Statutory Requirements Governing the Activities of Licensees
The largest area on the Michigan exam — 15 of the 40 items, more than a third of the state content. The bulletin breaks it into eleven lettered subtopics, and almost every one of them has a hard number or a bright line attached to it.
Advertising
A broker's advertising must carry the broker's name or business name, a telephone number or street address, and a statement that the advertiser is a real estate broker (MCL 339.2512e(1)). Since January 1, 2018, advertising that names an associate broker, a salesperson or a cooperating group must also carry the employing broker's telephone number or street address and the employing broker's business name in equal or greater type size than the licensee's name (MCL 339.2512e(3)). A broker or associate broker may advertise property he personally owns in his own name but must affirmatively indicate that he is a licensee (MCL 339.2512e(2)); a salesperson may advertise under her own name only for her principal residence, or, for a rental, only property she owns (MCL 339.2512e(4)). A broker may not advertise under a name other than the one the license is issued in, and must report an assumed name with the application or within 30 days of adopting it, whichever is earlier (MCL 339.2512e(5)). A licensee representing a seller may not advertise the property as "for sale by owner" (MCL 339.2512d(4)).
Commissions and Fees
A salesperson may accept compensation for licensed activity only from the employing broker (MCL 339.2510(1)). A broker may not share a fee with an unlicensed person, and MCL 339.2512(1)(h) says expressly that this includes paying anyone for the name of a potential buyer or seller; the only carve-out in the sentence is the purchase of a commercially prepared list of names. A Michigan broker may pay a commission to a broker licensed in another state if that broker conducts no negotiation here. MCL 339.2512b permits an owner or the owner's agent to give an existing tenant consideration worth one month's rent or less for referring a prospective tenant. An unlicensed person cannot sue in a Michigan court for a commission at all without alleging and proving licensure at the time of performance (MCL 339.2512a).
Disclosure and Conflict of Interest
A licensee selling property she owns discloses her interest and her licensure in writing before an offer is signed (MCL 339.2502b(3)); a licensee acquiring an interest in property discloses her licensure to the owner before the owner is asked to sign the purchase agreement or the option (MCL 339.2516(1)-(2)). R 339.22137 forbids taking a referral fee for placing a loan alongside the commission unless the buyer and seller both consent in advance in writing, and forbids a fee from an abstract, home warranty, title insurance or other settlement service provider unless the client consents in advance in writing — in each case subject to RESPA. R 339.22139(1) forbids misrepresenting material facts, and R 339.22139(2) protects the licensee who discloses a material condition against a claim that the disclosure was disloyal.
Handling of Contracts, Documents and Listings
A signed copy of the offer to purchase goes promptly to the buyer; all terms and conditions must be in the offer; all signed written offers reach the seller within 2 business days of receipt, a business day being any day that is not a Saturday, Sunday or federal holiday; and true executed copies of an acceptance go promptly to both sides (R 339.22132; R 339.22101(1)(b)). After the seller accepts and the agreement is fully executed, a licensee is not disciplined for failing to submit later offers unless the service provision agreement requires it (R 339.22132(5)). Since 2024 PA 122, a right-to-list home sale agreement is void and unenforceable if it is unwritten, unsigned by all owners, longer than 2 years, or missing both an early-termination option capped at the broker's initial consideration plus 6% per annum and a conspicuous first-page explanation of the term and that option (MCL 339.2512g); entering a void one is a disciplinable act (MCL 339.2512(1)(l)).
Handling of Monies and Trust Accounts
The trust or escrow account is a demand account only, and all money received in a fiduciary capacity — escrow funds and earnest money included — goes into a NON-interest-bearing demand trust account (R 339.22134(2)-(3)). Checks must be signed by a broker or associate broker; a cosignatory may only accompany that signature. The account designates the broker as trustee and must allow withdrawal without previous notice (MCL 339.2512(1)(k)(vi)). The broker deposits within 2 banking days after receiving notice that all parties accepted the offer, and delivers within the same 2 banking days to a third-party escrowee named in the purchase agreement (MCL 339.2512(1)(k)(v), (vii)). A salesperson delivers deposits to the broker on receipt. The broker may keep up to $2,000.00 of its own money in each trust account for bank charges and minimum balances, and may not otherwise commingle. Property management money is the exception that proves the rule: those accounts are kept separate from all others and MAY be interest-bearing unless the property management employment contract says otherwise (MCL 339.2512c(2)-(3)). Where buyer and seller both claim a deposit, it stays in trust until a civil action decides it or the parties agree in writing, and the broker may commence an action to interplead it (R 339.22134(9)).
Place of Business and Branch Offices
A broker maintains a place of business in Michigan — a physical location held out to the public (MCL 339.2501(m)) — and obtains a branch office license for every additional one. A branch more than 25 miles from the nearest boundary of the municipality holding the main office must be under the direct supervision of an associate broker who is physically present at that branch on a regular basis during ordinary business hours (MCL 339.2505(3)).
Record Keeping
Trust and escrow records show the date and source of each receipt, the deposit date, the payee, check number, purpose and amount of each disbursement, the current balance of every account, and the receipts and disbursements affecting each single transaction with both parties' names and the property address (R 339.22134(4)-(7); MCL 339.2512(1)(k)(vi)). They are kept not less than 3 years after the date of inception and made available to the department on request. Continuing education evidence is a separate 4-year clock (MCL 339.2504a(3)).
Inducements
No plan or scheme involving a lottery, contest, game, prize or drawing may be used for the sale or promotion of a sale of real estate. A game promotion complying with MCL 750.372a may be used for any purpose other than the direct promotion of a specific piece of real estate (MCL 339.2511).
Dispute Resolution
A LARA complaint and a civil suit are independent tracks. MCL 339.2515(3) says the article does not diminish a party's right to pursue direct and immediate legal or equitable remedies in a court of competent jurisdiction, and MCL 339.2515(2) puts the burden of proof on the department at all times. The board's remedies are the article 6 penalties, restitution included, but restitution rests on proofs made to the hearing examiner in a contested case. Binding arbitration in Michigan real estate law arrives by contract — for instance the paragraph every residential condominium purchase agreement must carry, submitting claims under $2,500.00 to the American Arbitration Association at the purchaser's exclusive option (MCL 559.184(4)(d)).
Stigmatized Property
MCL 339.2518 bars any action against a broker, associate broker or salesperson for failing to disclose that a former occupant has or is suspected of having a disability, that the property was or was suspected to have been the site of a homicide, suicide or other occurrence prohibited by law with no material effect on the property's condition, or any information from the sex offender registry compilation under MCL 28.728(2). The shield covers stigma only. Physical condition is still governed by the Seller Disclosure Act and by R 339.22139.
Closing Responsibilities
At execution of an offer to purchase the licensee must recommend that the purchaser require the seller to provide a fee title policy in the amount of the purchase price, certified to the approximate closing date (MCL 339.2512d(3)(b)). A licensee may not close on terms contrary to the executed purchase agreement without the written approval of buyer and seller (MCL 339.2512d(3)(d)). A broker or associate broker involved at closing must furnish the buyer and seller a signed, complete and detailed closing statement showing each party all receipts and disbursements affecting that party — unless the closing is conducted by a title insurance company or a person designated to act as its agent, licensed or authorized to do business in this state (MCL 339.2512d(3)(e)).
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State-specific details
State exam facts
- State regulator
- Michigan Dept. of Licensing and Regulatory Affairs (LARA)
- Exam vendor
- PSI
- Prelicensing education
- 90 hours of approved broker prelicensure education (in addition to the salesperson's 40)
- Passing score
- 75% (raw score of 90)
- Scored questions
- 115
- Time limit
- 210 minutes
Who regulates real estate brokers in Michigan?
The Michigan Department of Licensing and Regulatory Affairs (LARA), through the Board of Real Estate Brokers and Salespersons, licenses brokers under Article 25 of the Occupational Code (MCL 339.2501 to 339.2518). LARA contracts with PSI to administer the licensing exam. The current administrative rules are R 339.22101 to R 339.22165, effective June 4, 2025; the older rule numbers from R 339.22201 onward have all been rescinded.
What experience do I need before the Michigan broker exam?
MCL 339.2505(7) requires the equivalent of three years of full-time experience in the business of real estate — which is a credit schedule, not a calendar. A licensed salesperson earns one year of credit for each 12-month period in which she closed five or more real estate transactions, so holding a license without closing anything earns no credit. The statute also credits builders, investors (capped at one year), attorneys, licensed appraisers and full-time real estate finance or conveyancing work, and R 339.22115 adds credit for out-of-state licensees and for managing at least 10 Michigan units for three or more years. On top of that, brokers complete 90 clock hours of approved prelicensure classroom courses, at least 9 of them on civil rights and fair housing law, within the 36 months before applying unless they held an active salesperson license through that period.
How is the Michigan broker exam structured?
PSI delivers one integrated exam of 115 scored questions worth 120 points in 210 minutes; passing is 75%, a raw score of 90. There is no separate Michigan state portion — PSI bulletin 837 never uses the phrase — so 40 of the scored items are Michigan law and rules and the other 75 are the percentage-weighted national block. The 40 Michigan items are published as 3 on the duties and powers of the Department and the Board, 4 on licensing requirements, 15 on the statutes governing licensee activities, 5 on contractual relationships, and 13 on additional state topics. (Salespersons sit the same 115 questions for 180 minutes at 70%, a raw score of 80.) Older mirrored copies of the Michigan bulletin from 2016-2017 say 120 questions and only 6 additional-state-topic items; those are out of date.
How much continuing education does a Michigan license need?
Eighteen clock hours per license cycle — and, since 2023 PA 246 took effect on February 13, 2024, at least 2 hours of law, rules and court cases plus at least 1 hour of fair housing in every year of the cycle, with the remaining 9 hours completable at any point. Evidence must be kept for at least four years (MCL 339.2504a; R 339.22161).
Sources: https://test-takers.psiexams.com/api/content/bulletin/837, https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-339-2505, https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-339-2504a, https://ars.apps.lara.state.mi.us/AdminCode/DownloadAdminCodeFile?FileName=R%20339.22101%20to%20R%20339.22667.pdf
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