Double Trouble: Landlord Is Not Subject to Statutory Penalty for Wrongfully Withholding Security Deposit

MCL 554.613(2) states that a landlord is liable to a tenant for double the amount of the security deposit retained if the landlord fails to “comply fully with this section.”

MCL 554.613(1) states that within “45 days after termination of the occupancy,” a landlord may sue the former tenant “for a money judgment for damages…,” and that a landlord “shall not be entitled to retain any portion of a security deposit for damages claimed unless he has first obtained a money judgment for the disputed amount” (subject to specific exceptions if the former tenant cannot be found).

In Tree City Properties, LLC v Perkey, ___ Mich App ___ (2019) (Docket No. 339539), the Court of Appeals addressed, in a published opinion, what happens if the landlord complies with § 613(1) by filing suit and serving the former tenant, but is unable to prove it is entitled to all of the security deposit that it has attempted to retain.

The Court of Appeals held that, although the trial court found the landlord only to be entitled to part of the security deposit, the funds had not been wrongfully retained and therefore, no penalty was owed under § 613(2).

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