The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5160

January 6, 1978

LANDLORD AND TENANT:

Deductions from security deposit for demages during occupancy

NOTICE:

Time during which notice must be sent and received

Pursuant to statute, a landlord is required to make use of an inventory check list at the commencement and termination of occupancy as a means of ascertaining damages to a rental unit which may be claimed from a tenant's security deposit.

It is not necessary to prepare a new inventory check list upon renewal or extension of a rental agreement.

Where more than one person occupies the premises with the landlord's consent and the landlord requires all of them to sign the rental agreement and the check list, all signatories are responsible for the condition of the items on the check list until the last of them has terminated occupancy.

Upon termination of occupancy, unless the tenant provides the landlord with an address to which the landlord may return the security deposit and send notice of claim of damages, the landlord is relieved from the requirement of sending a notice of damages to the tenant. The landlord has 30 days after termination of occupancy to send the tenant the notice of claim of damages, if any, along with a check or money order returning the balance of the security deposit. Upon receipt of the list of damages, the tenant has 7 days to respond. The 7 day period commences when the tenant has actually received the notice of damages, not when the landlord has sent the notice.

Hon. Earl E. Nelson

The Senate

Lansing, Michigan

You have requested my opinion on several questions concerning 1972 PA 348; MCLA 554.601 et seq; MSA 26.1138(1) et seq. Your question will be restated into three questions and answered seriatim.

Your first question may be restated as follows:

Pursuant to 1972 PA 348, is a landlord required to complete an inventory checklist at the renewal or extension of a rental agreement?

As a means of ascertaining damages to a rental unit which may rightfully be claimed from a tenant's security deposit, Michigan landlords are required to make use of inventory checklists at the commencement and termination of occupancy.

Section 8 of the Act, supra, provides:

'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 investory 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 check list 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.'

Section 8 requires use of an inventory checklist at the commencement and termination of a tenant's occupancy. You question whether a landlord is required to complete an inventory checklist when entering into a renewal or extension of an existing rental agreement. The issue is whether a renewal or extension of a rental agreement constitutes a termination and subsequent commencement of occupancy which would require use of inventory checklists.

Section 1(b) of the Act, supra, defines rental agreement as follows:

'(b) 'Rental agreement' means all agreements which establish or modify the terms, conditions, rules, regulations or any other provisions concerning the use and occupancy of a rental unit.'

When a lease contains a renewal clause, the option to renew is considered part of the present demise and not the creation of a new lease; it operates as an extension of an existing, on-going lease. Kern v Pawlega, 5 Mich App 384; 146 NW2d 689 (1966). When a lease is silent with respect to renewal or extension, the parties may negotiate a renewal or extension. In the absence of express agreement the tenant has no enforceable right to a renewal or extension of a lease. Pikes Peak Co v Pfuntner, 158 Mich 412; 123 NW 19 (1909).

Additionally, Section 16 of the Act provides that it is prospective in application to lease 'entered into, renewed or renegotiated after April 1, 1973.' In my opinion this clause was placed in the Act to avoid impairment of pre-existing leases, consistent with established principles that a statute which changes the substance of contracts cannot be made retroactive. Const 1963, art 1, Sec. 10; Guardian Depositors Corp v Brown, 290 Mich 433; 287 NW 798 (1939).

Accordingly, from the permissive language of the Act and the case law, I conclude that the renewal or extension of a rental agreement does not require the use of inventory checklists because there is neither a commencement nor termination of occupancy, but rather a continuation of occupancy by agreement of the parties.

Your second question may be restated as follows:

Pursuant to 1972 PA 348, what are a landlord's inventory checklists duties as to multiple tenants?

The Act, supra, defines tenant in Section 1(d) as follows:

"Tenant' means any person who occupies a rental unit for residential purposes with the landlord's consent for an agreement upon consideration.'

The Act, supra, consistently refers to tenant in the singular and does not specifically refer to instances where a rental unit may be occupied by more than one tenant. However, common experience teaches that many rental units are occupied by more than a single tenant. You question the application of the Act's inventory checklist requirements to multiple tenants.

It is my opinion that if an individual tenant completes and signs the inventory checklist at the time of commencement of occupancy of the premises, no further checklist will be required until the same individual terminates his or her occupancy. The fact that other persons may also occupy the same rental unit will not affect this result. Upon termination of occupancy by the tenant signing the inventory checklist, the landlord is required by Section 8 of the Act, supra, to present an identical form to be used as a termination inventory checklist listing any damages the landlord claims were caused by the tenant.

If more than one person occupies the premises with the landlord's consent and the landlord requires all of them to sign the rental agreement and the checklist, all signatories will be responsible for the condition of the items on the checklist until the last of them has terminated occupancy.

Your third question may be restated as follows:

Pursuant to 1972 PA 348, when is a tenant deemed to have received a landlord's notice of damages so that the tenant's 7 days to respond commence?

Upon the termination of occupancy, 1972 PA 348 places duties on both the landlord and the tenant. First, Section 11 of the Act, supra, requires the tenant to notify his landlord of an address to which the landlord may return the tenant's security deposit and send notice of any claimed damages within 4 days after termination of occupancy. A tenant's failure to notify the landlord relieves the landlord from the requirement of sending a notice of damages to the tenant but does not prejudice a tenant's subsequent claim.

Second, the landlord has 30 days after the tenant terminates occupancy to mail to the tenant a notice of damages, if any, along with a check or money order returning the balance of tenant's security deposit. This obligation is contained in Section 9 which provides:

'In case of damage to the rental unit or other obligation against the security deposit, the landlord shall mail to the tenant, within 30 days after the termination of occupancy, an itemized list of damages claimed for which the security deposit may be used as provided in section 7, including the estimated cost of repair of each property damaged item and the amounts and bases on which he intends to assess the tenant. The list shall be accompanied by a check or money order for the difference between the damages claimed and the amount of the security deposit held by the landlord and shall not include any damages that were claimed on a previous termination inventory checklist prior to the tenant's occupancy of the rental unit. The notice of damages shall include the following statement in 12 point boldface type which shall be at least 4 points larger than the body of the notice: 'You must respond to this notice by mail within 7 days after receipt of same, otherwise you will forfeit the amount claimed for damages."

Third, if a landlord claims damages from the tenant's security deposit and gives notice thereof, the law requires the tenant to respond to the notice of damages in writing within 7 days upon receipt of the list of damages. This requirement is contained in Section 12 which provides:

'If a landlord claims damages to a rental unit and gives notice of damages as required, the tenant upon receipt of the list of damages shall respond by ordinary mail to the address provided by the landlord as required by section 3 within 7 days, indicating in detail his agreement or disagreement to the damage charges listed. For the purposes of this section the date of mailing shall be considered the date of the tenant's response.' (emphasis added)

Thus your question raises the issues as to whether the emphasized phrase 'upon receipt of the list of damages' means that the 7 day period during which the tenant must respond begins to run when the landlord mails his response to the tenant, or when the tenant is in actual receipt of the notice, assuming that the tenant has given the landlord the tenant's correct address as required by Section 11.

1972 PA 348, supra, is silent as to when the tenant is presumed to have received the landlord's notice of damages, and in my opinion the tenant's seven day response period to the notice of damages commences after he is in actual receipt of the landlord's notice of damages. The exact date that a tenant receives the notice may be question of fact for determination of a court or jury. A tenant would have the opportunity to testify as to the date he actually received the notice of damages and his testimony would be subject to refutation by the landlord. If a landlord believes this places an unfair burden upon him, he may, of course, send his notice of damages by registered mail, delivered to addressee only, and thereby obtain proof of the date that the tenant actually received the notice.

Since Section 12 of the Act, supra, requires a tenant to respond to the landlord within 7 days after receipt of the list of damages, the date he actually receives the notice should not be counted and the seven days should begin to run on the following day and expire at midnight on the seventh day thereafter.

Frank J. Kelley

Attorney General