If you own a rental house in Michigan and you’re ready to sell, you may not need the tenants to move out first. This guide covers three practical questions: what happens to the lease, how month-to-month tenancies end, and who is responsible for the security deposit.
This is general information, not legal advice. Every lease and situation is different, and a Michigan attorney can review yours.
Does selling the house end the lease?
Generally, no. Michigan courts treat a tenancy as an interest in the property that comes ahead of interests created later. So when a rented house is sold, the buyer usually takes it subject to the time left on the lease. The Michigan Judicial Institute’s landlord-tenant benchbook puts it this way: if an owner leases a property and then sells it before the lease expires, “the new owner is subject to the term remaining of the lease.”
Your lease’s own terms still matter, so read it before you plan a sale. Some situations, like housing-assistance programs or local rules, can add tenant protections.
What if the tenant is month-to-month?
Michigan courts generally treat a month-to-month tenancy as a “tenancy at will,” which either side can end with notice. Under MCL 554.134(1), that notice is generally one month. When rent is paid at intervals shorter than three months, notice equal to the time between rent payments is enough.
The lease, a housing program or local rules may add other requirements. Notice and eviction are also different things. A notice can end the tenancy, but it doesn’t remove anyone from the house. If a tenant stays after the tenancy ends, getting possession back goes through the courts. That’s a step to take with legal guidance.
You can also simply sell with the month-to-month tenant still in place.
What happens to the security deposit?
Under MCL 554.605, a security deposit is the tenant’s property until the landlord establishes a right to it. When a landlord sells, MCL 554.614 says the selling landlord stays responsible for the deposit until one of these happens:
- The deposit is transferred to the new owner, and the tenant gets written notice by ordinary mail of the transfer and the new owner’s name and address.
- The new owner complies with section 4 of the Act, which covers how deposits are held.
- The deposit is returned to the tenant.
A private deal between the seller and buyer doesn’t, by itself, end the seller’s responsibility to the tenant. Make sure the deposit is accounted for in the sale paperwork, and that the tenant gets the required notice.
What to have ready before you talk to a buyer
- The current lease, with its end date and rent amount
- The security deposit amount and where it’s held
- Rent payment history and any unpaid balance
- Copies of any notices given or received
- The house’s condition and any repairs you know about
Thinking about selling with your tenant in place?
We work with Michigan owners who want to sell houses that still have tenants living in them. Tell us about the lease, the condition of the house and your timing, and we’ll talk through whether a sale with the tenant in place could work for you. Contact us.
Related reading: Can you sell a house with a lien in Michigan? · How much does it cost to sell a house in Michigan? · How we buy houses
Sources: MCL 554.134 (Michigan Legislature) · MCL 554.605 (Michigan Legislature) · MCL 554.614 (Michigan Legislature) · Michigan Judicial Institute, Residential Landlord-Tenant Law Benchbook, §1.1(B), p. 1-5