Legal mistakes are expensive for rental property owners, and a complex process is usually required to dis-entangle yourself from a lawsuit or a complaint. Protect yourself and your Grand Rapids investment property by understanding the laws, rules, and regulations that apply to you when you’re renting out one home or an entire portfolio of properties.
Fair Housing and Additional Federal Laws to Know
The Fair Housing Act establishes protected classes against whom you may not discriminate when you’re advertising a rental property, screening applications, or renting out your home. Most people don’t intentionally discriminate, but if you’re not sure of the law and its details, you can make an error that will look like discrimination to federal housing authorities. Be consistent with your screening and management practices, document everything in your marketing and showing process, and stay up to date with all the law’s changes and trends.
The Americans with Disabilities Act is a federal law that protects people with physical, intellectual, and emotional disabilities. It requires you to make accommodations for tenants or prospective tenants who have disabilities. This might mean wheelchair ramps, designated parking spots, and service animals. Understanding the difference between a pet, a service animal, and an emotional support animal is critical in effectively renting out your property.
The Fair Credit Reporting Act is another federal law you need to know. When tenants apply for a property and rent a home from you, they share a lot of personal and financial information. What you do with that information is protected.
Michigan Security Deposit Laws
The Michigan State Legislature has created a booklet called A Practical Guide for Landlords and Tenants. You’ll want to review it when you become a Grand Rapids landlord. One of the most important sections references security deposits. This is an area that’s often contentious between landlords and tenants for a number of reasons. You need to know a few important things:
- There’s a limit to what you can collect. Your security deposit cannot be more than the equivalent of one-and-a-half times the monthly rent. A $1,200 rental property cannot have a security deposit larger than $1,800.
- You need to hold the deposit in a regulated financial institution such as a bank or you have to deposit a cash bond or surety bond with the Secretary of State.
- Return the deposit within 30 days of the tenant moving out. If you’re keeping all or part of the deposit, you’ll need to provide an itemized list of the damages you found and deducted. There’s also language you need to include in this case which invites the tenants to respond within seven days of the notice if they plan to contest any of the deductions.
If the tenant disputes your deductions, you’ll need to negotiate or prepare for court. This illustrates the importance of a documented and well-photographed move-in and move-out inspection report.
Eviction Laws in Grand Rapids Rental Homes
Hopefully, you’ll never need to evict a tenant, especially now, with the COVID pandemic freezing most eviction proceedings.
You are not allowed to evict or remove a tenant outside of the legal process. In Michigan, it’s called Summary Proceedings and there’s a process that must be followed to the letter.
The process begins with an eviction notice. Depending on how the tenant responds to the notice, you may have hearings, court appearances, and even a trial. When you can successfully prove that you have the right to cancel the lease agreement and regain possession of the property (usually for nonpayment of rent or a lease violation), you’ll get an Order of Eviction. Usually, the tenant will move out. If not, a court officer can manage the physical removal of the tenant and their belongings.
Don’t take shortcuts when you’re trying to evict a tenant. If you change the locks or show up at the property to confront them or turn off the utilities – you’ll face huge legal penalties.
This is only a small sampling of the state and federal laws you need to know when you’re renting out a property. We know that mistakes are easy to make, even if you’re an experienced real estate investor. Professional Grand Rapids property management can protect you from liability and keep you compliant. If you’d like some help, please contact us at Short South Realty Group.