Michigan Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

Which body licenses Michigan real estate brokers and may discipline a broker's license?

• a.The Department of Licensing and Regulatory Affairs (LARA)✓
• b.The Michigan Department of Treasury
• c.The county register of deeds where the broker's office sits
• d.The Michigan Association of Realtors, through its ethics panels

LARA administers Article 25 of the Occupational Code, MCL 339.2501 to 339.2518, and acts through the Board of Real Estate Brokers and Salespersons created by MCL 339.2502; PSI's Michigan bulletin says in terms that on this examination "Department" means LARA and "Board" means that board. Discipline runs from censure through suspension and revocation under MCL 339.602. Treasury is the arm of state government that collects revenue, not the one that grants occupational licenses. The register of deeds is a county recording office that takes in deeds and mortgages; it keeps a record of instruments, not a roster of licensees. A trade association may discipline a member's standing in the association, but it cannot issue, deny, or revoke a state license.

A buyer complains to LARA about a Michigan broker's conduct. Under MCL 339.2512(2), a complaint seeking a penalty must be filed no later than:

• a.6 months after the alleged violation, with no other measuring date
• b.18 months after the later of the violation or the completed transaction✓
• c.3 years after the closing, regardless of when the violation occurred
• d.5 years after the broker's license is next renewed by the department

MCL 339.2512(2) requires a complaint that seeks a penalty under article 5 to be filed not later than 18 months after whichever of two dates occurs later: the date of the alleged violation, or, where the violation occurs in connection with a real estate transaction, the date the transaction is completed. Both prongs matter, because a violation early in a long escrow is measured from the closing rather than from the act. A six-month window is shorter than the statute allows and would cut off complaints the department can still hear. Three years from the closing and five years from a renewal are periods the section does not use at all; the renewal cycle has no bearing on the complaint clock. Once a complaint is lodged, MCL 339.502 requires the department to begin investigating immediately and to send the complainant a written acknowledgment within 15 days.

After a hearing, the Board of Real Estate Brokers and Salespersons assesses penalties under article 6 of the Occupational Code. The largest administrative fine that may be imposed on a licensee is:

• a.$500.00
• b.$2,500.00
• c.$10,000.00✓
• d.$50,000.00

MCL 339.602(e) caps the administrative fine payable to the department at $10,000.00 for a person licensed or registered under the act. It sits alongside the other article 6 penalties: a limitation on the license, suspension, denial, revocation, censure, probation, and restitution based on proofs made to the hearing examiner in a contested case. The $500.00 figure is real but belongs elsewhere — MCL 339.601(4) makes a first offense of practicing without a license a misdemeanor punishable by a fine of not more than $500.00 or 90 days, rising to $1,000.00 or a year on a second offense. Neither $2,500.00 nor $50,000.00 appears in article 6. Procedurally, MCL 339.514(1) gives the board 60 days after it receives the hearing report to determine the penalty, and MCL 339.514(3) bars a member who investigated the complaint or attended the informal conference from taking part in that determination.

An unlicensed Michigan property owner sells houses she owns. Under MCL 339.2502b she is selling real estate as a principal vocation, and so needs a broker's license, if she:

• a.Owns more than 5 separate parcels of land in a single county
• b.Advertises a property in more than 5 different publications
• c.Engages in more than 5 real estate sales in any 12-month period✓
• d.Holds each property fewer than 5 years before reselling it

MCL 339.2502b(1) says that unless the owner engages the services of a real estate broker, an owner must be licensed as a broker to sell her own real estate as a principal vocation, and it then defines principal vocation four ways: more than 5 real estate sales in any 12-month period; representing to the public that she is principally engaged in the sale of real estate; devoting over 50% of her working time, or more than 15 hours per week in any 6-month period, to the sale of real estate; and, if she is a licensed salesperson, any sale other than her principal residence. The count is of sales inside a rolling 12 months, so how many parcels she owns, how widely she advertises, and how long she holds each house are all beside the point. MCL 339.2503 sets out the genuine exemptions, including an attorney-at-law rendering services as an attorney-at-law, a receiver, a trustee in bankruptcy, an administrator or executor, and a person selling under order of a court.

Under the Michigan Occupational Code, an "associate broker" is:

• a.An individual who meets broker requirements but is licensed to a broker✓
• b.An entry-level licensee ranked below the real estate salesperson tier
• c.A business entity that holds a real estate broker's license itself
• d.An unlicensed assistant working under a licensed salesperson's direction

MCL 339.2501(a) defines an associate broker as an individual who meets the requirements for licensure as a real estate broker and who is licensed under MCL 339.2505 to provide brokerage services as an employee or independent contractor of a real estate broker. That places the license above the salesperson tier, not below it, so the entry-level description inverts the ladder. A broker's license may indeed issue to a partnership, corporation, limited liability company or other entity under MCL 339.2508(1), but the entity is then the broker; each control person designated as a principal must separately obtain an associate broker's license under MCL 339.2508(2), and only individuals may hold one. MCL 339.2509(2) adds that a person may hold only one associate broker's license as a nonprincipal. An unlicensed assistant holds no license at all and may not perform regulated acts.

Michigan requires a broker applicant to show the equivalent of 3 years of full-time experience in the business of real estate. Under MCL 339.2505(7) a licensed salesperson earns one year of that credit for each 12-month period in which the salesperson:

• a.Held an active Michigan salesperson license
• b.Completed 18 clock hours of continuing education
• c.Closed 5 or more real estate transactions✓
• d.Earned at least $25,000 in gross commissions

MCL 339.2505(7)(b)(i) grants a real estate salesperson one year of credit for each 12-month period of licensure in which he or she closed 5 or more real estate transactions. Bare licensure earns nothing, which is why the familiar shorthand "three years as a salesperson" is wrong: a salesperson who closes no transactions accumulates no credit however long the license is held. The same subsection credits other backgrounds — a builder who built and personally sold or leased at least 5 units in a year, an investor at 6 months per 5 personally negotiated transactions capped at 1 year, an attorney who handled at least 6 real estate transactions in a year, a licensed appraiser working full time, and full-time work in acquisition, financing or conveyance roles. R 339.22115 adds one year for an out-of-state licensee closing 5 or more transactions in a year and one year for managing not less than 10 Michigan units for 3 or more years. Continuing education hours and commission dollars appear nowhere in the credit schedule.

A Michigan licensee is in a 3-year license cycle. R 339.22161 and MCL 339.2504a require that in EACH year of the cycle the licensee complete at least:

• a.6 hours of any approved continuing education topic
• b.3 hours of law courses and 3 hours of fair housing
• c.1 hour of law courses and 2 hours of agency practice
• d.2 hours of law courses and 1 hour of fair housing✓

R 339.22161(1) sets 18 hours of continuing education per license cycle and then fixes an annual floor inside it: a minimum of 2 hours each year on statutes, rules and court cases, for 6 or more hours per cycle, and a minimum of 1 hour each year on compliance with local, state or federal fair housing laws, for 3 or more hours per cycle. The remaining 9 hours may be completed at any point in the cycle. The annual floor is the change, added to MCL 339.2504a(2)(a) by 2023 PA 246, effective February 13, 2024; the 18-hour cycle total and the 90-hour broker and 40-hour salesperson prelicensure requirements are longstanding and did not change. Six hours a year is only the arithmetic the department uses to size a cycle, years multiplied by 6 under MCL 339.2504a(2)(f)(i), not a subject requirement. Evidence of completion must be retained for at least 4 years under MCL 339.2504a(3).

A Michigan salesperson's name appears on a yard sign and a web listing. Since January 1, 2018 that advertising must also carry the employing broker's telephone number or street address, plus the broker's business name in:

• a.Type of equal or greater size than the salesperson's name✓
• b.Type at least half the size of the salesperson's name
• c.Type of any size, provided it is on the same page
• d.Bold 12-point type placed above the salesperson's name

MCL 339.2512e(3) requires that advertising displayed or published on or after January 1, 2018 which includes the name of an associate broker, a salesperson, or a cooperating group employed by the same broker 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 name of the associate broker, salesperson, or cooperating group." A half-size rule, an any-size rule and a fixed 12-point rule are all inventions; the statute states a relative size, so the broker's identity can never be the fine print. MCL 339.2512e(1) governs the broker's own advertising, which must give the broker's name or business name, a telephone number or street address, and state that the advertiser is a real estate broker. MCL 339.2512e(4) limits a salesperson advertising under her own name to her principal residence when selling, or to property she owns when renting, and MCL 339.2512e(5) requires notice of an assumed name to the department with the application or within 30 days of adopting it, whichever is earlier.

A Michigan broker wants to pay $500 to an unlicensed neighbor who supplied the name of a homeowner thinking of selling. Under MCL 339.2512(1)(h) the payment is:

• a.Permitted, because supplying a name is not a licensed activity
• b.Permitted if the seller consents to it in writing at the closing
• c.Prohibited unless the neighbor registers the referral with LARA
• d.Prohibited, because it is a fee shared with an unlicensed person✓

MCL 339.2512(1)(h) makes it a disciplinable act to share or pay a fee, commission or other valuable consideration to a person not licensed under the article, and it says expressly that this "includ[es] payment to any person that provides the name of, or any other information regarding, a potential seller or purchaser of real estate." So dressing the payment up as a referral fee does not save it, and neither a seller's written consent nor a filing with the department can license an unlicensed payee. The one carve-out in the same sentence is payment for the purchase of a commercially prepared list of names; the sentence also lets a Michigan broker pay a commission to a broker licensed in another state provided that nonresident broker conducts no negotiation in this state. MCL 339.2512b is a separate and narrow allowance in the rental context: an owner or the owner's authorized agent may give an existing tenant consideration worth one month's rent or less for referring a prospective tenant.

An unlicensed person negotiated a Michigan sale and now sues the seller for the agreed commission. Under MCL 339.2512a the action fails because the plaintiff cannot:

• a.Show that the seller signed a written listing agreement
• b.Allege and prove licensure at the time of the performance✓
• c.Establish that the fee charged was commercially reasonable
• d.Prove the buyer was procured ready, willing and able

MCL 339.2512a bars a person engaged in, or acting in the capacity of, a person required to be licensed from maintaining an action in a court of this state for the collection of compensation "without alleging and proving that the person was licensed under this article at the time of the performance of the act or contract." The bar goes to status, not to the merits, so it closes the courthouse door before any of the usual commission arguments is reached. A signed listing agreement, a textbook procuring-cause showing and a demonstrably reasonable fee are all irrelevant if the pleading cannot allege licensure at the time of performance. The unlicensed activity is separately a misdemeanor under MCL 339.601(4), and a licensee who aids or abets the unlicensed practice of an occupation is subject to penalty under MCL 339.604(l).

A Michigan licensee lists and sells a rental house she owns herself. She must reveal her ownership interest and her licensure to the purchaser:

• a.In writing, before an offer to purchase is signed✓
• b.Orally, at the first showing of the property
• c.In writing, at or before the closing appointment
• d.Orally, before the deed is delivered to the buyer

MCL 339.2502b(3) requires a licensee selling property that the licensee owns or has an interest in to reveal the facts of that ownership or interest and the licensee's licensure to the purchaser, in writing, before an offer to purchase is signed, and to provide written proof of the disclosure to the department on request. The mirror provision runs the other way in MCL 339.2516(1): when a licensee buys or otherwise acquires an interest in real property, the licensee must disclose the licensure to the owner before the owner is asked to sign the purchase agreement, and MCL 339.2516(2) applies the same rule where the licensee takes an option from an owner who requested the licensee's services. Neither section is satisfied orally, and neither tolerates waiting for the closing; the disclosure exists so the other side knows who it is dealing with before it commits itself.

A Michigan licensee receives a signed written offer to purchase on a Thursday. Under R 339.22132(3) the offer must be delivered to the seller within:

• a.24 hours of receipt, weekends excluded
• b.2 business days after receipt of the offer✓
• c.5 calendar days after receipt of the offer
• d.3 business days, or sooner if the offer expires

R 339.22132(3) requires a licensee to deliver all signed, written offers to purchase to the seller within 2 business days after receipt, and R 339.22101(1)(b) defines a business day as a day that is not a Saturday, Sunday or federal holiday, so an offer taken in on Thursday runs to Monday. Delivery may be in person, by mail, or by electronic communication under the Uniform Electronic Transactions Act, 2000 PA 305 — but electronic records or digital signatures require the parties' prior agreement. The neighboring subrules complete the picture: a signed copy of the offer goes promptly to the buyer, all terms and conditions of the transaction must be included in the offer, and true executed copies of an acceptance go promptly to both purchaser and seller. Once the seller has accepted and the sales agreement is fully executed, R 339.22132(5) protects a licensee who does not submit later offers, unless the service provision agreement requires that subsequent offers be presented.

Under MCL 339.2512g, added by 2024 PA 122, a right-to-list home sale agreement is void and unenforceable if it:

• a.Is recorded against the residential property
• b.Runs for a period of more than 2 years✓
• c.Names a supervisory broker who is not a principal
• d.Pays the owner more than 6% of the sale price

MCL 339.2512g(1) voids a right-to-list home sale agreement on any of four grounds: it is not in writing; it is not signed by all persons that have an ownership interest in the residential real estate; it is for a period of more than 2 years; or it omits either an option for the owner to terminate early for consideration no greater than the initial consideration the broker paid the owner plus interest of 6% per annum, or a conspicuous statement on the first page of the term and of that early-termination option. The 6% is the interest rate on the broker's own money, not a share of the sale price, and recording has nothing to do with validity. A supervisory broker is a designated-agency concept under MCL 339.2517, not a term of these agreements. MCL 339.2501(w) defines the agreement as one obligating the owner to list at a future date for consideration and excludes service provision agreements from it, and MCL 339.2512(1)(l) makes entering a void one a disciplinable act.

Earnest money that a Michigan broker holds for others must be deposited in a trust or escrow account that is:

• a.A non-interest-bearing demand account✓
• b.An interest-bearing account for the buyer
• c.A money-market account in the broker's name
• d.A 90-day certificate of deposit held to closing

R 339.22134(2) says a trust or escrow account must be maintained in a demand account only, and R 339.22134(3) requires the broker to deposit all money received in a fiduciary capacity, including escrow funds and earnest money, in a non-interest-bearing demand trust account. Checks drawn on it must be signed by a broker or associate broker, and a cosignatory may be added only alongside that signature. MCL 339.2512(1)(k)(vi) requires the account to designate the broker as trustee and to allow withdrawal without previous notice, which rules out a time deposit. Property management money is the deliberate exception: MCL 339.2512c(3) allows a property management account to be interest-bearing unless the property management employment contract says otherwise, and MCL 339.2512c(2) requires those accounts to be kept separate from all others. A broker may keep up to $2,000.00 of its own money in each trust account to cover service charges and minimum balances under MCL 339.2512(1)(k)(iv), and no more.

All parties accept an offer and the Michigan broker is notified. The broker must deposit the earnest money into the trust account no later than:

• a.2 banking days after notice of the acceptance✓
• b.The next business day after the offer is written
• c.5 banking days after the buyer's check clears
• d.The date of closing, or of an earlier default

MCL 339.2512(1)(k)(v) starts the clock when the broker "has received notice that an offer to purchase is accepted by all parties" and allows not more than 2 banking days from that point to deposit money belonging to others into a separate custodial trust or escrow account with a bank, savings and loan association, credit union or recognized depository. It does not run from the writing of the offer, from a check clearing, or from the closing. The same 2-banking-day limit appears in subparagraph (vii) for the case where the purchase agreement names an escrowee other than the broker: the licensee in possession must cause the deposit to be delivered to that named escrowee. Note that "banking days" is the statute's unit here, distinct from the "business day" the administrative rules use for offer delivery. A salesperson has no holding discretion at all; MCL 339.2512(1)(k)(ii) requires delivery to the broker on receipt.

A Michigan sale collapses and buyer and seller each claim the earnest money the broker holds. Under R 339.22134(9) the broker must:

• a.Keep it in trust pending a court ruling or written agreement✓
• b.Split it evenly and account to both sides within 30 days
• c.Release the deposit to the party the purchase agreement favors
• d.Forward it to the department to hold until the dispute ends

R 339.22134(9) provides that any deposit in the broker's trust account claimed by both the buyer and the seller "shall remain in the broker's trust account until a civil action has determined to whom the deposit shall be paid, or until the buyer and seller have agreed, in writing, to the disposition of the deposit," and the same subrule expressly allows the broker to commence a civil action to interplead the deposit with the proper court. Reading the purchase agreement and paying whichever party the broker believes is right is precisely the judgment the rule removes from the broker. An even split is a disposition neither party agreed to and no court ordered. The department licenses and disciplines; it is not a stakeholder and holds no disputed deposits. In the ordinary case, the same subrule requires disbursement at consummation or termination in accordance with the agreement the parties signed.

A Michigan broker opens a branch office 40 miles from the nearest boundary of the municipality holding its main office. That branch must be:

• a.Staffed by at least two full-time licensed salespersons
• b.Registered with the county register of deeds office
• c.Under the direct supervision of an associate broker✓
• d.Limited to property management and leasing activity

MCL 339.2505(3) requires a real estate broker to maintain a place of business in this state and to obtain a branch office license for each additional place of business; where a branch office is located more than 25 miles from the nearest boundary of the municipality in which the main office sits, the broker must ensure the branch is under the direct supervision of an associate broker. The subsection defines direct supervision as an associate broker being physically present at the branch on a regular basis to supervise and manage the business during ordinary business hours, so it is a staffing duty rather than a paperwork one. "Place of business" is defined in MCL 339.2501(m) as a physical location the broker holds out to the public as a place where clients and customers may do business with a licensee. Recording with a county office, minimum headcounts and restrictions on the activities a branch may conduct form no part of the requirement.

Michigan trust or escrow account records must be kept for a period of not less than:

• a.1 year after the transaction closes
• b.5 years after the license is renewed
• c.7 years after the account is closed
• d.3 years after the records' inception✓

R 339.22134(8) fixes the retention period for all trust or escrow account records at not less than 3 years after the date of inception of the records — a date tied to the records themselves, not to a closing, a renewal or the eventual closing of the account. R 339.22134(6) requires the records to reflect the current balance of each account and to be made available to the department on request, and R 339.22134(4), (5) and (7) set out what each receipt and disbursement entry must show, down to the check number, the payee and the property address. MCL 339.2512(1)(k)(vi) adds that the records must show clearly for whose account money is deposited and to whom it belongs, and makes them subject to inspection by the department. The continuing-education retention period is a different clock: 4 years under MCL 339.2504a(3).

MCL 339.2511 tells a Michigan licensee that a lottery, contest, game, prize or drawing may NOT be used to:

• a.Recruit salespersons to the brokerage's own office
• b.Attract attendance at a continuing education seminar
• c.Raise money for a charity named in the office's ads
• d.Promote the sale of a specific piece of real estate✓

MCL 339.2511 forbids a plan or scheme involving a lottery, contest, game, prize or drawing to be used by a real estate broker or salesperson "for the sale or promotion of a sale of real estate." It then carves out a game promotion as defined in and complying with section 372a of the Michigan penal code, MCL 750.372a, which a licensee may use "for any purpose other than the direct promotion of a specific piece of real estate." The line the statute draws is therefore the specific property: recruiting licensees, supporting a charity and filling a classroom all sit outside it, while a drawing run to move a listing sits inside it. Inducements aimed at unlicensed people who feed the brokerage names run into a different prohibition altogether, the fee-sharing bar in MCL 339.2512(1)(h).

A Michigan seller files a LARA complaint against a broker and is told the matter is now in the agency's hands. Under MCL 339.2515(3) the seller may still:

• a.Demand that the board award her money damages
• b.Pursue direct legal or equitable remedies in court✓
• c.Compel the department to prove her private claim
• d.Require the broker to submit to binding arbitration

MCL 339.2515(3) provides that the article "shall not diminish the right of a party to pursue and utilize direct and immediate legal or equitable remedies in a court of competent jurisdiction." The disciplinary track and the civil track run in parallel, and neither waits on the other. What the complainant cannot do is turn the board into her civil court: the board assesses the article 6 penalties under MCL 339.602, and although restitution is among them it rests on proofs submitted to and findings made by the hearing examiner in a contested case, not on a complainant's demand. Nothing in the article lets a party impose arbitration on a broker who never agreed to it — binding arbitration in Michigan real estate law appears by contract, as in the small-claim arbitration paragraph every residential condominium purchase agreement must carry under MCL 559.184(4)(d). MCL 339.2515(2) puts the burden of proof on the department at all times, which is a different thing from the department litigating a private claim.

MCL 339.2518 bars an action against a Michigan licensee for failing to disclose that:

• a.The roof of the house has a known active leak
• b.The property was the site of a prior homicide✓
• c.The seller has received a higher competing offer
• d.The lot lies partly within a mapped flood plain

MCL 339.2518 shields a real estate broker, associate broker or salesperson in three defined situations: failure to disclose that a former occupant has or is suspected of having a disability, as that term is drawn from the federal Fair Housing Act; failure to disclose that the property was or was suspected to have been the site of a homicide, suicide or other occurrence prohibited by law which had no material effect on the condition of the property; and failure to disclose information from the sex offender registry compilation made available under MCL 28.728(2). The shield covers stigma, not condition. A known active roof leak is a material fact the licensee may not misrepresent under R 339.22139(1) and one the seller is asked about directly on the Seller's Disclosure Statement; R 339.22139(2) goes further and protects a licensee who does disclose a material condition against a client's claim that the disclosure was disloyal. Competing offers and flood-plain mapping fall outside section 2518 as well.

A Michigan broker involved at a closing must furnish the buyer and seller a signed, complete and detailed closing statement, except where the closing is conducted by:

• a.The listing broker's own in-house closing department
• b.An attorney retained by the buyer for the transaction
• c.A federally chartered bank funding the buyer's loan
• d.A title insurance company or its designated agent✓

MCL 339.2512d(3)(e) requires a real estate broker or associate broker involved at the closing of a real estate or business opportunity transaction to furnish, or cause to be furnished, to the buyer and seller a complete and detailed closing statement signed by that broker showing each party all receipts and disbursements affecting that party — and then provides that the subdivision "does not apply if the closing is conducted by a title insurance company, or a person designated to act as the agent of a title insurance company, that is licensed or authorized to do business in this state." That is the only closing agent named. A lender at the table, a buyer's attorney and the brokerage's own staff all leave the broker's duty intact. Two related closing duties sit in the same subsection: at execution of an offer to purchase the licensee must recommend that the purchaser require a fee title policy in the amount of the purchase price, and under MCL 339.2512d(3)(d) a licensee may not close on terms contrary to the executed purchase agreement without the written approval of buyer and seller.

Michigan's written disclosure of the types of agency relationships must reach a potential buyer or seller:

• a.Before that person discloses confidential information✓
• b.Within 3 days after the first property showing
• c.At the time an offer to purchase is presented
• d.Before the closing statement is prepared for signature

MCL 339.2517(1) requires a licensee to disclose all types of agency relationships available and the duties each creates "before the disclosure by the potential buyer or seller to the licensee of any confidential information specific to that potential buyer or seller." MCL 339.2517(3) requires the disclosure to be in writing, to be provided to the client, and to conform substantially to the statutory form, which itself recites that the form was provided before the disclosure of any confidential information. The whole point of the trigger is that nobody negotiates or confides before knowing who represents whom, so a deadline tied to a showing, to the presentation of an offer or to the closing paperwork arrives too late to serve it. Failing to provide the disclosure is a disciplinable act under MCL 339.2512(1)(b), and giving the disclosure does not by itself create an agency relationship.

Two salespersons in the same Michigan brokerage act as designated agents for the buyer and for the seller in one transaction. Under MCL 339.2517(7) and (8):

• a.Both designated agents become dual agents of the two parties
• b.The brokerage must withdraw from one side of the transaction
• c.The broker and supervisory brokers are consensual dual agents✓
• d.The designated agency agreements are void as a conflict of law

MCL 339.2517(8) states that two designated agents who are affiliated licensees may each represent a different party in the same transaction and "shall not be considered dual agents" — which is why designated agency is the alternative to dual agency rather than the mechanism of it. What MCL 339.2517(7) does is move the dual-agency status upward: where designated agents who are affiliated licensees represent different parties in the same transaction, the broker and all supervisory brokers are considered disclosed consensual dual agents for that transaction, and the designated agents must notify their clients that their broker represents both buyer and seller before an offer to purchase is made or presented. The designated agent's knowledge of a client's confidential information is not imputed to affiliated licensees who do not represent that client, and under MCL 339.2517(9) the designated agent may share it only with a supervisory broker, for the client's benefit. Nothing requires the firm to withdraw, and MCL 339.2517(10) lets a listing or buyer's agency agreement be amended in writing to create designated agency or change supervisory brokers at any time.

In Michigan a licensee acting as a "transaction coordinator" is one who:

• a.Represents whichever party first signs a written agreement
• b.Coordinates the closing on behalf of the title company
• c.Is not acting as the agent of either the buyer or seller✓
• d.Supervises the affiliated licensees on both sides of a deal

MCL 339.2517(11)(k) defines a transaction coordinator as "a licensee who is not acting as the agent of either the buyer or the seller," and MCL 339.2517(5) permits a licensee to act in that role upon proper notice to all parties to the real estate transaction. The statutory agency disclosure form lists it alongside seller's agent, buyer's agent and dual agent precisely so that a consumer can see on the page that nobody is representing them. It is not a status that attaches to whoever signs an agreement first, it is not the title company's closing function, and it is not a supervisory post — supervisory brokers belong to designated agency and are defined separately in MCL 339.2517(11)(j) as associate brokers designated in a written agency agreement to act in a supervisory role.

A Michigan associate broker signs an independent contractor agreement with her employing broker. As a result:

• a.She may hold client deposits in her own trust account
• b.She may be paid a commission directly by the seller
• c.The broker still must supervise her regulated activity✓
• d.The broker may waive its review of her advertising

MCL 339.2501(g) says in terms that the existence of an independent contractor relationship "does not relieve the real estate broker of the responsibility to supervise acts of the licensee that are regulated under this article," and MCL 339.2512f(2) forbids a broker to contract with a salesperson or nonprincipal associate broker in any manner that limits the broker's supervisory authority. MCL 339.2512f(1) spells out what supervision means: regular direct communication in person or by telephone, radio or electronic means, review of the licensee's practice and reports, analysis and guidance of performance in regulated activities, and written operating policies and procedures. Compensation still flows only through the employing broker under MCL 339.2510(1), and money belonging to others goes into the broker's custodial trust account, delivered to the broker on receipt under MCL 339.2512(1)(k)(ii). The independent contractor label is a tax and payroll characterization, which is why MCL 339.2501(h) conditions it on a written agreement and on at least 75% of annual compensation coming from sales commissions.

Under R 339.22131 a Michigan service provision agreement, meaning a listing or buyer agency agreement, must:

• a.Run for a term of at least 90 days
• b.Include a definite expiration date✓
• c.Name a supervisory broker for each party
• d.Be recorded with the register of deeds

R 339.22131(2) requires a service provision agreement to include a definite expiration date and forbids any provision requiring the party who signed it to notify the broker of an intention to cancel on or after that date — so the agreement ends on its own terms rather than rolling forward against a client who says nothing. R 339.22131(1) adds that the licensee must complete the agreement fully before the parties sign and hand them a true executed copy at signing. R 339.22135 separately forbids a licensee to become a party to a net service provision agreement for an owner, seller or buyer as a means of securing a commission. The rules impose no minimum term; these are contracts between broker and client rather than instruments recorded against title; and a supervisory broker must be named only in a designated agency agreement, under MCL 339.2517(7). MCL 339.2501(x) defines the term itself as a buyer agency agreement or listing agreement that establishes an agency relationship.

A Michigan seller conveys an unplatted parcel in a township, abutting a road never accepted as public. Section 261 of the Land Division Act requires the seller to:

• a.Petition the county road commission to accept the road
• b.Give written notice on a separate attached instrument✓
• c.Record a maintenance agreement before the closing date
• d.Obtain a variance from the township planning commission

MCL 560.261 forbids selling any lot in a recorded plat or any parcel of unplatted land in an unincorporated area abutting a street or road that has not been accepted as public "unless the seller first informs the purchaser in writing on a separate instrument to be attached to the instrument conveying any interest" that the road is private and is not required to be maintained by the board of county road commissioners; a contract entered into in violation of the section is voidable at the purchaser's option. The duty is disclosure with voidability as its sanction, not a duty to get the road accepted, to record a maintenance agreement or to obtain a zoning variance. The act is 1967 PA 288, MCL 560.101 and following, still carrying the popular names Plat Act and Subdivision Control; 1996 PA 591, the public act PSI's outline names for this topic, is the amendment that retitled it the land division act, effective March 31, 1997. Michigan's separate Land Sales Act, 1972 PA 286, was repealed in full by 2010 PA 49, so older material naming it is out of date.

A Michigan licensee tells homeowners the racial makeup of their block is changing and values will fall, hoping to win listings. MCL 37.2506 makes this:

• a.Lawful when the statement is factually accurate
• b.Unlawful under the Elliott-Larsen Civil Rights Act✓
• c.Unlawful only where the licensee is compensated
• d.Lawful if made to fewer than five households

MCL 37.2506 forbids representing, for the purpose of inducing a real estate transaction from which the person may benefit financially, that a change has occurred or will or may occur in the composition of the owners or occupants of a block, neighborhood or area with respect to religion, race, color, national origin, age, sex, sexual orientation, gender identity or expression, familial status or marital status — or representing that such a change will or may lower property values, increase criminal or antisocial behavior, or bring a decline in the quality of schools. The prohibition attaches to making the representation, so the accuracy of the claim, the number of households approached and whether a commission was actually earned are all beside the point. MCL 37.2502 covers the rest of the ground, barring refusal to deal, discriminatory terms, refusal to transmit a bona fide offer, misrepresenting availability, discriminatory advertising and taking a listing on discriminatory instructions, and MCL 339.2515(1) requires every Michigan listing agreement to state that discrimination is prohibited.

Under the Michigan Persons with Disabilities Civil Rights Act, a broker may not refuse to deal with a renter on the basis of a disability that is:

• a.Disclosed only after a lease application is submitted
• b.Not registered with a state disability assistance program
• c.Unrelated to the ability to acquire or maintain property✓
• d.Documented by a licensed physician's written report

MCL 37.1502(1) reaches an owner, any other person engaging in a real estate transaction, and a real estate broker or salesperson, and it protects the buyer or renter, a person residing or intending to reside in the dwelling, and anyone associated with them, against discrimination on the basis of a disability "that is unrelated to the individual's ability to acquire, rent, or maintain property or use by an individual of adaptive devices or aids." That relatedness test is the structure of the whole section; nothing in it turns on when the disability was mentioned, on enrollment in any state program, or on medical documentation. Subsection (1)(f) also bars discriminatory advertising and application forms, and subsection (2) bars denying a person access to a multiple listing service or a brokers' organization. On the disclosure side the counterpart is MCL 339.2518(a): no action lies against a licensee for failing to disclose that a former occupant has or is suspected of having a disability.

A Michigan broker manages rentals. Under 1972 PA 348 the security deposit may not exceed 1 1/2 months' rent, and an itemized list of damages must be mailed to the departed tenant within:

• a.14 days after the tenant vacates the unit
• b.45 days after the lease term formally ends
• c.30 days after the termination of occupancy✓
• d.7 days after the tenant's forwarding address

MCL 554.602 caps the security deposit at 1 1/2 months' rent, and MCL 554.609 requires the landlord to mail the tenant an itemized list of damages, together with a check or money order for the balance, within 30 days after the termination of occupancy. The other intervals in the act are real but attach to different steps, which is what makes them useful distractors: MCL 554.603 gives the landlord 14 days from the tenant taking possession to deliver the written notice of the landlord's name and address, the depository and the tenant's own duty to supply a forwarding address within 4 days of moving; MCL 554.609 requires the tenant to respond to the notice of damages within 7 days or forfeit the amount claimed; and MCL 554.613(1) gives the landlord 45 days after termination of occupancy to commence an action for a money judgment. Failing to comply fully with MCL 554.613 waives all claimed damages and makes the landlord liable to the tenant for double the amount retained.

The Michigan Truth in Renting Act makes which lease clause void?

• a.A clause requiring 30 days' notice to vacate
• b.A clause requiring rent on the first of the month
• c.A clause forbidding pets anywhere in the rental unit
• d.A clause providing for a confession of judgment✓

MCL 554.633(1)(d) forbids a rental agreement to include a provision for a confession of judgment by a party, and MCL 554.633(3) makes any provision that violates the section void. The rest of the prohibited list has the same character: waiving or altering remedies for a breach of the covenants of fitness and habitability, waiving rights under the security deposit act, discriminating in violation of the Elliott-Larsen Civil Rights Act or the Persons with Disabilities Civil Rights Act, exculpating the lessor from its own failure to perform, waiving a jury trial, shifting legal costs beyond what statute permits, taking a security interest in the tenant's personal property, accelerating rent without noting the duty to mitigate, waiving eviction procedure, releasing a duty to mitigate damages, requiring a power of attorney, and letting the lessor alter the agreement without the tenant's written consent. Ordinary commercial terms — due dates, pet rules and notice periods — are untouched. MCL 554.634 separately requires the agreement to state the address for notices and to carry the statutory notice in type no smaller than 12 point.

Michigan's criminal usury statute, MCL 438.41, is violated where a lender not authorized by law to do so knowingly charges simple interest at a rate exceeding:

• a.25% per annum✓
• b.7% per annum
• c.11% per annum
• d.36% per annum

MCL 438.41 makes it criminal usury to knowingly charge, take or receive money or other property as interest on the loan or forbearance of money at a rate exceeding 25% at simple interest per annum, or the equivalent rate for a longer or shorter period, and it punishes the offense by imprisonment of up to 5 years or a fine of not more than $10,000.00, or both. The 7% figure is real but belongs to a different statute and a different question: MCL 438.31 sets the legal rate of interest at 5% and lets the parties stipulate in writing for any rate not exceeding 7% per annum — while excluding from that act any obligation whose rate is regulated by another law of this state or of the United States, which is why ordinary regulated mortgage lending is not confined to 7%. Neither 11% nor 36% appears in either act.

A Michigan home sells for $200,000 in a county of fewer than 2,000,000 people. The state real estate transfer tax alone, at $3.75 per $500 of value, is:

• a.$1,100
• b.$1,720
• c.$860
• d.$1,500✓

MCL 207.525(1) levies the state real estate transfer tax at $3.75 for each $500.00 or fraction of $500.00 of the total value of the property transferred, so $200,000 divided by $500 gives 400 units and 400 multiplied by $3.75 is $1,500. The county transfer tax under MCL 207.504 is a separate and much smaller levy — 55 cents for each $500.00 in a county with a population under 2,000,000, and not more than 75 cents where the county board of commissioners so authorizes in a county of 2,000,000 or more — which adds $220 here and produces the $1,720 combined figure that the third choice reflects. The written instrument must state the total value on its face unless an affidavit declaring it is attached. MCL 207.526 exempts a long list of transfers, among them instruments given as security, leases, conveyances to a child, stepchild or grandchild, conveyances creating or ending a tenancy by the entireties, corrective deeds, land contracts before legal title passes, and instruments given in foreclosure or in lieu of it.