Legislative Analysis
Phone: (517) 373-8080
ALLOW LANDLORDS TO RETURN SECURITY DEPOSITS
http://www.house.mi.gov/hfa
THROUGH ELECTRONIC PAYMENT METHODS
Analysis available at
Senate Bill 539 (S-1) as reported from House committee http://www.legislature.mi.gov
Sponsor: Sen. Sarah Anthony
House Committee: Economic Development and Small Business
Senate Committee: Housing and Human Services
Complete to 12-8-24
SUMMARY:
Senate Bill 539 would amend the landlord-tenant act to allow landlords to return the amount
owed from a security deposit electronically to a tenant instead of by check or money order.
Rental leases often require tenants to pay a security deposit at the start of the lease to cover any
potential damage to the rental unit, apart from normal wear and tear, that occurs during their
tenancy. 1 The act allows a landlord to deduct the amount of damages to a rental unit, including
the estimated cost of repairs, from a tenant’s security deposit as long as the landlord mails the
tenant, within 30 days after the termination of occupancy, an itemized list of the damages and
a check or money order for the remaining balance. (However, this notice requirement does not
apply if the tenant does not give the landlord a forwarding address within four days after their
occupancy ends.)
Senate Bill 539 would allow a landlord to transmit the owed amount to the tenant through direct
deposit, electronic transfer, or the use of an internet or mobile payment account or app instead
of by check or money order. The landlord would still have to mail the tenant a notice and
itemized list of deducted damages within 30 days after the end of occupancy. A landlord that
returns a security deposit electronically would have to deposit the returned amount into the
tenant’s account in a financial institution or an internet or mobile payment account or app
within 10 days after they put the notice of damages in the mail.
MCL 559.609
BRIEF DISCUSSION:
Supporters of Senate Bill 539 argue that the bill would provide more options for both landlords
and tenants and would expedite the security deposit return process. While tenants who prefer
a mailed check would still have that option, allowing the use of secure options such as direct
deposit, mobile apps, and electronic transfer would modernize and streamline the process for
everyone involved.
FISCAL IMPACT:
The bill would have no fiscal impact on the state or local units of government.
1
A landlord also can use a security deposit to pay any rent or utility bills owed by the tenant at the end of the lease.
House Fiscal Agency Page 1 of 2
POSITIONS:
A representative of the Rental Property Owners Association of Michigan testified in support
of the bill. (11-12-24)
The following entities indicated support for the bill:
• Apartment Association of Michigan (12-3-24)
• Michigan Realtors (11-12-24)
• Property Management Association of Michigan (11-12-24)
Legislative Analyst: Holly Kuhn
Fiscal Analyst: Ben Gielczyk
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency SB 539 (S-1) as reported Page 2 of 2


Statutes affected:
Substitute (S-1): 554.609
Senate Introduced Bill: 554.609
As Passed by the Senate: 554.609