Municipalities Can No Longer Invade Tenant Space

Governor Snyder signed Senate Bill 107 into law on November 28, 2017.  The bill, popularly called the “Tenant Permission Bill,” was promoted by the Rental Property Owners Association of Michigan (RPOA-M), Apartment Association of Michigan (AAM) and the local Rental Property Owners Association in Grand Rapids (RPOA).  The law, now Public Act 169 of 2017, will take effect 90 days from the Governor’s signature which is February 26, 2018.  The law changes various aspects of the Housing Law of Michigan rental inspection enforcement regulations.

 The most prominent change under the new law is the removal of the right of a municipality to enter a rental premise for an inspection—without the tenant’s permission–under the landlord’s contractual right within a lease to enter the premises.  Several U.S. courts, including the Supreme Court, have ruled time and time again that municipalities must obtain permission from a tenant before entering their unit for a rental inspection, except in cases of an emergency.  This new law will now require municipalities to obtain permission or an administrative warrant or wait until the unit is vacant before entering for an inspection.

 Specifically, the new law requires a tenant to allow a municipality entry in the following situations:

·                   The lease authorizes an enforcing agency inspector to enter the leasehold for an inspection. (A clause in the lease must specifically state that the tenant agrees to allow the enforcing agency inspector to enter the premises for a municipal rental inspection.)

·                   The lessee has made a complaint to the enforcing agency.

·                   The enforcing agency serves an administrative warrant ordering the lessee to provide access.

·                   The lessee has given consent.

What about units where there are more than one tenant/leasee?  Requesting and receiving permission from one leasee satisfies the permission for the entry requirement.

 What about a landlord’s rights?  The same Federal courts which have ruled that tenants must give permission have also ruled that municipalities have a right to carry out rental inspections for health and safety purposes and may enter a unit if the tenant gives permission—with or without the consent of the landlord.

 Under the previous and new modified Housing Law, landlords must, in good faith, seek to obtain permission of the tenant for a municipal inspection.  Landlords are not allowed to discourage, in any way, a tenant’s choice to allow entry.  Doing so could endanger the landlord’s protections under the law.  This does not, however, mean that a landlord cannot inform the tenant of their right to refuse the inspection.

The law also includes two very important protections for the tenant and the landlord, namely that neither the tenant nor the landlord can be discriminated against for the tenant exercising their right to refuse an inspection.  For the tenant this means the municipality can’t threaten the tenant with condemnation of their rental unit or otherwise fine the tenant for refusal of entry.  For the landlord, this means that the municipality cannot condemn the property, remove a certificate of compliance or otherwise charge a fee or fine for the tenant’s refusal of entry if the landlord has fulfilled their obligations under the other parts of the law.

 So, when do landlords have to allow the municipality entry?  Here are specific circumstances under the new law when a landlord must provide entry:

 ·                   The lease authorizes an enforcing agency inspector to enter the leasehold for an inspection. (A clause in the lease must specifically state that the tenant agrees to allow the enforcing agency inspector to enter the premises for a municipal rental inspection.)

·                   The lessee has made a complaint to the enforcing agency.

·                   The leasehold is vacant.

·                   The enforcing agency serves an administrative warrant ordering the owner to provide access.

·                   In cases of an emergency.

 The changes to the law were necessary to protect tenants from aggressive municipal tactics that used threats of eviction and more to enter a rental premise—all of which were contrary to the rights of all citizens under the 4th Amendment of the U.S. Constitution.

Clay Powell, Director of the RPOA-M and RPOA, stated that it has taken nearly four years to get these changes made and wishes to thank all the legislators that were involved along the way to make the changes reality and bring Michigan into compliance with Federal Law.

As always, except in cases of an emergency, a landlord/property manager must give tenants a 24-hour notice before entry.

Property Owners and Tax Time

The key to saving money on your tax return is to take advantage of the many deductions offered to full-time rental property owners. Your property is considered a full-time rental if you allocate fewer than 15 days for personal use.

Some of the most basic deductions that landlords could easily overlook are costs related to cleaning and maintenance, property taxes, management fees, mortgage interest, advertising, and even property insurance.

Want to save even more money? You can also deduct expenses related to traveling to manage your property, depreciation of your property, HOA fees, insurance claim deductibles, operating expenses, and even your utilities. Basically, any cost you incur to keep your rental property up and running can be filed as a tax deductible expense.

If your rental property expenses exceeded your rental earnings, you can even deduct your losses. If your annual income (adjusted gross income) is below $100,000, you are eligible to deduct up to $25,000 of your rental losses. As your annual income increases, the rental loss deduction is reduced.

One of the best tips any landlord could get is to keep meticulous records or better yet, hire a professional property manager to keep these records for you. You must treat your rental property like a business. The more expenses that you document, the better chance you have to get those tax deductions and keep more of your money. Rental Management One provides detailed expenses reports and even copies of expense receipts for our Owners to turn into their CPA making this important task a “non-stress” related task.

New to the Rental Game

With the popularity of travel websites such as Airbnb, many people are interested in the opportunity to turn their primary and/or secondary home into a money making property, which is a great idea I might add. The good news is, for rental experts and noobs alike, you can dramatically benefit by adding a professional property manager to your business team. The cost is low but the value is worth every penny. Call Rental Management One at 248-208-3882 and start getting the most money out of your rental property.