SB 372

SENATE BILL NO. 372
A bill to amend 1972 PA 348, entitled
"An act to regulate relationships between
landlords and tenants relative to rental agreements for rental units; to
regulate the payment, repayment, use and investment of security deposits; to
provide for commencement and termination inventories of rental units; to provide
for termination arrangements relative to rental units; to provide for legal
remedies; and to provide penalties,"
by amending the title and section 1 (MCL 554.601), the
title and section 1 as amended by 2024 PA 179, and by adding sections 1e, 1f,
1g, and 1h.
the people of the state of michigan enact:
TITLE
An act to regulate relationships between landlords
and tenants relative to rental agreements for rental units and between landlords and
prospective tenants; to regulate the payment, repayment, use and
investment of security deposits; to provide for commencement and termination
inventories of rental units; to provide for termination arrangements relative
to rental units; to require
certain notices to prospective tenants; to allow for the reuse of certain
tenant screening reports; to provide for legal remedies; and to
provide penalties.
Sec. 1. As used in this act:
(a) "Consumer report" means that term as defined in 15 USC
1681a.
(b) "Consumer reporting agency" means any person that, for
monetary fees or dues or on a cooperative nonprofit basis, regularly engages in
whole or in part in the practice of assembling or evaluating consumer credit
information or other information on consumers for the purpose of furnishing
consumer reports to third parties using any means or facility of interstate
commerce for the purpose of preparing or furnishing consumer reports.
(c) "Credit score" means the numerical score ranging from 300
to 850 assigned by a consumer reporting agency to measure credit risk and includes
FICO credit score.
(d) (a) "Landlord"
means any of the following:
(i) The owner, lessor, or sublessor of a
rental unit or the property of which it is a part.
(ii) A person authorized to exercise any
aspect of the management of the premises, including a person that, directly or
indirectly, acts as a rental agent or receives rent, other than as a bona fide
purchaser, and that has no obligation to deliver the receipts to another
person.
(e) "Prospective tenant" means a person that makes a request
to a landlord or the landlord's agent to rent or lease a rental unit.
(f) (b) "Rental
agreement" means an agreement that establishes or modifies the terms,
conditions, rules, regulations, or any other provisions concerning the use and
occupancy of a rental unit.
(g) "Rental application fee" means a nonrefundable payment of
money charged by a landlord or the landlord's agent to a prospective tenant to
receive, validate, review, or otherwise process an application for the rent or
lease of a rental unit, and includes the cost of obtaining or assessing a
consumer report.
(h) (c) "Rental
unit" means a structure or part of a structure used as a home, residence,
or sleeping unit by a single person or household unit, or any grounds, or other
facilities or area promised for the use of a residential tenant. Rental unit
includes, but is not limited to, apartment units, boarding houses, rooming
houses, mobile home spaces, and single and 2-family dwellings.
(i) "Reusable screening report" means a consumer report that
was prepared within the previous 45 days by a consumer reporting agency at the
request and expense of a prospective tenant, made directly available to a
landlord for use in the rental application process, or is provided through a
third-party website that regularly engages in the business of providing a
reusable tenant screening report and complies with all state and federal laws
pertaining to use and disclosure of information contained in a consumer report
by a consumer reporting agency, and is available to the landlord at no cost to
access or use.
(j) (d) "Security
deposit" means a deposit, in any amount, paid by the tenant to the
landlord or the landlord's 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 an 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.
(k) (e) "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.
(l) (f) "Source of income" includes
benefits or subsidy programs including housing assistance, housing choice
vouchers provided under 42 USC 1437f, public assistance, veterans' benefits,
Social Security, supplemental security income or other retirement programs, and
other programs administered by any federal, state, local, or nonprofit entity.
Source of income does not include either of the following:
(i) Income that a prospective tenant cannot
demonstrate is derived from sources and activities permitted by law and is
provided on an ongoing basis.
(ii) Housing assistance that is not approved
by the appropriate agency within 30 days after the landlord provides all
information required as a condition of the agency's approval, including
evidence that all repairs required before occupancy have been completed.
(m) (g) "Tenant"
means an individual who occupies a rental unit for residential purposes with
the landlord's consent for an agreed upon consideration.
Sec. 1e. (1) A
landlord may elect to accept a reusable screening report from a prospective
tenant. If a landlord accepts a reusable screening report from a prospective
tenant in accordance with this subsection, the landlord may require the
prospective tenant to state, in writing, that there has not been a material
change to the information in the reusable screening report.
(2) A landlord that accepts a reusable screening report from a
prospective tenant shall not charge the prospective tenant a rental application
fee.
(3) A landlord that declines to accept a reusable screening report from
a prospective tenant may charge the prospective tenant a fee of not more than
$25.00 that includes the cost of obtaining a consumer report and the rental
application fee, only if the landlord complies with section 1f(1).
(4) A landlord that maintains a website that advertises the rental
premises for rent must include a statement in the advertisement that provides whether
the landlord will accept a reusable screening report from a prospective tenant.
Sec. 1f. (1)
Before accepting an application for a rental unit or a rental application fee
from a prospective tenant, a landlord must inform the prospective tenant of all
of the following, in writing:
(a) The information that will be accessed to screen the tenant's
application.
(b) What criteria may result in the denial of the prospective tenant's
application for the rental unit.
(c) If a consumer report obtained by a landlord or reusable screening
report obtained by the tenant will be required.
(d) That the prospective tenant has a right to obtain a free copy of the
consumer report obtained by the landlord if the landlord takes adverse action
against the tenant, or to dispute the accuracy of information contained in a
consumer report obtained by the landlord or reusable screening report provided
by the prospective tenant.
(e) Whether rental units are available for occupancy in the rental
premises for which the prospective tenant would be applying for tenancy.
(f) Whether the landlord will accept a reusable screening report.
(g) If rental units are available for occupancy, the number of units
available, by number of bedrooms.
(h) If rental units are not available for occupancy, whether the
landlord maintains a waiting list for prospective tenants. If the landlord
maintains a waiting list, how many other prospective tenants are on the waiting
list above where the prospective tenant would be, including for each number of
bedrooms unit type the prospective tenant would apply for.
(2) Beginning on the effective date of the amendatory act that added
this section, a landlord shall not use any of the following as a deciding
factor in determining a prospective tenant's eligibility for a lease:
(a) The credit score of the prospective tenant.
(b) The fact that the prospective tenant was a party to a judicial
action involving a dispute that arose under a tenancy in which there was no
finding of liability against the prospective tenant.
(3) If a landlord violates this section or section 1g, the prospective
tenant may bring a civil action against the landlord for actual damages of not
more than $1,000.00, reasonable attorney fees, and the costs of bringing the
action.
Sec. 1g. (1) If, after
the receipt of an application for a rental unit and payment of the application
fee by the prospective tenant or acceptance of a reusable screening report for
the prospective tenant, a landlord takes adverse action against the prospective
tenant, the landlord shall promptly do all of the following:
(a) Provide a written notice of the adverse action to the prospective
tenant.
(b) Give the prospective tenant, without charge, a copy of any consumer
report or reusable screening report the landlord relied on in taking the
adverse action, if the landlord has not already given the prospective tenant
that report.
(c) Provide the prospective tenant an opportunity to meet to discuss the
adverse action, including a meaningful and fair opportunity to rebut any
information contained in the consumer report or reusable screening report. A
landlord shall fairly and in good faith consider any rebuttal information and
evidence the prospective tenant presents, including the inaccuracy of
information appearing in a consumer report or reusable screening report. If
this subdivision applies, a landlord shall, within 7 days after meeting with
the prospective tenant as described under this subdivision, notify the
prospective tenant in writing of the landlord's final decision on the adverse
action.
(2) The written notice required under this subsection must state the
reasons for the adverse action and contain the following information in a form
that substantially conforms to the following form:
ADVERSE ACTION
NOTICE
Name of prospective tenant: _______________.
Address: _____________.
City/State/Zip Code: ____________________.
This notice is to inform you that the following decision has been made
to your application for a rental unit [checkmark indicates the decision]:
__ Rejected.
__ Approved with conditions [identify the conditions]:
Adverse action on your application for a rental unit was based on
any/all of the following [checkmark indicates all that apply]:
__ Information contained in the consumer report or reusable screening
report prepared by _____________ [name, address, and phone number of the
consumer reporting agency], on (date). [include a detailed explanation of the
information].
__ The consumer report or reusable screening report did not contain
sufficient information, specifically _____________ [state the missing
information with as much specificity as possible].
__ Information received from previous rental history or reference:
______________________ [identify the information].
__ Information received in a criminal record: ___________ [identify the
criminal record].
__ Information received in a civil record: _________ [identify the civil
record].
__ Information received from an employment verification: ________ [identify
the information].
__ Other information [identify the information]: __________
Dated this ____ day of ____, ____ [year].
Landlord/landlord's agent signature: ______________.
(3) As used in this section, "adverse action" means denying a
rental application or approving a rental application with conditions.
Sec. 1h. Beginning
on the effective date of the amendatory act that added this section, a landlord
shall do all of the following:
(a) In determining a prospective tenant's eligibility for a lease,
consider the prospective tenant's current ability to pay rent and suitability
for tenancy, according to a landlord's rental application criteria.
(b) Both of the following:
(i) Note the date
and time of when the landlord receives a completed rental application for a
rental unit from a prospective tenant.
(ii) Screen all
complete rental applications for that rental unit in the order in which the
rental application for that rental unit is received.