Illegal Michigan Cottage Rental?

I saw a ad on craigslist for a cottage:

Notice how he states it can fit 4 people. It was me and my 2 family members and when we got there we were shocked. He rented out a CLOSET next to the big house in the picture. This place is the size of a large bathroom! In order to extend the futon we had to take the little table outside to close the door and go to the "bathroom" aka a little 3 SQ FT room.

We showed other people our "cottage" and they said that this cannot be legal. Where can I find out whats legal to rent out. The place was about 12-15 SQ FT in total and he said 4 people can live there! I want to report this guy! He wont give me my money back!

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Ontario Cottage Rentals