Michigan Real Estate Broker

A void contract has no legal effect from the beginning (e.g., made by a person legally adjudicated mentally incompetent, forged signature, illegal purpose, or missing all essential elements), while a voidable contract appears valid and stays binding unless the party entitled to disaffirm (e.g., under duress, a minor, or an intoxicated person) acts to rescind — if that party does not disaffirm in time, courts treat it as valid and enforceable.

An unenforceable contract, such as an oral agreement to sell real property, may have all valid elements but cannot be enforced in court (Statute of Frauds writing requirement), whereas illegal-purpose contracts are void and contracts by minors or intoxicated persons are voidable.

Under an exclusive right-to-sell listing the broker earns the full agreed commission no matter who sells the property, including the seller personally, while under an exclusive agency listing the seller retains the right to sell the property independently without owing the broker a commission.

With a purchase money mortgage the buyer receives the deed and legal title at closing and grants the seller a security interest for the unpaid balance; under a land contract the seller retains legal title (buyer holds equitable title) until all installment payments are made.

Novation substitutes an entirely new contract for the existing one and discharges the old obligation, while an amendment merely modifies existing terms and an addendum adds new terms or provisions (addenda may be added after execution if both parties mutually agree).

A latent defect is a structural or other problem that is hidden and not visible or discoverable by ordinary inspection (known latent defects must be disclosed, and failure to reveal them can let buyers cancel or recover damages), whereas a patent defect is visible and obvious on a routine walkthrough.

Accepting a deed in lieu does not eliminate junior liens and typically causes the lender to lose FHA, VA, or private mortgage insurance rights, while a formal foreclosure of the senior lien sells the property free of the foreclosing mortgage and extinguishes all junior liens.

A fee simple determinable (created by language such as 'so long as') transfers title automatically to the holder of the possibility of reverter upon violation, while a fee simple subject to a condition subsequent requires the grantor to bring a court action to assert the right of reentry.

Joint tenancy requires the four unities of time, title, interest, and possession and carries the right of survivorship; tenancy in common has no right of survivorship, so a deceased co-owner's interest passes to heirs or devisees through probate (breaking a unity typically converts joint tenancy to tenancy in common).

GRM is based on monthly gross rent and is used for one- to four-unit residential properties with no other income, while GIM is based on annual gross income and applies to properties of five or more units and commercial properties; both use gross income rather than NOI, unlike the capitalization rate method.

Real property is transferred by deed (executed, delivered, and accepted), while personal property is transferred by bill of sale.

A sublease transfers possession for only part of the remaining lease term with the tenant retaining a reversionary interest, while an assignment transfers the entire remaining interest with nothing retained.

For employees, the broker must withhold Social Security and income taxes and must pay federal/state unemployment compensation tax on wages; a properly classified independent contractor pays his or her own income and Social Security taxes.