, common pleas or municipal court where the landlord resides or does business for collection on the bond.

554.605 Security deposit as property of tenant.

Sec. 5.

For the purposes of this act and any litigation arising thereunder, the security deposit is considered the lawful property of the tenant until the landlord establishes a right to the deposit or portions thereof as long as the bond provision is fulfilled, the landlord may use this fund for any purposes he desires.

554.606 Waiving requirements of act.

Sec. 6.

The requirements of this act may not be waived by the parties to a rental agreement except as specifically provided herein.

554.607 Security deposit; permissible uses.

Sec. 7.

A security deposit may be used only for the following purposes:

(a) Reimburse the landlord for actual damages to the rental unit or any ancillary facility that are the direct result of conduct not reasonably expected in the normal course of habitation of a dwelling.

(b) Pay the landlord for all rent in arrearage under the rental agreement, rent due for premature termination of the rental agreement by the tenant and for utility bills not paid by the tenant.

554.614 Termination of landlord's interest; liability for security deposit.

Sec. 14.

Upon termination of a landlord's interest in a rental unit whether by sale, assignment, death, appointment of receiver or otherwise, the landlord or his agent is liable with respect to the security deposit, until the occurrence of any of the following:

(a) Transfer of the deposit to the landlord's successor in interest and written notification to the tenant by ordinary mail of the transfer and of the successor's name and address.

(b) Compliance with section 4 by the successor in interest.

(c) Return of the security deposit to the tenant.

554.608 Inventory checklists.

Sec. 8.

(1) The landlord shall make use of inventory checklists both at the commencement and termination of occupancy for each rental unit which detail the condition of the rental unit for which a security deposit is required.

(2) At the commencement of the lease, the landlord shall furnish the tenant 2 blank copies of a commencement inventory checklist, which form shall be identical to the form used for the termination inventory checklist. The checklist shall include all items in the rental unit owned by the landlord including, but not limited to, carpeting, draperies, appliances, windows, furniture, walls, closets, shelves, paint, doors, plumbing fixtures and electrical fixtures.

(3) Unless the landlord and tenant agree to complete their inventory checklist within a shorter period, the tenant shall review the checklist, note the condition of the property and return 1 copy of the checklist to the landlord within 7 days after receiving possession of the premises.

(4) The checklist shall contain the following notice in 12 point boldface type at the top of the first page: “You should complete this checklist, noting the condition of the rental property, and return it to the landlord within 7 days after obtaining possession of the rental unit. You are also entitled to request and receive a copy of the last termination inventory checklist which shows what claims were chargeable to the last prior tenants.”.

(5) At the termination of the occupancy, the landlord shall complete a termination inventory checklist listing all the damages he claims were caused by the tenant.

554.610 Effect of noncompliance with notice of damages requirement.

Sec. 10.

Failure by the landlord to comply with the notice of damages requirement within the 30 days after the termination of occupancy, constitutes agreement by the landlord that no damages are due and he shall remit to the tenant immediately the full security deposit.

A security deposit, or damage deposit, is money, beyond your first month’s rent, that you have to pay your landlord when you move in. Your landlord holds this money as long as you reside in the unit. When you move out and if you have paid all your rent and utility bills and you have not damaged the unit, the landlord is to return this money. The same rule for every state.


It does not matter what the landlord calls the money, it still is a security deposit. If you pay your first and last month’s rent when you move in, the last month’s rent is really a security deposit. The only exception to this rule in Michigan is a non-refundable fee, such as a cleaning fee paid at the beginning of a tenancy. In other states, a cleaning fee may or may not be permitted, as this can be deducted from a security deposit.

Put it all on the AL to win the all-star game.

Ice,

If you plan to purchase more rental properties and manage them yourself you should look into joining a landlord's association. Typically there is at least one in each county. There is usually a fee but they could answer questions like this, often have some form documents if you need them, can refer you to attorneys if necessary and would advise you of changes in applicable law should any occur. They also typically lobby on behalf of landlords.

Real property law is the one area of the law that is often vastly different in every state.

Also, keep this handy

http://www.legislature.mi.gov/(S(jn...page=getobject&objectname=mcl-act-348-of-1972

Here are the MI landlord associations. I don't know anything about them, but you should look into some local ones.

http://www.thelpa.com/lpa/associations/michigan.html