Renting out your house can be a great way to earn a steady rental income. However, many first-time landlords in Michigan are unsure whether they need a license. A common question is – do I need a license to rent out my house?
The answer is yes. A rental license is typically required to ensure your property meets safety standards and complies with local regulations. Without one, you could face fines, legal issues, or other challenges.
In this blog, we’ll explain when a rental license is needed, its importance, and provide a step-by-step guide to help you navigate the application process.
Do You Need A License To Rent Out A House In Michigan?
You need a license to rent out your house in Michigan. You must apply for a rental license with the Michigan Department of Licensing and Regulatory Affairs (LARA). It is the first step to becoming a certified landlord in the state.
You’ll also need a landlord certificate from your local county clerk’s office along with the LARA registration. These two certifications ensure you meet the state’s rules and have the qualifications to manage rental properties. It is essential to avoid fines or legal trouble while renting your property.
How Does Licensing Help Landlords?
Licensing your rental property is a legal step that offers multiple advantages for landlords and residents. Here’s how it helps:
1. Ensures Legal Compliance
Getting a rental license from the Michigan Department of Licensing and Regulatory Affairs (LARA) ensures you meet state laws. It protects you from fines and legal troubles and helps you stay on track as a responsible landlord.
2. Increases Property Value
Licensed properties are often more appealing to buyers. They show proper maintenance and compliance, making them more attractive and boosting their market value. A well-regulated home gives buyers confidence in their investment.
3. Property Safety and Resident Protection
A license ensures regular inspections, which improve property safety. It helps you fix issues like faulty wiring or plumbing before they harm residents, keeping everyone secure.
4. Enhances Resident Trust
Residents trust landlords with licensed properties. It shows you care about legal standards and their well-being. Happy residents stay longer and take better care of your property.
5. Reduces Liability Risks
Licensing minimizes risks by ensuring your property complies with safety codes. It protects you from lawsuits or claims, giving you peace of mind and saving money on legal fees.
What Are the Rental Licensing Requirements in Michigan?
Getting a rental license in Michigan involves providing specific details about your property and meeting state guidelines. We’ve listed the essential requirements you need to know to apply for your rental license. Have a look:
- Initial Application Form: You must collect a rental license application where you provide owner details like your name, ID number, address, and contact information. Include information about your property, such as the number of units, room sizes, and subletting plans.
- Floor Plan and Site Plan: If your property hasn’t been reviewed, you must submit a detailed floor plan and site plan. These documents help authorities verify the property layout and compliance.
- Photographs: Capture clear photos showing your property’s front, back, and sides. Make sure you have the pictures of your driveway approach. These images help verify the condition of your rental.
- Additional Requirements for Condos: If your property is a condo, submit documents like the condo association’s rules, proposed lease agreements, and evidence of required notices and approvals.
- Fees: You must provide the required amount to proceed with the licensing process. In Michigan, expect to pay between $500 and $1,550. It includes application review, inspections, up to one reinspection, and hearing fees.
Licensing and Registration Process in Michigan
Many landlords struggle with the lengthy process of getting a landlord license. AmeriHome has listed the simple steps to make the application process quicker and easier.
Step 1: Verifying property restrictions
Before applying for a landlord license, verify that your property has no zoning or deed restrictions. Some neighborhoods, called overlay districts, only allow owner-occupied homes. Additionally, deed restrictions may prevent you from renting the property for a specific period. Make sure your property is eligible for renting.
Step 2: Submit the Application and Supporting Documents
Fill out the landlord license application form with accurate information, including your name, property address, and details about the rental units. Be sure to attach all required documents, such as property photos, floor plans, and payment for the fees. Check everything before submitting to avoid mistakes.
Step 3: Administrative Review and Trades Inspection
After you submit your application, the Housing Office will review it to ensure everything is correct. They check for property restrictions, confirm the owner’s information, and ensure there are no unpaid fees with the City.
If everything is good, your rental unit will undergo an “all trades” inspection within 60 days. Inspectors will check the building, electrical, and plumbing systems to ensure they meet safety standards.
Within 30 days after the inspection, you’ll get a notice with the results. If there are any problems or violations, the notice will explain what needs to be fixed and give you a time limit. Once the issues are fixed, the Housing Office will contact you to begin the hearing process.
Step 4: Housing Commission and City Council Hearing
After your inspection, your application will go through two essential meetings: the Housing Commission Hearing and the City Council Hearing.
At the Housing Commission Hearing, which happens within 40 working days of your inspection, the commission will review your application. You will get a notice s before the meeting, and you must attend unless you request to send a legal agent.
At the City Council Hearing, the council will decide whether to approve or deny your application. They may add extra conditions to the license. The council will give their decision in writing in a few days.
Step 5: Obtain an Initial Rental License
Once your application has been approved and all requirements are met, you will receive your initial rental license. This license allows you to legally rent out your property. The license is valid for one year or until the property is sold.
During the first year, you cannot rent the property until all conditions set by the City Council are met. You must also schedule reinspections as required. 120 days before the first year ends, you must apply for a regular rental license.
A Quick Checklist for First-time Landlords in Michigan
If you’re a first-time landlord in Michigan, you’ll want to make sure everything is set up properly. Here’s a quick list to help guide you through the process.
1. Register Your Property: Make sure your property is registered with the Michigan Department of Licensing. It is required to legally rent your property.
2. Preparing Your Michigan Rental House: Before renting, ensure your property is clean, safe, and ready for residents. Fix any broken appliances or issues with plumbing or electricity.
3. Investing in Rental Property Insurance: Get rental property insurance to protect your investment. It will help cover damages or unexpected repairs that could happen.
4. Market Your Rental Property: Advertise your rental online and with local listings. Take good photos and write a clear, honest description to attract renters.
5. Screen and Find the Perfect Resident: Carefully check each potential resident’s background. Look at their rental history, credit score, and employment to find someone trustworthy.
6. Setting the Right Price: Research similar properties in your Detroit Metropolitan area to set a fair rent price. Be competitive, but ensure you’re covering your costs.
7. Use a Written Lease: Always use a written lease agreement. This document should include rent details, rules, and responsibilities for you and the resident.
8. Maintaining Your Rental Property: Regularly inspect and maintain your property to keep it safe and well-kept. If you need assistance, consider working with a professional property management service in Michigan. They will handle repairs, inspections, and resident communication, ensuring everything is properly managed.
In Closing
Getting a rental license for your property is an important step to follow the rules and avoid severe penalties. If you don’t get a license, you could face fines or even have to stop renting your property in Michigan. It’s always best to ensure you follow all the rules to keep your rental business safe and legal.
If you’re unsure about the process, consider reaching out to our property manager in Michigan, who can help guide you through getting your rental license. It will ensure everything is done correctly and save you from future problems.
Frequently Asked Questions
How long does it take to get a rental license in Michigan?
The process can take a few weeks. You must submit your application and wait for approval from the local government before you can rent out your property.
Do I need an inspection to get a rental license?
Yes, many Michigan cities require an inspection of the property before issuing a rental license. It ensures the property meets safety and health standards.
Can I rent out my property without a lease agreement?
While not illegal, renting without a lease agreement is risky. A lease protects both you and the resident by clearly defining the responsibilities and terms of the rental.
