Michigan Real Estate Broker Exam — All Questions

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.