Michigan Commercial Lease Agreement

Security Deposit Limits and Handling

• No limits exist to how much lessors can ask for security deposits on a commercial property.
• Landlords can hold the deposit in any account, allowing it to co-mingle with other funds.
• There aren’t laws stating when the landlord must return the deposit. Still, most use the 30 days that residential leases require.
• Tenants aren’t entitled to any interest in the security deposit, and lessors don’t need to bear any interest.

Right of Entry for Inspections and Repairs

• Landlords can enter the commercial premises with very few restrictions.
• Though the law doesn’t require it, leases can also contain terms regarding reasonable notice periods when entering the premises. Often, this notice period varies between 24 and 48 hours.
• Most lessors will add clauses regarding repairs. Often, the landlord must ensure the premises are in good condition at the start of an agreement.
• Once the agreement starts, the lessor usually becomes responsible for repairs. If the lessee identifies any required repairs before signing the contract, they can request repairs. They can also negotiate lower rent while fixing the problem themselves.

Environmental Responsibilities

• The Michigan Department of Environment, Great Lakes, and Energy oversees environmental regulations. There are various federal, state, and local laws on how to handle multiple environmental issues.
• The lessor must ensure the property is in good condition before the agreement. It includes ensuring there are no environmental issues present.
• If any environmental remediation or processes happen on the property, the lessor must inform the tenant.
• Once they sign the lease, the lessee becomes responsible for any environmental issues.

Notice Requirements

• When terminating the agreement, different notice periods apply depending on the lease type. Weekly leases have a seven (7) day notice, monthly ones a 30-day notice, and yearly leases a year’s notice.
• Most commercial leases are fixed-term. It means there’s no specific notice period, which always expires on the stated date.
• Lessees can break the lease early, but there might be some penalties. These penalties can be having to pay the remaining rent. It can also be losing the security deposit or paying marketing and advertising fees. If the lessor and lessee can’t agree, the lessor can also sue them through the small claims court.

Include Required Disclosures

The Michigan state only requires landlords to add the federal disclosure in the document.

• Lead-Based Paint: Lessors of buildings built before 1978 must inform tenants if lead-based paint is present. They should also tell them about lead poisoning and other hazards.