Zorn’s rental property transfer reform approved by Senate

LANSING, Mich. — The Michigan Senate on Wednesday unanimously approved legislation by Sen. Dale Zorn to allow rental property owners more flexibility when transferring property between entities.

“This reform would stop local governments from requiring unnecessary and costly rental re-inspections simply based on the transfer of a property from one type of entity to another if the owners of both entities are the same people,” said Zorn, R-Ida. “This issue is a form of double dipping and arises when an owner transfers property from one business entity to another or from personal ownership into an LLC, IRA or trust. Properties that are certified and in compliance at the time of these limited types of transfers shouldn’t need to be re-inspected.”

Senate Bill 692 amends the Housing Law of Michigan to add that a transfer of ownership to another person is not a change in ownership if the owner, owners, trustors, grantors, or members of the transferring person are under common control.

Under the bill, a property must have been inspected within two years of it being transferred. Since several municipalities have longer time periods between inspections due to good behavior or inspection capacity, the bill allows for a period set forth by the local municipality if it is longer than two years.

SB 692 clarifies that “person” in the law means an individual or a corporation, limited liability company, partnership, limited partnership, limited liability partnership, limited liability limited partnership, trust, individual retirement account, or other legal person recognized in Michigan.

The bill now heads to the House of Representatives for consideration.