Michigan Real Estate Salesperson

Michigan Real Estate Salesperson Exam — Study Brief

Key Concepts

Governing Authority (Article 25, Act 299 of 1980) The Michigan Department of Licensing and Regulatory Affairs (LARA) and the State Board of Real Estate Brokers and Salespersons jointly oversee real estate licensees. The Department administers licensing; the Board sets policy and standards.

General Powers - The Department has broad authority to issue, renew, suspend, revoke, and restrict licenses under the Occupational Code. - The Board may promulgate rules governing real estate practice, education requirements, and conduct standards. - The Department can investigate complaints against licensees on its own initiative or based on a written complaint from any person. - The Department may subpoena witnesses, compel testimony, and require production of documents during investigations. - The Board has authority to approve or deny prelicensure and continuing education course providers and course content.

Investigations, Conferences, Hearings - Upon receiving a complaint or initiating an investigation, the Department may conduct an informal conference with the licensee before proceeding to a formal hearing. - Formal hearings are conducted under the Administrative Procedures Act; licensees have the right to notice and an opportunity to be heard. - The Department may issue a complaint and notice of hearing if there is sufficient cause to believe a violation has occurred. - During an investigation, the Department can require a licensee to produce records, trust account statements, and transaction documents. - Investigations may result in: no action, informal conference resolution, consent order, or formal disciplinary proceedings.

Michigan Real Estate Salesperson Exam | 5 Questions (4% of Exam)

Key Concepts

Activities Requiring a License (MCL 339.2501)

A license is required for any individual who, for compensation or valuable consideration, performs real estate brokerage activities — including selling, buying, listing, negotiating purchase/sale/exchange, leasing, renting, property management, or providing market analyses of real estate for others.

Exemptions — A license is NOT required for: - Property owners selling or managing their own property - Attorneys acting in a professional legal capacity - Court-appointed receivers, trustees, or administrators acting under court order - Public officials performing official duties - Individuals acting under a properly executed power of attorney

Types of Licenses (MCL 339.2501, 339.2505)

Michigan issues three primary license types under Article 25:

A business entity (corporation, LLC, partnership — not sole proprietorship) may also be licensed as a broker.

Eligibility for Licensing (MCL 339.2504–2505)

To qualify as a real estate salesperson, an applicant must: - Complete the required prelicensure education (40 clock hours for salesperson) - Pass the state licensing exam - Be sponsored by a licensed Michigan real estate broker - Be at least 18 years of age - Not have a disqualifying criminal history (reviewed on a case-by-case basis)

Study Brief — Michigan Real Estate Salesperson Exam

Key Concepts

Advertising (MCL 339.2512)

• All advertising must be under the supervising broker's name. A salesperson cannot advertise independently.
• Misleading advertising is a violation subject to license discipline.

Commissions & Fees

• Only a licensed real estate broker can receive a commission or fee — salespersons are paid through their broker, never directly from clients or customers.
• Fees may be charged for: sales, leasing, property management, mortgage negotiation, market analyses, and business opportunity sales.
• A limited service agreement (MCL 339.2501(j)) allows a client to knowingly waive specific enumerated services — must be in writing.

Disclosure / Conflict of Interest (MCL 339.2512d)

• Licensees must disclose agency relationships to all parties.
• A licensee must disclose any dual agency situation (representing both buyer and seller) and obtain informed written consent.
• Disclosure of the broker's agency relationship must occur at first contact or as soon as practicable.

Stigmatized Property (MCL 339.2518)

• No duty to disclose that a property was the site of a homicide, suicide, felony, or that an occupant had or died from HIV/AIDS.
• These facts do not constitute a material defect and cannot be the basis of a lawsuit against a licensee for non-disclosure.

Key Concepts

Agency Relationships Available in Michigan (Article 25, MCL 339.2501 et seq.)

Transaction Coordinator: A licensee who assists both parties in a transaction without representing either. No fiduciary duties to buyer or seller — performs ministerial acts only.

Designated Agency: A broker assigns specific salespersons to represent the buyer and seller separately within the same brokerage. This avoids dual agency — each designated agent owes full fiduciary duties to their respective client. The broker remains a dual agent, but the individual salespersons do not.

Dual Agency: Occurs when the same licensee (or same brokerage without designated agency) represents both buyer and seller. Requires written informed consent from both parties before it can proceed. Dual agents cannot fully advocate for either party — loyalty duties are limited.

Agency Disclosures: Under MCL 339.2512b, licensees must disclose their agency relationship at first contact with a potential client or customer. The disclosure must be made in writing before any offer is written. Key point: disclosure is required even if no formal agency agreement is signed.

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

• A salesperson must be licensed under a broker — they cannot operate independently.
• The relationship can be employee or independent contractor, but the broker retains supervisory responsibility regardless (MCL 339.2501(g)).
• Independent contractor status requires two conditions (MCL 339.2501(h)):
• A written agreement stating the licensee is not considered an employee for tax purposes.
• At least 75% of annual compensation comes from commissions on real estate sales.
• Even as an independent contractor, the broker is still legally responsible for supervising the salesperson's regulated acts.
• Associate brokers are licensed at the broker level but work under…

Key Concepts

Land Division Act — Public Act 591 (Disclosure of Private Road)

If a parcel of land is accessed by a private road, the seller must disclose this in writing. Private roads are not maintained by public funds; buyers must understand ongoing maintenance responsibilities. This disclosure is part of the seller's obligations under the Land Division Act.

Michigan Fair Housing

Two statutes govern fair housing in Michigan, providing broader protections than federal law: - Elliott-Larsen Civil Rights Act (ELCRA): Prohibits discrimination based on religion, race, color, national origin, age, sex, height, weight, familial status, and marital status. - Persons with Disabilities Civil Rights Act (PDCRA): Prohibits discrimination based on physical or mental disability. Requires reasonable accommodation and allows tenants to make reasonable modifications (at their own expense, with restoration upon departure).

Both acts cover housing, employment, and public accommodation. Michigan's protected classes exceed federal fair housing — notably adding height, weight, and marital status.

Landlord-Tenant Relationship Act

• Security deposits are capped at 1.5 times monthly rent.
• Landlord must return deposit (or itemized claim) within 30 days of lease termination.
• Landlord must provide tenant with a written inventory checklist at move-in.
• Tenant must provide forwarding address; failure to do so can forfeit deposit rights.

Truth in Renting Act

• Applies to residential rental agreements with more than 12 units in a complex.
• Prohibits lease clauses that violate tenant rights under Michigan law.
• Illegal clauses are void and unenforceable; landlords cannot include waiver-of-rights language.