On July 21, Michigan’s governor signed into law House Bill 6074, prohibiting large institutional investors from owning single-family homes in the state. The new law, which took immediate effect upon signing, defines a “large institutional investor” as a for-profit entity that invests in, owns, rents, manages, or holds single-family homes, that directly or indirectly controls more than 100 single-family homes in the state as of the law’s effective date, and that manages or has a net value of $375 million or more at any point during the relevant tax year. The law carves out several categories of “excepted purchases” that fall outside the prohibition, including homes purchased under build-to-rent programs, renovate-to-rent programs that substantially rehabilitate homes failing to meet local building codes, homeownership programs that meet specified renter-protection and reporting requirements, and purchases by mortgage servicers or lenders following a foreclosure or deed-in-lieu of foreclosure that are disposed of within a commercially reasonable period.

The law also exempts purchases connected to a restructuring of previously owned homes, purchases made under a state-approved brownfield plan, and certain income-qualified rental housing approved by the state housing authority. A large institutional investor that violates the law is subject to a civil fine of up to $25,000 per single-family home acquired in violation, which the county prosecutor where the property is located or the state attorney general may sue to collect. The governor’s office said the law mirrors recently enacted federal legislation (previously covered by InfoBytes here) but sets a lower ownership cap of 100 single-family homes, instead of the federal law’s 350 single-family home cap.