Michigan Real Estate Broker

Key Concepts

Activities Requiring a License (MCL 339.2501(u))

A real estate broker license is required to perform any of the following for compensation: - Sell, buy, list, or negotiate the purchase/sale/exchange of real estate - Negotiate the mortgage of real estate (activity not regulated under separate mortgage licensing acts) - Negotiate construction of a building on real estate - Lease, rent, or offer to rent real estate for others as a whole or partial vocation - Engage in property management as a whole or partial vocation - Sell/buy/lease a business, business opportunity, or goodwill of an existing business - Engage in the sale of real estate as a principal vocation (even as owner)

Types of Licenses (MCL 339.2505)

• Real Estate Broker: Individual or business entity; may operate independently
• Associate Real Estate Broker: Meets full broker requirements but is licensed to work under a broker as employee or independent contractor
• A "principal" associate broker: control person designated as principal under 339.2505(1)
• A "nonprincipal" associate broker: control person licensed as associate broker but NOT designated as principal
• Real Estate Salesperson: Licensed under a broker; cannot operate independently

Eligibility for Licensing

• Salesperson: Must be employed by a licensed broker; compensation must flow through the broker
• Associate Broker/Broker: Must meet prelicensure education requirements (MCL 339.2504)
• Independent Contractor Relationship qualifies as "employment" under MCL 339.2501(h) IF:
• Written agreement exists treating the licensee as non-employee for tax purposes
• At least 75% of annual compensation comes from real estate sales commissions
• Even in an independent contractor arrangement, the broker remains responsible for supervising the licensee's regulated acts (MCL 339.2501(g))

Key Concepts

Advertising (Rule 339.22303) All ads must include the broker's name as licensed. Salespersons and associate brokers cannot advertise independently. "Blind ads" (no broker identification) are prohibited. Internet advertising is treated like any other advertising medium.

Commissions & Fees Commissions are negotiable — no fixed rates. A salesperson or associate broker may only receive compensation from their employing broker, never directly from a buyer or seller. A broker may charge fees for specific services beyond commission (e.g., transaction coordination, administrative fees) if disclosed in writing.

Disclosure / Conflict of Interest (MCL 339.2512b–2512d) Brokers must disclose agency relationships in writing at the time of listing or first showing. A broker acting as a dual agent must obtain written consent from both parties. Under limited service agreements (MCL 339.2501(j)), clients may waive specific services enumerated in MCL 339.2512d(3)(b),(c),(d), but the waiver must be knowing and in writing.

Stigmatized Property (MCL 339.2512e) No disclosure duty attaches to stigmatized property — a licensee is not required to disclose that a property was the site of a murder, suicide, felony, or that an occupant had or was suspected of having HIV/AIDS. Psychological defects do not trigger mandatory disclosure.

Handling of Contracts and Documents Licensees must deliver a copy of any signed contract, listing agreement, or offer to all parties at the time of signing. Alterations to contracts must be initialed by all parties. A broker must present all offers promptly, even after a purchase agreement has been accepted, unless the seller has instructed otherwise in writing.

Key Concepts

Agency Relationships Available in Michigan (Article 25, MCL 339.2501+)

Transaction Coordinator: A licensee who assists in a transaction without representing either party as an agent. Owes no fiduciary duties but must still act honestly and in good faith.

Designated Agency (MCL 339.2517): The broker designates one or more licensees to represent the buyer and one or more to represent the seller within the same brokerage. Each designated agent owes full fiduciary duties only to their respective client — this is the primary mechanism Michigan uses to handle in-house transactions while preserving client representation.

Dual Agency: Occurs when a single licensee (or the brokerage without designated agency) represents both buyer and seller in the same transaction. Requires informed written consent from both parties. In dual agency, the agent cannot fully advocate for either party — cannot disclose one party's motivation, acceptable price, or confidential information to the other.

Agency Disclosures (MCL 339.2512b–2512d)

• Michigan requires a written agency disclosure statement to be provided to the consumer at the first substantive contact.
• The disclosure must explain the types of agency relationships available (seller's agent, buyer's agent, dual agent, designated agent).
• The consumer must sign the disclosure acknowledging receipt — this is not a contract, just a disclosure.
• Failure to provide this disclosure is a licensable offense.

Broker/Salesperson Relationships (MCL 339.2501(g)(h))

Key Concepts

Land Division Act – Public Act 591 (Private Road Disclosure) Sellers must disclose the existence of private roads. A private road is not maintained by the government — buyers assume maintenance costs. Disclosure is required on the Seller's Disclosure Statement.

Elliott-Larsen Civil Rights Act (ELCRA) Prohibits discrimination in housing, employment, and public accommodations based on: religion, race, color, national origin, age, sex, height, weight, familial status, and marital status. Note: sexual orientation and gender identity were added by amendment (2023). This is Michigan's primary fair housing statute beyond federal law.

Persons with Disabilities Civil Rights Act (Act 220 of 1976) - Cited as the "persons with disabilities civil rights act" (MCL 37.1101) - Guarantees opportunity in employment, housing, public accommodations, education without discrimination based on disability (MCL 37.1102) - Disability defined under Article 5 (housing): a determinable physical or mental characteristic that substantially limits one or more major life activities AND is unrelated to the individual's ability to acquire, rent, or maintain property (MCL 37.1103(d)(i)(D)) - Accommodation is required unless it would impose an undue hardship - Does NOT cover current illegal use of controlled substances (MCL 37.1103(f))

Landlord-Tenant Relationship Act & Truth in Renting Act - Landlord-Tenant Act governs security deposits: max deposit = 1.5 months' rent; landlord must return deposit or itemized deduction list within 30 days of lease termination - Security deposits must be held in a regulated financial institution; tenant must be notified of institution name/address within 14 days of receiving deposit - Truth in Renting Act: prohibits illegal or unconscionable clauses in residential leases; leases must be in plain language

Michigan Real Estate Broker Exam Study Brief

Key Concepts

Governing Authority — Occupational Code Act 299 of 1980, Article 25 The Michigan Department of Licensing and Regulatory Affairs (LARA) and the State Board of Real Estate Brokers and Salespersons share authority over licensing and enforcement.

General Powers of the Department/Board - Issue, deny, suspend, revoke, or place conditions on licenses - Promulgate rules governing broker and salesperson conduct - Investigate complaints against licensees - Require licensees to produce records, documents, and information relevant to an investigation - The Board advises the Department; the Department holds ultimate licensing authority

Investigations - The Department may investigate any person suspected of violating Article 25, whether licensed or unlicensed - Investigators may conduct audits of trust accounts, escrow accounts, and brokerage records - A complaint may be filed by any person; the Department may also initiate investigations on its own motion - During investigation, the Department can subpoena witnesses and compel production of documents

Conferences and Hearings - Before formal disciplinary action, the Department may offer a consent order or compliance conference to resolve minor violations - Formal hearings are conducted under the Administrative Procedures Act (APA); licensees have the right to appear, present evidence, and be represented by counsel - The Department must provide written notice of charges and an opportunity to be heard before revoking or suspending a license - Decisions from hearings may be appealed through Michigan circuit courts