What is a Michigan Landlord Security Deposit Bond?
The Michigan Department of State mandates laws which govern residential security deposits and requires landlords to post a surety bond for the amount of the security deposit. If you are a landlord in the state, it is imperative that you know these requirements to protect your investments.
The Landlord Security Deposit Bond benefits persons making security deposits with the landlord.
The bond guarantees financial protection to the landlord in the event that a tenant fails or defaults on his or her rental payment responsibilities.
Under Michigan’s Landlord and Tenant Relationships Act 348 of 1972, Sec. 554.604 (4)(1), landlords may use the security deposit money for any purposes they desire if they deposits with the Secretary of State (SOS) a surety bond to secure the entire deposits up to $50,000 and 25% of any amount exceeding $50,000.
What are the bond conditions?
- The bond must be written by a Surety which is licensed to do business in the State of Michigan.
- If the Principal (landlord) is a corporation, the coverage is provided and extended without notification to the Surety for any change of officers.
- The Principal must annually file with the Surety and Attorney General a certified statement of the security deposits where the Surety will revise the bond amount accordingly within 30 days of the filing of the statement.
- The Principal’s books and records upon the bond will be open to the inspection during reasonable business hours to the Surety and Attorney General.
- The Surety’s liability for all claims will not exceed the sum of the bond.
- The bond is continuous until canceled by the Surety by giving 60 days written notice to the Secretary of State and Attorney General.
What is the bond amount?
The bond amount varies depending on the amount of the security deposit.
The amount must be deposited with the Secretary of State (SOS) and must be approved by the Attorney General. The Attorney General may find a bond unacceptable based only upon reasonable criteria associated with the sufficiency of the bond and will notify the landlord in writing the reason for the bond’s unacceptability.
The cost of the bond is a percentage of the bond amount, which is 1%-5%. The cost may be based on your credit score and other financial requirements evaluated by a certified surety underwriter.
How do I obtain a Landlord Security Deposit Bond?
Just follow these steps:
- Contact us
You may contact us by filling out a form HERE, or by giving us a call at 800-333-7800. Our surety bond experts will send you the application that you need for this type of surety bond.
2. Submit your application
Along with a completed surety bond application form, you will also be asked to submit necessary documents needed for the underwriting process. These are the following:
- Your business/job history
- Your credit score
- Your copy of the BOND FORM, which can be obtained from the Secretary of State.
All these will be carefully evaluated by our underwriter. We will inform you if you need to submit additional documents for your application. To avoid any delays, please collect all the required documents before submission.
3. Issuance & Bond Premium
Once your surety bond has been approved, you will be notified of your bond premium. After the premium has been paid, your surety bond will be issued and sent to you immediately.