Law Provides Rental Property Owners More Flexibility When Transferring Ownership
Gov. Gretchen Whitmer recently signed Michigan Senate Bill 16 into law, which reforms the Housing Law of Michigan to provide that transfer of rental property between two entities under common ownership or control is not a change of ownership unless the property was inspected within two years immediately preceding the sale of transfer. The reform allows for more flexibility when transferring property between entities. Prior to the change in the law, Michigan rental properties were subject to numerous inspections when they were transferred from one type of entity to another — even if the owners of both entities were the same people.
What is The Housing Law of Michigan?
The Housing Law of Michigan establishes minimal standards for the physical condition of multi-family rental housing units in cities, villages, and townships with a population of 10,000 or more. The recent amendment to the Housing Law mandates enforcement of these standards and assigns responsibility for enforcement to local governments.
How was the Housing Law of Michigan amended?
The updated law requires that local governments inspect regulated property in a manner that is both appropriate to the needs of the community and determined to best secure compliance with the law. This includes conducting inspections on one or more of the following bases:
- A complaint basis, where property that is the subject of complaint regarding a violation is inspected in a reasonable time.
- An area basis, where all regulated property in a predetermined geographical area is inspected simultaneously or in a short period of time.
- A recurrent violation basis, where property that has a high incidence of recurrent or uncorrected violations is inspected more frequently.
- A compliance basis, where property brought into compliance before expiration of a certificate of compliance or a requested repair order may be issued a certificate of compliance for the maximum renewal period authorized by the local government.
- A percentage basis, where a local government establishes a percentage of units in a multiple dwelling (such as an apartment building) to be inspected to issue a certificate of compliance for the multiple dwelling.
The law states that the maximum period between inspections of a rental property is six years – as long as the property’s most recent inspection found no violations of the law and the property has not changed ownership during a six-year period. Otherwise, the maximum period between inspections is four years.
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