Michigan-Specific Study Areas

Michigan-specific study areas

This guide maps Michigan-specific topics to the current PSI content outline and to primary Michigan statutes and rules. It is not a ranking of exam-prep providers and does not characterize how often any topic appears on a given candidate's exam.

Trust accounts and broker funds

Michigan law requires a broker to deposit money belonging to others, such as earnest money deposits, into a separate custodial trust or escrow account. Under MCL 339.2512, these funds must be deposited no later than two banking days after the broker receives notice that an offer has been accepted. To help maintain the account without triggering commingling violations, a broker may keep a limited amount of personal funds in the trust account — under Public Act 502 of 2016, this allowable limit is $2,000.

Advertising and employing-broker identification

Under MCL 339.2512e, a salesperson may advertise property for sale under the salesperson's own name only when the property is the salesperson's principal residence. A salesperson may advertise property for rent or lease under the salesperson's own name only when the salesperson owns the property. Otherwise, advertising by a salesperson or associate broker must be under the employing broker's supervision and business name. When the salesperson, associate broker, or team name appears, the employing broker's business name must appear in equal or greater type size, together with the broker's telephone number or street address.

The Michigan Seller Disclosure Act

The Seller Disclosure Act (MCL 565.951 et seq.) requires sellers of most residential real property (1 to 4 units) to disclose known material defects to prospective buyers before a purchase agreement is signed, using a statutory Seller's Disclosure Statement completed in good faith. Statutory exemptions include transfers by court order, foreclosure sales, deeds in lieu of foreclosure, and certain transfers between family members.

Stigmatized property and nondisclosure protection

MCL 339.2518 provides that an action cannot be brought against a licensee for failing to disclose that a property was the site of a homicide, suicide, or other occurrence with no physical impact on the property.

Residential security deposits

Michigan limits a residential security deposit to one-and-one-half times the monthly rent under MCL 554.602. Within four days after termination of occupancy, a tenant must generally give the landlord a written forwarding address. When that requirement is satisfied, the landlord generally must mail the itemized damages notice and the undisputed balance within 30 days after termination of occupancy. Failure to comply with the 30-day notice requirement generally constitutes agreement that no damages are due. If the tenant does not provide the required forwarding address, the landlord is relieved of the damages-notice requirement, but the tenant does not lose a subsequent claim for the security deposit.

The Michigan Condominium Act

The Michigan Condominium Act treats a preliminary reservation agreement and a qualifying new-construction purchase agreement as two distinct rules. Under MCL 559.183, a developer must refund a preliminary reservation deposit within three business days after the purchaser gives cancellation notice. Under MCL 559.184, a qualifying new-construction condominium purchase agreement must provide the purchaser a nine-business-day withdrawal right, and the purchase agreement must state that funds are returned within three business days after a valid withdrawal.

Property tax: Proposal A, SEV, and uncapping

Under the Michigan Constitution's Proposal A and MCL 211.27a, a property's Taxable Value is capped each year at the lesser of the current State Equalized Value (SEV, generally 50% of true cash value) or a Capped Value calculated from the prior year's Taxable Value adjusted for inflation or 5%, whichever is lower, plus additions. When a property transfers ownership, the Taxable Value "uncaps" and resets to the current SEV for the following calendar year, which can significantly change the buyer's future tax bill. Certain transfers, such as those between spouses, are exempt from uncapping under MCL 211.27a(7).

Non-judicial foreclosure and statutory redemption

Michigan primarily uses foreclosure by advertisement, a non-judicial process. Under MCL 600.3240, the standard redemption period for a residential property of four units or fewer is six months from the sheriff's sale, with statutory exceptions that can lengthen or shorten this period depending on factors such as agricultural use, amount paid toward the original debt, or a determination that the property is abandoned.

License-required activity and broker supervision

Michigan law prohibits an individual from acting as a real estate broker, associate broker, or salesperson without the required license. A broker is also responsible for supervising the work of licensed salespersons. Before assigning customer-facing or transaction-related work to an unlicensed person, use current LARA guidance or obtain professional advice rather than relying on a generic assistant checklist.