Species occurrence patterns, and related processes of persistence, colonization and turnover, are increasingly being used to infer habitat suitability, predict species distributions, and measure biodiversity potential. The majority of these studies do not account for observational error in their analyses despite growing evidence suggesting that the sampling process can significantly influence species detection and subsequently, estimates of occurrence. We examined the potential biases of species occurrence patterns that can result from differences in detectability across species and habitat types using hierarchical multispecies occupancy models applied to a tropical bird community in an agricultural fragmented landscape. Our results suggest that detection varies widely among species and habitat types. Not incorporating detectability severely biased occupancy dynamics for many species by overestimating turnover rates, producing misleading patterns of persistence and colonization of agricultural habitats, and misclassifying species into ecological categories (i.e., forest specialists and generalists). This is of serious concern, given that most research on the ability of agricultural lands to maintain current levels of biodiversity by and large does not correct for differences in detectability. We strongly urge researchers to apply an inferential framework which explicitly account for differences in detectability to fully characterize species-habitat relationships, correctly guide biodiversity conservation in human-modified landscapes, and generate more accurate predictions of species responses to future changes in environmental conditions.