Michigan Real Estate Salesperson

Key Concepts

General powers of the department and boards

• The department may bring any appropriate action, including mediation or other alternative dispute resolution, in the name of the people of this state, to carry out and enforce the act (Section 339.605(1)). The attorney general shall intervene in and prosecute all cases arising under the act if the attorney general considers it necessary, and the department has standing to bring an administrative action or a direct court action regarding unlicensed practice (Section 339.605).
• Each board must meet not less than 2 times per year; a majority of the members appointed and serving constitutes a quorum; and voting by proxy is prohibited (MCL 339.305(1)).
• Upon completion of a hearing conducted pursuant to Section 511, a board shall assess a penalty or penalties as provided in Article 6 (MCL 339.309).
• The department shall at all times bear the burden of proof as to all charges made against a party. It is not authorized to assume facts not in evidence or to compel a party to prove innocence before charges have been proven (Section 339.2515(2)).
• The department may require an applicant whose license was previously denied, suspended, or revoked to file a bond for a period not to exceed 5 years as a condition of licensure (Section 339.2513).

Investigations, conferences, and hearings — the deadline chain

Exam: Michigan Real Estate Salesperson

Key Concepts

Activities requiring a license - A "real estate broker" includes a person who, for compensation, "sells or offers for sale, buys or offers to buy, leases or offers to lease, or negotiates the purchase or sale or exchange of a business, business opportunity, or the goodwill of an existing business for others" — including as a partial vocation (MCL 339.2501(u)). - The definition also reaches market analyses, listing, negotiating the mortgage of real estate, negotiating for construction of a building, leasing/renting for others, and property management as a whole or partial vocation (MCL 339.2501(u)).

Exemptions (Section 2503) - An attorney-at-law rendering services as an attorney-at-law is exempt (Section 2503(2)). - A court-appointed administrator selling property under order of a court is exempt (Section 2503(2)). - A person regulated under the mortgage brokers, lenders, and servicers licensing act, 1987 PA 173, is exempt so long as that person performs no other act requiring a broker, associate broker, or salesperson license (Section 2503(3)).

Owner acting as principal vocation (Section 2502b) - More than 5 real estate sales in any 12-month period = principal vocation, requiring a broker's license if the owner is not using a licensed broker (Section 2502b(1)(a)). - Devoting over 50% of working time, or more than 15 hours per week in any 6-month period, to the sale of real estate = principal vocation (Section 2502b(1)(c)). - A salesperson selling real estate other than their principal residence is engaging in sales as a principal vocation (Section 2502b(1)(d)).

Key Concepts

Advertising. A salesperson may not advertise to sell real property under his or her own name unless the property is the salesperson's principal residence; a salesperson may not advertise property for rent or lease under his or her own name unless the salesperson owns the property (Occupational Code, Section 339.2512e(4)).

Commissions and fees. A salesperson may accept a commission or valuable consideration for licensed acts only from the real estate broker that employs the salesperson (Section 339.2510(1)). Sharing or paying fees or valuable consideration to unlicensed persons is prohibited, except payment for the purchase of a commercially prepared list of names (MCL 339.2512(1)(h)). A licensee entitled to a commission from a sale may also take a referral fee for placing a loan in that same transaction only with the prior written consent of both buyer and seller, and only if the fee is not otherwise prohibited by RESPA, 12 USC 2601 to 2617, or other applicable law (R 339.22137(1)).

Disclosure and conflict of interest. A licensee who buys or acquires an interest in real property must disclose to the owner that the licensee is licensed before the owner is asked to sign the purchase agreement (Section 339.2516(1)); the same disclosure is required before the owner signs an option agreement where the owner requested the licensee's services (MCL 339.2516(2)); and a licensee who acquires an interest and is owed a commission must disclose licensure to the seller in order to receive the consideration (MCL 339.2516(3)). Acting for more than one party without the parties' knowledge is penalized, except in property management (Section 339.2512(1)(a)). Agency relationship types and duties must be disclosed **before the potential buyer or seller discloses…

Key Concepts

Agency relationships available in Michigan

• Transaction coordinator means a licensee who is not acting as the agent of either the buyer or the seller — Section 2517(11)(k). This is distinct from a dual agent, who represents both parties.
• Absence of a written designated agency agreement: the client is considered to have an agency relationship with the broker and all affiliated licensees — Section 2517(6).
• Designated agents on opposite sides of one deal: if designated agents who are affiliated licensees represent different parties in the same real estate transaction, the broker and all supervisory brokers are considered disclosed consensual dual agents for that transaction — Section 2517(7).

Service provision agreements (listings, buyer agency)

• A "service provision agreement" is a buyer agency agreement or listing agreement executed by a real estate broker and a client that establishes an agency relationship — Section 2501(x). A right-to-list home sale agreement is a separate thing and does not include a service provision agreement — Section 2501(w).
• Every service provision agreement must contain a definite expiration date and must not contain a provision requiring the signing party to notify the broker of intent to cancel on or after the expiration date — Rule 131(2).
• The broker must provide a true executed copy at signing to the party or parties signing it — Rule 131(1).
• A licensee shall not become a party to a net service provision agreement for an owner, seller, or buyer as a means of securing a commission — Rule 135.
• Limited service agreement: a written service provision agreement in which certain enumerated services under Section 2512d(3)(b), (c), and (d) are knowingly waived…

Key Concepts

Land Division Act (private road disclosure) - A seller of a lot in a recorded plat or unplatted parcel in an unincorporated area abutting a street or road not accepted as public must inform the purchaser in writing on a separate instrument attached to the instrument conveying the interest, stating the road is private and not required to be maintained by the board of county road commissioners. A contract entered in violation is voidable at the option of the purchaser (Land Division Act 1967 PA 288, Section 560.261).

Michigan fair housing - Elliott-Larsen: a person shall not represent, to induce a real estate transaction from which the person may benefit financially, that a change has occurred or will occur in the composition of owners/occupants with respect to protected classes, or that the change will result in lowering of property values, an increase in criminal or antisocial behavior, or a decline in the quality of schools (Section 37.2506 — blockbusting). - Persons with Disabilities Civil Rights Act: Section 502 does not apply to the rental of a housing accommodation in a building containing accommodations for not more than 2 families living independently, if the owner or a member of the owner's immediate family resides in one (Section 37.1503). - Source-of-income discrimination rules do not apply to a person who, including all related entities, is a landlord of fewer than 5 rental units in Michigan (MCL 37.2502(4); see also MCL 554.601c/601d).