Michigan Commercial Property Laws: A Landlord's Overview
Understand the unrestrictive regulatory landscape of Michigan commercial real estate and the powerful role of freedom of contract in commercial leasing.
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Unlike the residential sector, which is bound by the strict constraints of the Truth in Renting Act and the Landlord-Tenant Relationships Act, commercial property management in Michigan operates almost entirely on the doctrine of "Freedom of Contract."
In Michigan, there is very little statutory consumer protection for a business signing a commercial lease. The courts generally assume that business entities are legally sophisticated enough to negotiate their own protections.
The Power of the Lease Agreement
Because statutory protections are minimal, the written commercial lease dictates everything. Whatever the landlord and commercial tenant negotiate and sign is generally legally binding.
Unlike residential tenants, commercial tenants in Michigan cannot rely on an "implied warranty of habitability" to force a landlord to fix a leaky roof. If the commercial lease states that the tenant is 100% responsible for all structural repairs through a Triple Net (NNN) lease structure, Michigan courts will enforce that clause mercilessly.
If the lease states that late rent accrues 18% default interest compounded monthly, a commercial tenant must pay it. The state will not intervene to protect them from a harsh agreement.
Key Differences from Residential Law
"Self-Help" Evictions are Generally Banned
While Michigan allows great flexibility in drafting a commercial lease, landlords cannot bypass the state court system when attempting to evict a commercial tenant.
Commercial evictions, much like residential evictions, must follow the Summary Proceedings Act. A commercial landlord cannot simply wait until Friday night and change the locks on a tenant's warehouse because they are two months late on rent. The landlord must serve the proper statutory Notice to Quit, file a lawsuit in District Court, obtain a Judgment of Possession, and utilize a court officer to physically execute the lock-out.
Attempting an illegal "self-help" lock-out can instantly expose a commercial landlord to massive "constructive eviction" damages, allowing the commercial tenant to stop paying rent completely and sue for lost business revenue.
Explore more Michigan commercial compliance topics:
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