Your FREE Michigan Real Estate Salesperson Practice Test 2026 – 150+ Q&A

Correct answer: Police power regulates property use without compensation, while eminent domain takes property and requires just compensation

The central distinction is that police power regulates how owners may use property to protect the public welfare without paying compensation, while eminent domain actually takes the property and constitutionally requires just compensation. Neither power generally requires the owner's consent, and eminent domain applies to real property as well, so the compensation difference is the defining contrast.

Correct answer: An easement in gross

This is an easement in gross because it benefits a particular person or entity, such as a utility company, rather than a dominant parcel of land, and there is no adjoining benefited estate. An easement appurtenant requires a dominant and servient parcel and runs with the land, a deed restriction limits use rather than granting a use right, and a life estate is a form of ownership, not a use easement.

Correct answer: An easement by necessity

An easement by necessity may be created when a landlocked parcel has no access to a public road, allowing the owner to cross neighboring land out of necessity. A license is merely revocable permission rather than an enforceable access right, an easement in gross to a stranger would not address landlocking, and a profit a prendre is the right to remove resources such as minerals, not a right of access.

Correct answer: Deed restrictions

Recorded covenants, conditions, and restrictions are deed restrictions, private controls placed by a developer or association that limit how owners may use their property. Zoning ordinances and police power regulations are public controls imposed by government, and an eminent domain taking is a government acquisition of property, so the privately created CC&Rs fall under deed restrictions.

Correct answer: The more restrictive of the two generally controls the owner's use

When a deed restriction and a zoning ordinance conflict, the more restrictive provision generally governs, because the owner must comply with both the public and the private limitation. Neither one automatically voids the other, and the property is certainly not free of all limits, so the controlling rule is that the stricter requirement prevails.

Correct answer: A fee simple determinable

The city holds a fee simple determinable because ownership continues only so long as a stated condition, use as a public park, is met, and it automatically reverts to the grantor if that condition is violated. A fee simple absolute carries no such condition, a life estate is measured by a life rather than a use condition, and a leasehold conveys only possession for a term rather than a defeasible fee.

Correct answer: A reversion

The grantor's future interest that brings the property back to the grantor at the end of a life estate is a reversion. A remainder is the future interest when the property passes instead to a named third party, an easement is a nonpossessory right to use land, and an encroachment is a physical intrusion across a boundary, so a reversion is the interest that returns ownership to the grantor.

Correct answer: Lot and block referencing a recorded plat

The lot and block method is best for a platted subdivision because once the plat is recorded, each lot can be identified simply by its lot and block numbers, making deeds short and precise. Metes and bounds requires lengthy directional calls, a narrative of physical features is imprecise, and surveying each small lot from a principal meridian would be unnecessarily cumbersome for a recorded subdivision.

Correct answer: As a fixture that transfers with the real property

The built-in oven is most likely a fixture that transfers with the real property because it is permanently attached to the cabinetry and adapted to the home with the intent that it remain. Fixture status turns on annexation, adaptation, and intent. It is no longer the seller's personal property once installed, it is not a trade fixture (which applies to commercial tenant equipment), and it is not an emblement, which refers to annual crops.

Correct answer: As trade fixtures the tenant may remove before the lease ends

Items a commercial tenant installs to conduct business are trade fixtures, which the tenant generally may remove before the lease ends, provided any damage from removal is repaired. They are not treated as permanent fixtures belonging to the landlord, they are not emblements (which are annual crops), and they do not become the landlord's real property upon installation, since the trade-fixture exception protects the business tenant's equipment.

Correct answer: A homeowner whose lot borders a lake builds a dock and uses the shore

Littoral rights belong to an owner whose land borders a stationary body of water such as a lake, allowing reasonable use of the shore and water, which the dock-building homeowner illustrates. The scenarios involving a river, creek, or flowing stream concern riparian rights, which attach to moving watercourses, so only the lakefront example demonstrates the littoral right tied to non-flowing water.

Correct answer: A legal nonconforming use

The factory continues as a legal nonconforming use, a use that was lawful before the zoning change but no longer conforms to current zoning, which is typically allowed to remain rather than be immediately shut down. An easement appurtenant is a use right over another parcel, a fee simple determinable is a defeasible ownership estate, and a variance is a forward-looking permission for a new deviation, none of which describes a grandfathered prior use.

Correct answer: The growing trees are real property, while the harvested apples are personal property

Growing trees rooted in the ground are part of the real property because they are attached to the land, but once the apples are harvested and severed, they become movable personal property. The classification changes upon severance, so it is incorrect to call both items personal property, both real property, or to reverse the categories.

Correct answer: Obtain a survey to determine the true location of the boundary line

Obtaining a survey is the appropriate first step because an encroachment is a physical intrusion across a boundary, and only a survey can establish exactly where the true line lies relative to the fence. Recording a deed restriction does not resolve a boundary dispute, eminent domain is a government power unavailable to a private owner, and emblements concern annual crops rather than boundary intrusions.

Correct answer: Metes and bounds relies on directional bearings and monuments; rectangular survey relies on meridians and base lines

Metes and bounds identifies a parcel using directional bearings, distances, and physical monuments, while the rectangular survey system locates land by reference to principal meridians and base lines that frame townships, ranges, and sections. The other pairings scramble these tools, such as wrongly assigning plat numbers to metes and bounds or bearings to lot and block, which actually relies on a recorded subdivision plat.

Correct answer: As a tenant in common with the three siblings, who remain joint tenants among themselves

The buyer holds as a tenant in common with the siblings because a forced sale of one joint tenant's interest destroys the unities of time and title as to that share, severing the joint tenancy only for the transferred portion. The three remaining siblings still satisfy the unities among themselves and continue as joint tenants with survivorship. The new owner cannot be a joint tenant because the unities were broken on transfer, tenancy by the entirety requires marriage, and no one owns the whole in severalty because multiple owners remain.

Correct answer: A mere lien on one joint tenant's interest generally does not by itself sever the joint tenancy

In a lien-theory state, a mortgage on one joint tenant's interest is treated as a lien rather than a transfer of title, so it generally does not by itself destroy the unities or sever the joint tenancy. The survivorship feature typically continues unless the lien is foreclosed and the interest actually conveyed. The mortgage does not permanently convert the estate, does not give the lender full title, and does not strip the non-borrowing brother of his interest.

Correct answer: A new deed must be executed conveying the property into a form of co-ownership that can include the daughter

A new deed is required because tenancy by the entirety can exist only between two spouses, so adding a third owner means re-conveying the property into a form such as joint tenancy or tenancy in common that allows three owners. The change in ownership form must be accomplished by a written, delivered deed. A child is never automatically added, an affidavit of relationship does not transfer or create an ownership interest, and divorce is not a prerequisite to deeding the property to additional owners.

Correct answer: A partition action

A partition action is correct because any tenant in common has the right to file for partition, which asks a court to physically divide the property or, if division is impractical, order a sale and distribute the proceeds according to each owner's fractional share. This remedy lets an owner exit a co-ownership the others will not voluntarily end. A quiet title action resolves competing title claims, a foreclosure enforces a lien against a defaulting borrower, and escheat is the state's taking of ownerless property.

Correct answer: The paying owner may generally seek contribution from the other for that owner's proportionate share of the expenses

The paying co-owner may generally seek contribution because tenants in common are each responsible for their proportionate share of necessary carrying costs such as taxes and needed repairs, so one who advances those costs can recover the others' shares, often at sale or through an accounting. The expenses are not the sole burden of the payer, they are not simply ignored when settling the proceeds, and advancing money does not by itself increase that owner's fractional ownership percentage.

Correct answer: That the co-owners be legally married to each other

Tenancy by the entirety is distinguished from a joint tenancy by the added requirement that the co-owners be legally married to each other, layering a unity of marriage on top of the four unities. This marital requirement is what separates it from joint tenancy, which any two or more qualifying owners may use. The form does not call for unequal shares, it includes rather than omits a right of survivorship, and it requires no advance court approval to be created by deed.

Correct answer: The covenant of further assurance

The covenant of further assurance is correct because it is the grantor's promise to take any further actions or execute any additional documents reasonably necessary to perfect or correct the grantee's title after the conveyance. This directly matches a promise to supply later instruments fixing a description error. The covenant against encumbrances assures the property is free of undisclosed burdens, the covenant of seisin assures ownership and the right to convey, and the covenant of warranty forever promises to defend the grantee against lawful claims.

Correct answer: An undisclosed recorded mechanic's lien existed against the property at the time of conveyance

An undisclosed recorded lien at the time of conveyance breaches the covenant against encumbrances because that covenant promises the property is free of liens, easements, or other burdens except those disclosed, and a hidden lien is exactly such an undisclosed encumbrance. A suit by a stranger with no valid claim implicates quiet enjoyment or warranty, a refusal to fix a description error implicates the covenant of further assurance, and a grantor who never owned the property breaches the covenant of seisin.

Correct answer: Request an extended-coverage policy or endorsements that remove or insure over certain standard exceptions

The buyer should request extended coverage or endorsements because a standard owner's policy carves out common exceptions, and the insurer can often remove or insure over some of them, frequently after a current survey, in exchange for additional premium, broadening the protection. These exceptions are not necessarily permanent or uninsurable. A quitclaim deed from the seller does not change what the insurer chooses to cover, and a quiet title action addresses ownership disputes, not the terms of an insurance contract.

Correct answer: Subrogation

Subrogation is correct because it is the insurer's right, after paying a covered loss, to succeed to the insured's claims and pursue the third party responsible for the title defect to recover the amount paid. It allows the insurer to shift the loss to the truly responsible party. Reconveyance is the release of a deed of trust when a loan is paid, estoppel prevents a party from asserting a position inconsistent with prior conduct, and reformation is a court's correction of a written instrument to reflect the parties' true intent.

Correct answer: No, because the deed was never delivered with present intent to pass title

Title did not pass because a valid conveyance requires delivery of the deed with the grantor's present intent to transfer title, and merely signing, acknowledging, and storing the deed without delivering it shows no such present intent. The grantor retained control and intended to act only later. Signing and acknowledgment alone do not complete a transfer, naming a grantee is not delivery, and recording is for notice and priority rather than being an absolute requirement for a deed's effectiveness between the parties.

Correct answer: A competent grantor with legal capacity who signs the deed

A valid deed requires a competent grantor with legal capacity who signs the instrument, because the grantor is the one conveying title and must have the legal ability and intent to do so. The grantee generally need not sign the deed, the stated consideration need not be the actual full purchase price and full payment is not an element of a valid deed, and witness requirements vary by state and are not a universal element, unlike the grantor's competent signature.

Correct answer: Probate

Probate is correct because it is the court-supervised process that validates a will, settles the decedent's debts and claims, and authorizes the transfer of the decedent's real and personal property to the heirs or devisees. Until probate is completed, title to devised real estate is generally not clear for conveyance. Partition divides co-owned property, condemnation is the government's exercise of eminent domain, and foreclosure enforces a lien against a defaulting borrower.

Correct answer: Vacancy and collection losses plus operating expenses

To reach net operating income, the appraiser deducts vacancy and collection losses and the property's operating expenses from gross income. Debt service is deliberately excluded because net operating income reflects the property's earning power independent of financing, the owner's personal income taxes are not a property operating expense, and tax depreciation is an accounting deduction that does not belong in the appraisal's operating statement.

Correct answer: $240,000

The indicated value is $240,000, found by multiplying the monthly rent of $1,500 by the gross rent multiplier of 160. The gross rent multiplier method estimates value as gross rent times the market-derived multiplier. The other answers result from misplacing a decimal, dividing rent by the multiplier instead of multiplying, or using an incorrect rent figure.

Correct answer: Small rentals have comparable, predictable rents and minimal expense variation, while large commercial properties need detailed expense analysis

Appraisers favor the gross rent multiplier for small residential rentals because those properties have comparable, predictable rents and similar, modest operating expenses, making a simple rent-based factor reasonably reliable, whereas large commercial properties have varied expenses that demand the detailed net-income analysis of full capitalization. The multiplier is not illegal for commercial use, commercial properties do produce income, and the method requires rent-paying tenants to function.

Correct answer: Values rise because dividing the same income by a lower rate produces a higher value

Values rise, because with net operating income unchanged, dividing that income by a smaller capitalization rate yields a larger value, since value equals income divided by rate. Lower cap rates generally signal stronger demand and higher prices, so they do not reduce value, value does respond to rate changes rather than income alone, and value can still be estimated using the existing income and the new lower rate.

Correct answer: $1,200,000

The indicated value is $1,200,000, calculated by dividing the net operating income of $84,000 by the required capitalization rate of 0.07. The income approach uses value equals income divided by rate. The other answers result from multiplying income by the rate, computing only a portion of the income, or dividing by an incorrect rate rather than the stated 7%.

Correct answer: Legally permissible under current zoning and regulations

The appraiser first confirms the use is legally permissible under current zoning and regulations, since a use that violates the law cannot qualify as highest and best use no matter how profitable. The four tests are legal permissibility, physical possibility, financial feasibility, and maximum productivity. The lowest construction cost, neighbors' preferences, and similarity to the current use are not the screening criteria for highest and best use.

Correct answer: The land as a vacant commercial site, treating the existing house as not contributing to value

The highest and best use is the land as a vacant commercial site, with the existing house treated as not contributing, because when the value of the land for a permitted higher use exceeds the value of the property as improved, the improvement adds nothing and may even need removal. Continuing the residential use, minimizing taxes, and honoring the owner's preference do not reflect the use that maximizes the property's value.

Correct answer: Curable physical deterioration

Peeling paint, a worn roof, and an aging furnace are curable physical deterioration, the ordinary wear and tear on a property's components that is economically practical to repair. Physical deterioration originates within the property and is often deferred maintenance. Functional obsolescence stems from defective design rather than wear, and external or economic obsolescence is caused by influences outside the property's boundaries, not by repairable component wear.

Correct answer: External obsolescence

The loss from the new highway is external obsolescence, a decline in value caused by negative influences outside the property's own boundaries that the owner cannot fix from within the site. Curable physical deterioration and deferred maintenance involve on-site wear the owner can repair, and functional obsolescence arises from the property's own outdated design, whereas the highway is an off-site nuisance beyond the owner's control.

Correct answer: Buy the $310,000 home because it is the lower-priced equally desirable substitute

Under the principle of substitution, the rational buyer purchases the $310,000 home because it is the lower-priced of two equally desirable substitutes, and an informed buyer will not pay more than necessary for comparable utility. A higher price does not automatically signal greater value when the homes are identical, averaging the prices ignores the cheaper substitute, and the price difference itself gives no reason to walk away from both.

Correct answer: The principle of conformity

This reflects the principle of conformity, which holds that property values are maximized and best protected when properties in an area are reasonably similar in size, style, quality, and use, so that homogeneity supports stable values. Anticipation ties value to future benefits, contribution measures a feature's added value, and substitution caps price at the cost of an alternative, none of which explains why neighborhood uniformity sustains value.

Correct answer: Assemblage and plottage

Combining the lots into one site is assemblage, and the resulting increase in value, here the $90,000 by which the $450,000 combined site exceeds the $360,000 separate total, is plottage. Accretion and reliction describe land changes from water, reconciliation and contribution are appraisal reasoning and feature-value concepts, and severalty and progression refer to sole ownership and a value boost from grander neighbors, not combined-parcel value.

Correct answer: The cost to create an exact duplicate of the existing structure, including any outdated features

Reproduction cost is the cost to create an exact duplicate of the existing structure using the same materials and design, including any outdated or superadequate features. Replacement cost, by contrast, is the cost to build a structure of equivalent utility using current materials and standards. Open-market sale price reflects market value, and the assessor's figure is assessed value, neither of which is a construction-cost estimate.

Correct answer: Reconciliation, because abundant comparable sales make that approach the most reliable for a typical home

The step is reconciliation, the appraiser's reasoned weighing of the three value indications, and sales comparison is emphasized because plentiful comparable sales make it the most reliable approach for a typical owner-occupied home. Capitalization is an income-approach calculation rather than a final weighing step, depreciation is a cost-approach component, and assemblage refers to combining parcels, none of which describes the reconciliation process.

Correct answer: An agency disclosure

A form provided to a prospective buyer explaining whom the salesperson represents is an agency disclosure, satisfying the requirement to inform consumers of the agency relationship. It is not a listing agreement, which engages a broker to market a seller's property, not a liquidated damages clause, which sets preset damages, and not a buyer agency agreement, which would create representation of the buyer.

Correct answer: Puffing, a non-actionable statement of opinion

Saying a buyer will love the area and calling it the best in the city is puffing, an exaggerated statement of opinion that a reasonable person would not treat as a verifiable fact. It is not a material misrepresentation or fraud, which require false statements of fact, and it is not a disclosure of a latent physical defect in the property.

Correct answer: It is a false statement of material fact that can create liability for misrepresentation

Claiming the septic system was inspected and passed when it was not is a false statement of material fact that a buyer can reasonably rely on, exposing the agent to liability for misrepresentation rather than being protected puffing. Not all sales talk is protected, a later correction does not erase reliance-based harm, and the buyer's sophistication does not transform a false factual statement into mere opinion.

Correct answer: A breach of contract

A party who fails to perform a material contractual obligation without legal excuse has committed a breach of contract, exposing that party to remedies sought by the other side. A novation substitutes a new party, an assignment transfers contractual rights, and a contingency is a condition limiting the duty to perform, none of which describes a failure to perform itself.

Correct answer: An assignment

Transferring one's rights and interest under a contract to a third party without being released from the underlying obligations is an assignment, which leaves the assigning party potentially liable if the assignee does not perform. A novation would substitute a new party and release the original, rescission cancels the contract, and specific performance compels completion of the deal.

Correct answer: Legal capacity of the parties

A minor generally lacks the legal capacity to be bound, so a contract signed by a minor is missing the element of legal capacity and is typically voidable by the minor. Consideration, a lawful objective, and offer and acceptance could all be present in the agreement, but it is the party's lack of contractual capacity that makes the contract subject to disaffirmance.

Correct answer: When acceptance of the exact terms is communicated to the offeror

A binding contract typically forms when the offeree accepts the offer's exact terms and communicates that acceptance to the offeror, completing mutual assent. Recording occurs after closing, loan approval is a separate financing step, and deed delivery transfers title at closing, none of which is the moment the agreement becomes a binding contract.

Correct answer: It may be unenforceable or violate state rules requiring a definite term

Many states require a listing agreement to include a definite termination date, so omitting one can render the listing unenforceable or place the broker in violation of state regulations against open-ended listings. The omission does not automatically convert the listing to an open listing, double the commission, or transfer the listing to the multiple listing service.

Correct answer: It is an unlawful price-fixing arrangement because commissions must be negotiated independently

An agreement among competing brokers to set a uniform commission rate is unlawful price fixing, because commissions must be negotiated independently between each broker and client rather than coordinated among competitors. Such an arrangement is not a legitimate standardization of service, is not saved by being reasonable, and cannot be made lawful merely by disclosing it in a listing agreement.

Correct answer: General agency

General agency grants the agent authority to conduct a continuous series of transactions and act broadly for the principal, such as managing and selling a portfolio and signing documents on the owner's behalf. A special agency authorizes only a single specific task, a gratuitous agency is one created without compensation, and an ostensible agency arises from appearances rather than express broad authority.

Correct answer: The revocation is effective, so there is no offer left for the seller to accept

Absent an option supported by consideration, an offeror may revoke an ordinary offer any time before acceptance, so the buyer's clear revocation before the seller accepts is effective and leaves no offer to accept. The stated open-until time does not make the offer irrevocable without consideration, the buyer owes no damages for revoking an unaccepted offer, and the seller cannot compel performance of a contract that never formed.

Correct answer: Disclosure

In the OLD CAR memory aid for agent fiduciary duties, the O, L, and D stand for obedience, loyalty, and disclosure, which together with confidentiality, accounting, and reasonable care describe the six core obligations to the principal. Diligence, discretion, and documentation are not the duty represented by the D in this standard summary of an agent's fiduciary responsibilities.

Correct answer: Keep it confidential so it cannot be used against the seller in negotiations

Loyalty requires the agent to place the seller's interests first and protect confidential information such as the seller's urgency, so the agent must keep that motivation private to preserve the seller's bargaining position. Sharing the seller's desperation with buyers, posting it on the multiple listing service, or revealing it to a buyer's lender would all undermine the seller's negotiating leverage and breach the duty of loyalty.

Correct answer: The duty of accounting

The duty of accounting requires the agent to report and properly handle all money, documents, and property entrusted to the agent during the transaction, including a full record of trust funds. Loyalty concerns putting the principal first, obedience concerns following lawful instructions, and confidentiality concerns protecting private information, none of which describes the obligation to track and report entrusted funds.

Correct answer: The agent must not obey, because the duty of obedience extends only to lawful instructions

The duty of obedience requires following only the principal's lawful instructions, so an agent must refuse a directive to discriminate based on national origin because carrying it out would violate fair housing law. Obeying an unlawful order is never required, documenting an illegal refusal does not make it permissible, and no fee can authorize illegal discrimination.

Correct answer: Disclosed dual agency

Disclosed dual agency is the arrangement in which one licensee represents both the buyer and seller in the same transaction with the informed written consent of both parties. Subagency involves an agent of the listing broker working through the seller's agent, designated agency assigns different in-house agents to each side, and single agency means representing only one party.

Correct answer: It prevents the broker from giving undivided loyalty and full advocacy to either party

Dual agency inherently limits representation because a broker serving two opposing principals cannot give either one undivided loyalty or full advocacy without harming the other. It does not mandate a double commission, does not permit fully advocating for the higher offer, and does not automatically void the purchase contract, which remains valid when the dual agency is properly disclosed and consented to.

Correct answer: It allows each designated agent to advocate more fully for that agent's own client

Designated agency lets each assigned salesperson act more like a single agent and advocate for that agent's own client, reducing the loss of advocacy that occurs in pure dual agency. It does not eliminate agency disclosure requirements, does not guarantee a higher sale price, and does not free the broker, who still supervises the firm and the transaction.

Correct answer: A net listing

A net listing pays the broker any amount the property sells for above the seller's specified net, an arrangement many states prohibit or discourage because it creates a conflict between the broker's pay and the seller's interest in the highest price. An open listing pays only the procuring broker, an exclusive agency lets the owner sell commission-free, and an exclusive right-to-sell guarantees the broker a commission on any sale during the term.

Correct answer: Avoiding solicitation calls to consumers who have opted out of telemarketing

Scrubbing numbers against the registry meets the objective of avoiding solicitation calls to consumers who have chosen not to be contacted by telemarketers. It has nothing to do with verifying protected-class status, documenting commission splits, or confirming a legal description, which belong to fair-housing, contract, and title functions rather than telemarketing compliance.

Correct answer: The conduct is steering, because the agent limited housing choices based on national origin

The most sound conclusion is that the conduct is steering, because the agent restricted the buyer's housing options based on national origin, regardless of any well-meant motive. It is not lawful, because intent does not excuse the limitation; it is not blockbusting, which targets owners with panic selling; and it is not redlining, which is a lender or insurer denial of service rather than an agent's showing choices.

Correct answer: It lets licensees follow up with consumers who have already engaged with the firm without violating registry rules

The exception exists so licensees can follow up with consumers who have already done business with or inquired of the firm, recognizing a legitimate ongoing relationship. It does not authorize cold calling strangers, does not require calling registered numbers, and does not relieve the firm of maintaining company-specific opt-out records.

Correct answer: In a designated trust or escrow account separate from the company's general operating funds

Tenant security deposits should be held in a designated trust or escrow account kept separate from the company's operating funds, ensuring the money remains identifiable and protected. Placing them in an owner's investment account, the payroll account, or the manager's personal savings account would constitute commingling and risk loss or misuse of the funds.

Correct answer: The no-hire pact and the refusal to cooperate with rebate firms are both antitrust violations

Both parts are antitrust violations, because an agreement among competitors not to hire each other's employees is an illegal no-poach agreement and a collective refusal to deal with rebate firms is an illegal group boycott. They are not lawful independent judgment calls because they are concerted, and they are antitrust rather than fair-housing matters since no protected class is involved.

Correct answer: Permissible puffing, because it is general opinion rather than a statement of verifiable fact

The statement is permissible puffing, because calling a home "the finest you will ever own" is general, non-factual opinion that a reasonable buyer would not rely on as a verifiable claim. It is not steering, which channels buyers by protected class; not commingling, which involves client funds; and not a Do Not Call issue, which concerns telemarketing rather than ad puffery.

Correct answer: The Civil Rights Act of 1968, Title VIII, commonly called the Fair Housing Act

The Civil Rights Act of 1968, Title VIII, known as the Fair Housing Act, is the original federal law that first prohibited housing discrimination based on race, color, religion, and national origin. The Equal Credit Opportunity Act governs credit applications, the Americans with Disabilities Act addresses access to public accommodations, and the Real Estate Settlement Procedures Act covers closing procedures, none of which is the foundational fair-housing statute.

Correct answer: Familial status and disability

Familial status and disability were the protected classes added by the 1988 amendments to the Fair Housing Act, extending coverage to families with children and to persons with disabilities. Sex was added earlier in 1974, not in 1988. Religion, color, and national origin were among the classes already protected in 1968, so they were not part of the 1988 expansion.

Correct answer: Steering

Steering is the violation, because the agent redirected the buyer away from a requested area and toward another based on the buyer's ethnic background, a protected characteristic. Blockbusting induces panic selling among owners, redlining is a lender or insurer practice of denying service by geography, and commingling concerns improper handling of client funds.

Correct answer: It artificially depresses property values and exploits both departing owners and incoming residents through fear

Blockbusting is especially harmful because it uses fear about a protected group entering a neighborhood to drive owners to sell quickly at depressed prices, harming sellers who sell low and incoming buyers who may pay inflated prices. It is unlawful, not curable by disclosure, reaches residential housing, and is not the same as permissible puffing.

Correct answer: Redlining

Redlining is the correct identification, because denying insurance to an entire geographic area based on the protected characteristics of its residents is the classic form of redlining, which applies to insurers as well as lenders. Steering involves directing prospective buyers among neighborhoods, puffing is sales exaggeration, and antitrust price fixing involves collusion among competitors on price.

Correct answer: Antitrust law, as an illegal market allocation

Antitrust law is violated because competitors agreeing to carve up territories is an illegal market or customer allocation, a per se antitrust offense that suppresses competition. Fair housing law addresses discrimination, the Truth in Lending Act addresses credit-cost disclosure, and the Statute of Frauds addresses written-contract requirements, none of which targets territorial collusion among rivals.

Correct answer: Commingling and misuse of trust funds

Paying brokerage operating expenses from the trust account is commingling and misuse of trust funds, because client money in trust must never be used for the firm's own obligations. It is not lawful, and it is unrelated to fair-housing steering or to antitrust group boycotts, which concern discrimination and competitor collusion respectively.

Correct answer: The consumer recently sold a home through that brokerage, creating an established business relationship

An established business relationship, such as having recently transacted with the brokerage within the prior 18 months, is a recognized exception that allows a call to a registered number for a limited time. A mere belief that the consumer might sell does not create an exception. Calling before 8 a.m. is itself prohibited under telemarketing rules (permitted hours are 8 a.m. to 9 p.m. local time). Blocking caller ID does not create an exception and may itself violate the rules.

Correct answer: The natural breakdown of uranium in soil and rock beneath the foundation

The correct answer is the natural breakdown of uranium in soil and rock beneath the foundation. Radon is a naturally occurring radioactive gas produced as uranium decays in the ground, and it migrates upward into structures through cracks and openings in the foundation. Carpet off-gassing, lead solder in pipes, and circulating mold spores are distinct indoor concerns that do not produce radon.

Correct answer: Elevated radon is present and mitigation should be considered or performed

The correct answer is that elevated radon is present and mitigation should be considered or performed. A reading above the EPA action level signals that radon has accumulated to a level where reducing it through a mitigation system is advisable. A high reading does not automatically void the sale under building code, does not require demolition and rebuilding, and does not force the buyer to waive inspection rights.

Correct answer: When its fibers are disturbed and become airborne so they can be inhaled

The correct answer is when its fibers are disturbed and become airborne so they can be inhaled. Asbestos becomes dangerous primarily once it is friable or disturbed and releases microscopic fibers that people breathe in, leading to respiratory disease. Intact, undisturbed, sealed, or merely sun-exposed asbestos that is not releasing fibers presents far less immediate risk.

Correct answer: Older buildings constructed before asbestos was largely phased out of building products

The correct answer is older buildings constructed before asbestos was largely phased out of building products. Asbestos was widely used in insulation, tiles, and other materials in older construction, so it is most commonly found in those structures rather than newer ones. Brand-new homes are unlikely to contain it, it is not limited to commercial buildings, and its presence is tied to construction era and materials rather than to coastal flood zones.

Correct answer: Releases of petroleum or hazardous substances that contaminate soil and groundwater

The correct answer is releases of petroleum or hazardous substances that contaminate soil and groundwater. Underground storage tank regulation targets the leakage of stored fuels and chemicals that can corrode out of buried tanks and pollute the surrounding soil and water supply. Property tax assessment, riparian water rights, and boundary encroachments are unrelated matters not addressed by underground storage tank rules.

Correct answer: To identify potential contamination and limit exposure to costly cleanup liability before purchasing

The correct answer is to identify potential contamination and limit exposure to costly cleanup liability before purchasing. Environmental assessments on sites with suspected underground tanks help a buyer detect existing contamination and avoid inheriting expensive remediation obligations. Confirming square footage, verifying marketable title, and checking lead-based paint compliance are separate concerns addressed through different processes, not an environmental site assessment.

Correct answer: A permit, because altering regulated wetlands is restricted under environmental law

The correct answer is a permit, because altering regulated wetlands is restricted under environmental law. Filling or dredging protected wetlands generally requires a permit, and approval may be limited or denied to protect the wetland's ecological functions. Ownership does not grant unrestricted authority to alter regulated wetlands, no new deed is required to change a water boundary, and a title insurance endorsement does not authorize physical alteration of the land.

Correct answer: Because they provide ecological functions such as wildlife habitat and water filtration

The correct answer is because they provide ecological functions such as wildlife habitat and water filtration. Wetlands are protected for their environmental value, including supporting wildlife and naturally filtering and storing water, which is why their development is regulated. Protection is not about zeroing out assessed value, granting tax exemption, or conveying littoral rights, none of which is the basis for wetland regulation.

Correct answer: A psychological stigma attached to the property

The correct answer is a psychological stigma attached to the property. A stigma arises from a non-physical event, such as a notorious crime, that makes some buyers view the property as less desirable even though nothing is physically wrong. Functional obsolescence concerns physical or design shortcomings, a latent defect is a hidden physical problem, and a recorded encumbrance is a title matter, none of which captures reputation-based stigma.

Correct answer: No, because the federal lead-based paint disclosure applies only to target housing built before 1978

The correct answer is that no disclosure is required because the federal lead-based paint rule applies only to target housing built before 1978. A 1981 home falls outside the pre-1978 cutoff, so the disclosure form and EPA pamphlet are not federally mandated. The rule is not triggered by every rental, does not hinge on whether the tenant has young children, and does apply to both sales and leases of qualifying older housing.

Correct answer: The EPA-approved lead hazard information pamphlet given to the buyer

The correct answer is the EPA-approved lead hazard information pamphlet given to the buyer. Federal law requires that buyers of pre-1978 housing receive the EPA pamphlet on protecting families from lead, along with the disclosure form and any known records. A radon soil report, a Closing Disclosure, and a wetlands delineation map address entirely different issues and do not fulfill the lead-based paint information requirement.

Correct answer: It is a knowing failure to disclose that can expose the seller to liability under the lead disclosure law

The correct answer is that it is a knowing failure to disclose that can expose the seller to liability under the lead disclosure law. The federal rule requires sellers to disclose known lead-based paint and hazards anywhere in target housing, and deliberately concealing known leaded paint violates that duty and can lead to penalties and damages. Excluding the garage, shifting responsibility to the buyer's inspection, or having the agent sign does not cure a knowing concealment.

Correct answer: The agent generally must disclose known material defects to the buyer and cannot conceal them at the seller's request

The correct answer is that the agent generally must disclose known material defects to the buyer and cannot conceal them at the seller's request. A licensee's duty of honesty and fair dealing requires disclosure of known material facts affecting the property, and that duty overrides a seller's instruction to hide a defect. The agent cannot hide a known defect, is not relieved simply because the seller signs the form, and the duty does not wait for a buyer's inspector.

Correct answer: It declines to zero by the end of the term

The correct answer is that it declines to zero by the end of the term. In a fully amortized loan, each level payment covers the interest due and reduces principal, so the balance steadily falls until it is completely paid off at the end of the term. The balance does not grow toward a balloon, which describes a partially amortized loan, it does not stay unchanged, which describes interest-only or term loans, and it does not move with an index, which describes an adjustable-rate loan, so those choices misdescribe amortization.

Correct answer: An interest-only loan in which principal is not reduced during that period

The correct answer is an interest-only loan in which principal is not reduced during that period. An interest-only loan requires payments that cover just the interest for an introductory period, so the principal balance stays the same until amortization or a balloon begins. It is not negatively amortizing, where unpaid interest is added to the balance, it is not fully amortized, which steadily reduces principal, and it does not pay itself off, so those alternatives mischaracterize an interest-only structure.

Correct answer: The margin

The correct answer is the margin. On an adjustable-rate mortgage, the margin is the fixed percentage the lender adds to the movable index to determine the fully indexed rate at each adjustment, and it stays constant for the life of the loan. The index is the published economic indicator that moves, a cap limits how far the rate can rise, and a point is prepaid interest paid at closing, so none of those is the constant amount added to the index.

Correct answer: A teaser rate

The correct answer is a teaser rate. A teaser rate is an artificially low introductory rate on an adjustable-rate mortgage, set below the fully indexed rate to attract borrowers, after which the rate adjusts toward the index plus margin. A par rate is the standard market rate with no adjustments, a lifetime cap limits total increases over the loan, and a discount point is prepaid interest, none of which describes the temporary below-market introductory rate.

Correct answer: It permits a lower minimum down payment than most conventional loans and requires mortgage insurance premiums

The correct answer is that it permits a lower minimum down payment than most conventional loans and requires mortgage insurance premiums. An FHA-insured loan is designed to expand access to financing with a low minimum down payment and more flexible qualifying, but it requires both an upfront and an annual mortgage insurance premium. The no-down-payment, veterans-only description fits a VA loan, the above-conforming-limit description fits a jumbo loan, and FHA rules allow limited seller contributions toward closing costs, so those statements are incorrect.

Correct answer: An acceleration clause

The correct answer is an acceleration clause. An acceleration clause allows the lender, upon a borrower's default, to demand the full unpaid balance at once rather than waiting for each scheduled payment, and it is what makes foreclosure for the entire debt possible. A subordination clause changes lien priority, a defeasance clause cancels the security instrument once the debt is paid, and a habendum clause defines the extent of ownership in a deed, so none of those grants the lender the right to call the whole balance due on default.

Correct answer: A due-on-sale clause

The correct answer is a due-on-sale clause. A due-on-sale (or alienation) clause is a form of acceleration provision that lets the lender demand the entire remaining balance when the property is transferred without the lender's consent, which generally prevents a buyer from freely assuming the loan. A prepayment penalty charges a fee for paying early, an escalation clause raises an offer price, and an exculpatory clause limits personal liability, none of which triggers the loan balance upon transfer of the property.

Correct answer: Proration

The correct answer is proration. Proration is the allocation of ongoing property expenses and income, such as taxes, interest, insurance, and association dues, between the buyer and seller so that each pays only for the portion of the period during which they own the property. Subordination concerns lien priority, capitalization converts income to value, and recapture is a depreciation tax concept, so none of those describes the fair splitting of closing-date expenses.

Correct answer: It is shown as a credit to the buyer and a debit to the seller

The correct answer is that it is shown as a credit to the buyer and a debit to the seller. When taxes have accrued but are unpaid, the seller owes the portion covering the time the seller owned the property, so that amount is debited to the seller and credited to the buyer, who will pay the full bill later. Ignoring the accrual would unfairly burden the buyer, the amount is not folded into loan principal, and the broker does not absorb prorated taxes, so those alternatives misstate standard proration treatment.

Correct answer: The annual percentage rate

The correct answer is the annual percentage rate. Regulation Z, which implements the Truth in Lending Act, requires lenders to disclose the annual percentage rate so borrowers can compare the true yearly cost of credit, blending the interest rate with certain finance charges into one figure. The principal balance is the amount owed, the escrow cushion is a reserve for taxes and insurance, and the assessed value is used for taxation, none of which expresses the comparable annual cost of borrowing.

Correct answer: The Truth in Lending Act

The correct answer is the Truth in Lending Act. The Truth in Lending Act and its Regulation Z govern consumer-credit advertising, requiring that when a triggering term such as a specific rate or payment is stated, additional credit terms must also be disclosed so the advertisement is not misleading. The Real Estate Settlement Procedures Act addresses settlement services and kickbacks, the Equal Credit Opportunity Act prohibits credit discrimination, and the Fair Credit Reporting Act governs credit reports, none of which sets the triggering-term advertising rules.

Correct answer: $1,440

The seller is debited and the buyer credited $1,440. The daily tax is $4,380 / 365 = $12 per day, and the seller owned the property for 120 days of the unpaid taxes: 120 $\times$ $12 = $1,440. Because the taxes are unpaid (in arrears), the seller's share becomes a credit to the buyer who will pay the full bill.

Correct answer: $720

The buyer is credited $720. The daily rent is $2,400 / 30 = $80 per day, and the buyer owns the property for the 9 remaining days (the 22nd through the 30th): 9 $\times$ $80 = $720. Pre-collected rent for days after closing belongs to the new owner.

Correct answer: $1,280,000

The investor should pay no more than $1,280,000. In the IRV relationship, Value equals Income divided by Rate: $96,000 / 0.075 = $1,280,000. Dividing net operating income by the desired cap rate produces the supportable purchase price.

Correct answer: $135,000

The implied net operating income is $135,000. In the IRV relationship, Income equals Value multiplied by Rate: $1,500,000 $\times$ 0.09 = $135,000. When value and rate are known, multiplying them isolates the income figure.

Correct answer: $6,375

The cost of the points is $6,375. Each discount point is 1% of the loan, so 1.5 points equal 1.5% of $425,000: $425,000 $\times$ 0.015 = $6,375. Points are computed as a percentage of the loan amount, converted to a decimal before multiplying.

Correct answer: 150 feet

The tract is about 150 feet wide. One half acre equals 43,560 / 2 = 21,780 square feet, and width equals area divided by depth: 21,780 / 145 = 150.2 feet, which rounds to 150 feet. Dividing the known area by the known dimension recovers the missing dimension.

Correct answer: 196,020 square feet

The combined site contains 196,020 square feet. First total the acreage: 0.75 + 1.25 + 2.5 = 4.5 acres, then multiply by 43,560 square feet per acre: $4.5 \times 43,560 = 196,020$ square feet. Converting acres to square feet requires multiplying total acreage by the per-acre constant.

Correct answer: $435,000

The estimated cost is $435,000. First add the floor areas: 1,800 + 1,200 = 3,000 square feet, then multiply by the per-square-foot cost: 3,000 $\times$ $145 = $435,000. Total livable area must be summed before applying a unit cost.

Correct answer: $15,600

The cooperating broker receives $15,600. The total commission is $480,000 $\times$ 0.05 = $24,000; the listing broker keeps 35% ($24,000 $\times$ 0.35 = $8,400), leaving the cooperating broker the remaining 65%: $24,000 $\times$ 0.65 = $15,600. The cooperating broker's share is the complement of the listing broker's retained percentage.

Correct answer: $10,200

The total commission was $10,200. The salesperson's $7,140 represents 70% of the total, so divide the part by the rate: $7,140 / 0.70 = $10,200. When the share and its percentage are known but the whole is not, division recovers the total.

Correct answer: $319,149

The property must sell for about $319,149. After a 6% commission the seller keeps 94% of the price, so divide the desired net by 0.94: $300,000 / 0.94 = $319,148.94, which rounds to $319,149. The net must be divided by the retained percentage, not increased by the commission rate.

Correct answer: Article 25 of the Occupational Code (Act 299 of 1980), MCL 339.2501 et seq.

Real estate licensing in Michigan is governed by Article 25 of the Occupational Code, Public Act 299 of 1980 (MCL 339.2501 through 339.2518). The other acts address different subjects (land sales, residential seller disclosures, and civil rights).

Correct answer: The Department of Licensing and Regulatory Affairs (LARA)

Under the Occupational Code, the Department of Licensing and Regulatory Affairs (LARA), through its Bureau of Professional Licensing, administers real estate licensing in Michigan, working with the Board of Real Estate Brokers and Salespersons.

Correct answer: 40 clock hours

Article 25 of the Occupational Code requires a salesperson applicant to complete at least 40 clock hours of approved prelicensure classroom courses in the principles of real estate before being permitted to take the salesperson examination.

Correct answer: At least 4 clock hours

The 40-hour prelicensure course must include at least 4 clock hours of instruction on civil rights law and equal opportunity in housing, per Article 25 of the Occupational Code.

Correct answer: The 36-month period immediately preceding the application

Michigan requires that the 40 clock hours of prelicensure education be completed within the 36-month period preceding submission of the salesperson license application.

Correct answer: 18 hours

Under MCL 339.2504a and LARA rules, Michigan real estate licensees must complete 18 hours of approved continuing education during each 3-year license cycle.

Correct answer: At least 2 hours per year must cover laws, rules, and court cases regarding real estate

Michigan requires that at least 2 of the annual continuing education hours involve laws, rules, and court cases regarding real estate, completed each year by the license expiration date, totaling at least 6 legal hours over the 3-year cycle.

Correct answer: 3 years

Michigan real estate broker and salesperson licenses are issued on a 3-year cycle, and continuing education must be completed within that cycle.

Correct answer: Employed by and under the supervision of a licensed real estate broker

Under the Occupational Code, a salesperson must be employed by and act under the supervision of a licensed broker. A salesperson cannot operate independently or collect compensation except through the employing broker.

Correct answer: Only from the broker who employs the salesperson

Article 25 prohibits a salesperson from accepting compensation for real estate services from anyone other than the employing broker. Commissions flow from the transaction to the broker, then to the salesperson.

Correct answer: Within 2 banking days after notice that the offer has been accepted by all parties

MCL 339.2512 requires a broker to deposit money belonging to others into a separate custodial trust or escrow account within 2 banking days after the broker receives notice that an offer to purchase has been accepted by all parties.

Correct answer: In a non-interest-bearing demand account at a recognized depository

Michigan rule R. 339.22313 requires a broker to deposit funds held in a fiduciary capacity, including earnest money and escrow funds, into a non-interest-bearing demand trust or escrow account. Checks drawn on it must be signed by a broker or associate broker.

Correct answer: Prohibited and grounds for disciplinary action under Article 25

The Occupational Code and LARA rules require client money to be held in a separate custodial trust or escrow account. Commingling those funds with the broker's own money is prohibited and a basis for discipline.

Correct answer: Before the buyer or seller discloses any confidential information specific to that person

MCL 339.2517 requires a licensee to disclose all types of agency relationships available and the duties each creates before the potential buyer or seller discloses any confidential information specific to that person.

Correct answer: In writing, provided to the client, substantially conforming to the statutory form

MCL 339.2517 requires that the disclosure of the type of agency relationship be in writing, provided to the client, and substantially conform to the form specified in the statute (the Disclosure Regarding Real Estate Agency Relationships).

Correct answer: Transaction coordinator

Michigan's agency disclosure form recognizes the transaction coordinator: a licensee who is not an agent of the seller or the buyer and therefore owes no fiduciary duty to either party, but provides services to complete the transaction.

Correct answer: Both parties give knowing, informed consent in writing (disclosed consensual dual agency)

Michigan permits disclosed consensual dual agency: a licensee may represent both the seller and the buyer only with the knowledge and informed written consent of both parties. In dual agency the licensee cannot disclose all known information to either party.

Correct answer: Disclosed consensual dual agents

Under MCL 339.2517, when the other party is represented by an affiliated licensee, the licensee's broker and all named supervisory brokers are considered disclosed consensual dual agents. Designated agency lets the individual affiliated licensees each represent a different party.

Correct answer: Owes fiduciary duties to the buyer, even though the seller may pay the commission

Under Michigan agency law, a buyer's agent owes fiduciary duties to the buyer regardless of who pays the commission. Who pays compensation does not by itself determine agency representation.

Correct answer: The Seller Disclosure Act, Act 92 of 1993 (MCL 565.951 et seq.)

Michigan's Seller Disclosure Act (Act 92 of 1993, MCL 565.951 et seq.) requires sellers of residential real property to deliver a written Seller's Disclosure Statement to the buyer.

Correct answer: Not less than 1 and not more than 4 residential dwelling units

The Seller Disclosure Act applies to transfers of real property consisting of not less than 1 or more than 4 residential dwelling units, whether by sale, exchange, installment land contract, or lease with option to purchase.

Correct answer: Before the seller executes a binding purchase agreement with the buyer

Under the Seller Disclosure Act, the seller must deliver the written disclosure statement to the buyer (or buyer's agent) before the seller executes a binding purchase agreement with that buyer.

Correct answer: A disclosure of the property's condition known by the seller, not a warranty

The Seller Disclosure Act states the statement is a disclosure of the condition and information concerning the property known by the seller, and is expressly NOT a warranty by the seller or any agent.

Correct answer: The federal lead-based paint disclosure (Title X / Residential Lead-Based Paint Hazard Reduction Act)

Federal law (Title X) requires sellers and lessors of most housing built before 1978 to disclose known lead-based paint and hazards and provide the EPA pamphlet. This applies to Michigan transactions alongside the state Seller's Disclosure Statement.

Correct answer: The Elliott-Larsen Civil Rights Act (Act 453 of 1976)

The Elliott-Larsen Civil Rights Act (Act 453 of 1976) is Michigan's primary civil rights law and prohibits discrimination in housing, including the sale, rental, and financing of real estate.

Correct answer: Age, height, weight, and marital status

Elliott-Larsen prohibits housing discrimination based on religion, race, color, national origin, age, sex, height, weight, familial status, and marital status. Age, height, weight, and marital status are Michigan additions beyond the federal Fair Housing Act's protected classes.

Correct answer: Sexual orientation and gender identity or expression

Amendments to Elliott-Larsen in 2023-2024 expressly added sexual orientation and gender identity or expression to the protected classes covered by Michigan civil rights law, including in housing.

Correct answer: $3.75 for each $500 (or fraction) of the value transferred

Under the State Real Estate Transfer Tax Act (Act 330 of 1993, MCL 207.504), the state transfer tax is $3.75 for each $500 or fraction of the value of the property transferred (equivalent to $7.50 per $1,000).

Correct answer: $0.55 for each $500 (or fraction) of the value transferred

Under the county Real Estate Transfer Tax Act (Act 134 of 1966, MCL 207.504), the county transfer tax is $0.55 for each $500 or fraction of value. Counties with a population of 2 million or more (Wayne) may charge up to $0.75 per $500 if authorized.

Correct answer: $1,720

State tax = $200,000 / $500 = 400 units x $3.75 = $1,500. County tax = 400 units x $0.55 = $220. Combined = $1,500 + $220 = $1,720.

Correct answer: The seller (transferor)

Michigan's transfer tax acts impose the tax on the person who is the seller or grantor of the property. By custom and statute the transferor (seller) pays the transfer tax in a typical sale.

Correct answer: Michigan does NOT maintain a consumer real estate recovery fund; it funds a Real Estate Education Fund and a Real Estate Enforcement Fund instead

Unlike many states, Michigan does not operate a consumer recovery fund that reimburses the public for licensee misconduct. Under MCL 338.2237, a portion of each license fee funds the Real Estate Education Fund and the Real Estate Enforcement Fund, used for education and for investigating/enforcing against unlicensed activity and fraud.

Correct answer: $15 of each license fee per 3-year cycle is forwarded to the state treasurer for the fund

Under MCL 338.2237, $15 of each license fee received during a 3-year license cycle is deposited into the Real Estate Education Fund, used only for departmental programs related to education required of licensees and applicants.

Correct answer: Investigation and enforcement of actions regarding unlicensed activity and real estate fraud

MCL 338.2237 directs that the Real Estate Enforcement Fund be used by the department, in conjunction with the Attorney General, only for the investigation and enforcement of actions regarding unlicensed activity and real estate fraud.

Correct answer: The Board of Real Estate Brokers and Salespersons

The Board of Real Estate Brokers and Salespersons, created under the Occupational Code, works with LARA's Bureau of Professional Licensing on rulemaking, education standards, and disciplinary matters for Michigan licensees.

Correct answer: Nine members (six professional members and three public members)

The Board of Real Estate Brokers and Salespersons has nine members appointed by the Governor: six professional (licensee) members and three public members, each serving four-year terms.

Correct answer: Failing to account for or remit money belonging to others (e.g., mishandling escrow funds)

Article 25 (MCL 339.2512) lists prohibited conduct, including failing to account for or remit money belonging to others. Such conduct subjects a licensee to discipline. Negotiated commissions and single-party representation are lawful.

Correct answer: Prohibited under Article 25 (MCL 339.2511)

MCL 339.2511 of Article 25 prohibits using a plan or scheme involving a lottery, contest, game, prize, or drawing to sell or promote the sale of real estate in Michigan.

Correct answer: Sanctions such as license suspension, revocation, fines, or other disciplinary penalties

Under the Occupational Code, LARA (through the disciplinary process) may sanction violators with penalties including license suspension or revocation, fines, censure, probation, or other disciplinary action, in addition to any separate civil or criminal liability.

Correct answer: Abolished effective April 6, 2017 (2016 PA 489)

Michigan abolished dower by 2016 PA 489, effective April 6, 2017, eliminating the wife's common-law dower interest. As a result, a married woman's separate dower release is generally no longer required to convey clear title.

Correct answer: Tenancy by the entirety

In Michigan, when a married couple takes title, they are presumed to hold as tenants by the entirety, which carries an automatic right of survivorship and protects the property from the separate creditors of one spouse.

Correct answer: The seller retaining legal title while the buyer holds equitable title and makes installment payments

Under a Michigan land contract, the seller (vendor) keeps legal title until the contract is paid, while the buyer (vendee) holds equitable title and possession. Land contracts of 1-4 residential units are covered by the Seller Disclosure Act.

Correct answer: A licensed real estate broker

Under Article 25, only a licensed broker may operate a brokerage, hold client trust accounts, and employ and supervise salespersons. Salespersons must work under a broker and cannot independently hold escrow or supervise others.

Correct answer: Complete the approved 40-hour prelicensure course and apply through LARA

Article 25 requires the 40-hour prelicensure course (including 4 hours of civil rights/equal opportunity in housing) before sitting for the exam. Continuing education (18 hours per 3-year cycle) applies after licensure, not before the initial exam.

Correct answer: At least 90 hours of prelicensure education (incl. 9 hours civil rights/fair housing) and the equivalent of 3 years of full-time real estate experience

Under MCL 339.2504, a broker applicant must complete at least 90 clock hours of approved prelicensure courses, including at least 9 hours of civil rights and fair housing instruction, and show the equivalent of 3 years of full-time experience in the real estate business.