Michigan Real Estate Broker Exam — All Questions

A Michigan buyer signs a purchase agreement for a residential condominium unit and receives the developer's section 84a documents. She may withdraw without cause or penalty within:

• a.3 business days after receiving the documents
• b.15 calendar days after signing the agreement
• c.30 calendar days after the master deed records
• d.9 business days after receiving the documents✓

MCL 559.184(2) gives the purchaser 9 business days from receipt of the documents required by MCL 559.184a to withdraw from a signed purchase agreement without cause and without penalty, provided the withdrawal comes before conveyance of the unit; the count includes the day the documents are received if that day is a business day, and MCL 559.184(4)(b) requires the purchase agreement to recite the right. The 3-business-day figure appears in the same section but measures something else — MCL 559.184(4)(a) requires escrowed funds to be returned to the purchaser within 3 business days after a withdrawal. The right of withdrawal may be waived only in exceptional cases, in writing, by a purchaser who has received all the listed documents and knowingly and voluntarily gives it up under MCL 559.184(5), and the section does not apply to a business condominium unit. Amending the purchase agreement or the condominium documents affords no additional time to withdraw under MCL 559.184a(2).

A Michigan co-owner wants to lease her condominium unit. Before presenting a lease to a prospective tenant she must notify the association of co-owners in writing at least:

• a.5 days before, with the tenant's credit report
• b.20 days before, with the association's approval
• c.10 days before, with a copy of the exact lease✓
• d.30 days before, with a copy of the master deed

MCL 559.212(2) requires a co-owner, including the developer, who wishes to rent or lease a unit to disclose that fact in writing to the association of co-owners at least 10 days before presenting a lease or otherwise agreeing to grant possession, and at the same time to supply the association with a copy of the exact lease for review for compliance with the condominium documents; a copy of the executed lease must follow, and where no lease is used the co-owner must supply the occupants' names and address, the rent and its due dates, and the term. Subsection (3) requires tenants to comply with the condominium documents and requires every lease to say so. If the association concludes a tenant has not complied, subsection (4) has it notify the co-owner by certified mail and allow 15 days to investigate and cure before it may sue for eviction and damages. Where the co-owner is in arrears on assessments, subsection (5) lets the association direct the tenant to pay rent to it instead.

The Michigan State Housing Development Authority, created by 1966 PA 346, matters to a broker chiefly because it:

• a.Finances housing for low and moderate income buyers✓
• b.Issues the broker and salesperson licenses in Michigan
• c.Holds the escrow accounts of Michigan brokerage firms
• d.Adopts the zoning ordinances of Michigan municipalities

The State Housing Development Authority Act of 1966, MCL 125.1401 and following, opens by finding a seriously inadequate supply of and a pressing need for safe and sanitary dwelling accommodations within the financial means of low income or moderate income families and persons, and it declares it a valid public purpose to finance the acquisition, rehabilitation and construction of that housing and to make financing for the purchase of existing housing available at affordable interest rates. That is where a broker meets MSHDA in practice, in the down-payment assistance and mortgage products a qualifying buyer may use. Licensing and discipline belong to LARA under the Occupational Code; a client's escrow money stays in the broker's own non-interest-bearing demand trust account under R 339.22134(3); and zoning is a function of local government, not of a state housing authority.

Two competing Michigan brokerages agree over lunch to quote the same commission rate. Under the Michigan Antitrust Reform Act, 1984 PA 274, that agreement is:

• a.Lawful where each brokerage may still discount it
• b.Unlawful as a conspiracy in restraint of trade✓
• c.Lawful because commission rates are negotiable
• d.Unlawful only if a consumer proves actual harm

MCL 445.772 provides that a contract, combination or conspiracy between 2 or more persons in restraint of, or to monopolize, trade or commerce in a relevant market is unlawful, and MCL 445.773 separately reaches the establishment, maintenance, use or attempted establishment of a monopoly for the purpose of excluding or limiting competition or controlling, fixing or maintaining prices. An agreement among competitors about what to charge is the paradigm case, and the offense is complete on the agreement itself — a retained freedom to discount does not undo it, and no showing of actual consumer harm is required to make it unlawful. Commission rates are indeed negotiable between a broker and a client, which is exactly what an agreement among brokerages takes away from the client. A licensee who does this is also exposed to discipline under MCL 339.604 for violating a rule of conduct of the occupation.

A Michigan house sits within one mile of a working farm. Under MCL 286.473c the seller's one-mile farm notice is:

• a.Mandatory, and must be recorded with the deed at closing
• b.Mandatory, and must be signed by the neighboring farmer
• c.Voluntary, and bars any later nuisance suit by the buyer
• d.Voluntary, while the disclosure statement asks about farms✓

MCL 286.473c(1) says a seller of real property located within 1 mile of the property boundary of a farm or farm operation "may voluntarily make available to the buyer" the statement that generally accepted agricultural and management practices may generate usual and ordinary noise, dust, odors and other associated conditions, and that those practices are protected by the Michigan Right to Farm Act. It is an option, which is a genuine trap: PSI's outline heads this topic "Michigan Right to Farm Act (Seller's Disclosure Required)" and study material often reads that heading as making the one-mile notice compulsory. What is compulsory is the Seller's Disclosure Statement itself, whose "Other Items" list asks the seller whether there is a farm or farm operation in the vicinity, MCL 565.957. Giving the notice extinguishes no claims; what protects the farm is MCL 286.473, and MCL 286.473b lets a farm that prevails in a nuisance action recover its actual costs and reasonable attorney fees. Note that MCL 286.473c(2) still cross-refers to the Land Sales Act at MCL 565.808, an act repealed in full by 2010 PA 49.

A Michigan homeowner sells her own house on land contract and finances it herself. Under Regulation Z as amended by Dodd-Frank, a natural person escapes the definition of loan originator if, among other conditions, she finances the sale of:

• a.Any number of properties she has owned for 5 years
• b.Up to five properties in any single calendar year
• c.Only properties she built herself for resale at retail
• d.Only one property she owns in any 12-month period✓

12 CFR 1026.36(a)(5) excludes a natural person, estate or trust that provides seller financing for the sale of only one property in any 12-month period, owned by that person and serving as security for the financing, that has not built or acted as contractor for a residence on the property in the ordinary course of business, and whose financing carries no negative amortization and a fixed rate or a rate first adjustable after five or more years with reasonable caps. 12 CFR 1026.36(a)(4) is the wider exclusion, reaching three or fewer properties in any 12-month period, and it imposes two conditions the one-property exclusion does not: the financing must be fully amortizing, and the seller must determine in good faith that the consumer has a reasonable ability to repay. Neither exclusion is stated as a five-property or five-year test, and neither is available to a person who built the residence in the ordinary course of business. Michigan land contracts remain creatures of state law, but a seller-financed residential deal must now clear this federal screen too.