HOUSE BILL NO. 5605

March 20, 2024, Introduced by Reps. Brenda Carter, Steckloff, Farhat, Pohutsky, Neeley, Dievendorf, O'Neal, Young, Scott, Wilson, Rheingans, Price, Andrews, Martus, Tsernoglou, Liberati, McFall, McKinney, Morgan and Whitsett and referred to the Committee on Economic Development and Small Business.

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), section 1 as amended by 1995 PA 79, and by adding sections 1c, 1d, 1e, and 1f.

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 screening reports; to provide for legal remedies; and to provide penalties.

Sec. 1. As used in this act:

(a) "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 and includes, but without limitation, apartment units, boarding houses, rooming houses, mobile home spaces, and single and 2-family dwellings.

(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.

(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) (c) "Landlord" means the any of the following:

(i) The owner, lessor, or sublessor of the rental unit or the property of which it is a part. and, in addition, means a

(ii) The person authorized to exercise any aspect of the management of the premises, including a person who, that, directly or indirectly, acts as a rental agent , or receives rent, other than as a bona fide purchaser, and who whether or not the person has no an obligation to deliver the receipts rent payments to another person.

(d) "Tenant" means a person who occupies a rental unit for residential purposes with the landlord's consent for an agreed upon consideration.

(e) "Prospective tenant" means an individual who makes a request to a landlord or the landlord's agent to rent or lease a rental unit.

(f) "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 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) "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, an apartment unit, a boarding house, a rooming house, a mobile home space, or a single- or 2-family dwelling.

(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 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) (e) "Security deposit" means a deposit, in any amount, paid by the tenant to the landlord or his or her 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 under a lease with 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) (f) "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) "Tenant" means a person who occupies a rental unit for residential purposes with the landlord's consent for an agreed-upon consideration.

Sec. 1c. (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 rental application fee of not more than $25.00 only if the landlord complies with section 1d(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. 1d. (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 the landlord will accept a reusable screening report.

(f) Whether rental units are available for occupancy in the rental premises for which the prospective tenant would be applying for tenancy.

(g) If rental units are available for occupancy, the number of units available, by bedroom size.

(h) If rental units are not available for occupancy, whether the landlord maintains a waiting list for prospective tenants. If rental units are not available for occupancy and the landlord maintains a waiting list, how many other prospective tenants are above the prospective tenant on the waiting list for the bedroom types for which the prospective tenant would apply for tenancy.

(2) Beginning on the effective date of the amendatory act that added this section, a landlord shall not do any of the following:

(a) Use the credit score of the prospective tenant as the sole deciding factor in determining a prospective tenant's eligibility for a lease.

(b) Use 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, including, but not limited to, a dismissal of the judicial action, or a judgment in favor of the prospective tenant, in determining the prospective tenant's eligibility for a lease.

(3) If a landlord violates this section or section 1e, 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. 1e. (1) Within 14 days after receipt of an application for a rental unit by a prospective tenant, a landlord shall make a decision on the application.

(2) If the landlord takes adverse action against the prospective tenant, the landlord shall 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.

(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 of 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.

(3) The written notice required under subsection (2) must state the reasons for the adverse act 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 condition(s)].

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, mailing address, and internet website address of the consumer reporting agency], on _________, 20________ [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: ______________.

(4) As used in this section, "adverse action" means denying a rental application or approving a rental application with conditions.

Sec. 1f. 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 completed rental applications for that rental unit in the order in which the rental application for that rental unit is received.