If you own a rental property in Michigan, there’s an important legal update you shouldn’t overlook. On October 21, 2026, the Michigan Court of Appeals issued a unanimous decision that could have significant implications for landlords who rent properties without obtaining required local permits.
The takeaway? A missing rental permit could mean more than a municipal fine. It could put the enforceability of your entire lease at risk.
What Happened in This Case?
The case involved a rental property in West Bloomfield Township, where the tenant and former landlords filed claims against each other involving unpaid rent and a security deposit. Both parties agreed that the landlords had not obtained the rental permit required by the township.
The Court of Appeals determined that because renting the property without the required permit was unlawful, the lease was void from the beginning.
Without a valid lease, the parties could not pursue their breach of contract claims. The court also determined that the tenant was not obligated to pay the security deposit, while the landlords were not obligated to return it under the lease. The Michigan Landlord-Tenant Act did not govern the deposit under these circumstances.
However, the tenant may still pursue a separate claim for unjust enrichment. The case was sent back to the circuit court for further proceedings.
Why This Ruling Matters to Rental Property Owners
Many Michigan cities and townships require rental licenses, registrations, or certificates of compliance before a property can be leased. Until now, some owners may have viewed failing to obtain or renew a permit primarily as a risk of fines or other municipal penalties.
This ruling highlights a potentially much greater consequence. Without the required permit, an owner may be unable to enforce the lease, pursue unpaid rent through a breach of contract claim, or rely on the lease when addressing security deposit issues.
It’s also worth noting that the landlords’ attorney has publicly criticized the decision, so the legal discussion may not be over.
What Should Rental Property Owners Do Now?
This is a good time for owners to review their rental properties and make sure they are meeting local requirements.
A few important steps:
- Check local requirements. Confirm whether the city or township where each rental property is located requires a rental license, registration, inspection, or certificate of compliance.
- Review expiration dates. Many permits and certificates require periodic renewal. Make sure yours are current.
- Plan ahead for inspections. Schedule required inspections and obtain necessary approvals before signing a new lease or allowing a resident to move in.
- Don’t assume requirements are the same everywhere. Rental regulations can vary significantly from one Michigan community to another.
How Rental Management One Can Help
Understanding local rental requirements is an important part of managing an investment property. Rental Management One, part of the Real Estate One Family of Companies, reviews rental certification requirements when onboarding new properties to help owners understand and address applicable local requirements.
Whether you’re considering renting out a home or already own investment properties, making sure your paperwork and permits are in order is an important step in protecting your investment.
Please note: This article is intended for general informational purposes only and does not constitute legal advice. Property owners should consult a qualified attorney regarding their specific circumstances.
Originally written by Morgan Detvay of Rental Management One. Adapted for the Real Estate One Family of Companies blog.
