Michigan now bans big institutional investors from buying detached homes — including site condos
Michigan now bans big institutional investors from buying detached homes — including site condos
2026-09-12 · Michigan · Legislation
What happened. Michigan enacted a ban on large institutional investors buying single-family homes. 2026 PA 32, from House Bill 6074 sponsored by Rep. Karl Bohnak (R-109) with Reps. Cavitt, Wortz, Schmaltz, Markkanen and Prestin, was signed and effective 21 July 2026. It is a new standalone act, not an amendment to anything.1
The operative sentence, section 7(1): “a large institutional investor shall not purchase or enter into a contract to directly or indirectly purchase a single-family home in this state.”
Who is covered
A “large institutional investor” is a for-profit entity that meets all three tests in section 3(b):
- it is in the business of investing in, owning, renting, managing or holding single-family homes;
- alone or in concert with others, directly or indirectly, it has investment control of more than 100 single-family homes in the aggregate in this state; and
- it manages or has a net value of $375,000,000 or more at any point in the taxable year of the purchase.
Section 5 defines investment control broadly, reaching ownership or control of more than 25% of any class of equity interests in the owning entity, unless the holder is a passive investor. Government entities are excluded.
The definition that decides whether it reaches your community
Section 3(d): a “single-family home” is “a structure that contains 2 or fewer dwelling units.” Manufactured homes are expressly excluded.
What that means for Michigan associations, unit by unit
The definition is about the structure, not the legal form of ownership. So:
- A detached site condominium unit is covered. One structure, one dwelling unit. Michigan builds a great deal of its detached housing this way, and those projects are in scope.
- A duplex condominium is covered. Two dwelling units in the structure.
- A unit in a stacked or townhouse building of three or more is not. The structure contains more than two dwelling units, so the ban does not reach it.
- A detached home in a conventional HOA subdivision is covered.
That is a sharp line running through Michigan's condominium stock, and it does not correspond to anything in the Condominium Act.
Why this matters where an association's own tools have failed
Investor concentration is the problem Michigan associations have been trying to manage with leasing caps, rights of first refusal and lease-approval clauses — instruments that are hard to draft, hard to amend into an existing declaration, and awkward to enforce against a well-resourced buyer.
PA 32 does something an association cannot: it removes the buyer. Enforcement is by the county prosecutor or the Attorney General, with a civil fine of up to $25,000 per home acquired in violation, deposited in the general fund. No association has to bring the action or fund it.
The exceptions, which are wide
Section 3(a) and section 7(2) carve out a good deal:
- Build-to-rent of newly constructed homes. This is the largest lane left open, and it is precisely the model that produces whole new rental subdivisions.
- Renovate-to-rent, where improvements are not less than 15% of the purchase price.
- Qualifying rent-to-own and homeownership programmes, including one requiring a right of first refusal and a 30-day first look period.
- Mortgage servicer and lender acquisitions following default, which “must be disposed of within a commercially reasonable period.”
- Restructurings of holdings that pre-date the effective date, and MSHDA-approved brownfield or income-qualified housing.
Note what the exceptions do not include: nothing grandfathers a large investor's appetite for existing detached stock, which is the acquisition pattern associations complain about.
What it changes for a board
Very little, and that is the point — but two things are worth doing. First, if your project is detached or duplex and you have been considering a leasing-cap amendment principally to deter institutional buyers, the state has now done part of that work and the amendment fight may not be worth having. Second, understand that the ban reaches purchase, not ownership: an investor already holding units in your community is unaffected, and may still buy through a build-to-rent or renovate-to-rent route.
What to watch next
House Bill 6243, referred to House Regulatory Reform on 9 September 2026, would modify the new ban. Separately, Senate Bills 1125 and 1126 (Sen. Mary Cavanagh, D-6, introduced 29 July 2026) would cap rental property owned by certain business corporations and LLCs under the Business Corporation Act and the LLC Act — a different mechanism aimed at smaller investors than PA 32 reaches. Both are in committee.
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