State Practice, Closing, and Escrow (Michigan)
This topic covers how Michigan transactions are typically closed, how earnest money is handled, and financing customs such as the land contract.
Earnest Money and Trust Accounts
When a Michigan broker receives a buyer's earnest money deposit, it must be held in a separate broker trust or escrow account until the transaction closes or the deposit is otherwise properly disbursed under the contract. Brokers must keep accurate records and must not commingle client funds with personal or business operating funds. Disputes over deposits are resolved according to the purchase agreement and applicable law.
Land Contracts and Closing Customs
The land contract (installment sale) is a traditional Michigan seller-financing arrangement in which the buyer takes possession and makes installment payments while the seller retains legal title until the balance is paid. At closing, Michigan transactions involve prorating taxes, recording documents in the county register of deeds, and transferring title by deed. Transfer taxes typically apply to conveyances.