Michigan Real Estate Broker Exam — All Questions

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).