Michigan Real Estate Practice Exam

Sole ownership of real estate is called tenancy in severalty. At first, the term appears confusing, as several implies many. But in this case, severalty comes from the root word, to sever, meaning to cut. Ownership in severalty implies having cut all others claims to the property. Tenancy in the Entireties may appear to be the correct answer, but this is the ownership structure for when married persons own property together. An estate for years is a lease agreement with a definite start and end date. Joint tenancy is a form of co-ownership.

Zoning is typically practiced on the township or municipal level. It is a form of land use regulation aimed at promoting conformity to maintain the quality of life and the tax base. Zoning ordinances are justified via the police powers granted to the states in the US constitution. Master planning is part of the zoning process but is not the best answer.

The sales comparison approach, often called a comparative market analysis, is the primary method for valuing resident properties. Homes are priced by comparing them to similar homes currently on the market or recently sold. Assuming conformity, the prices should align with adjustments for contribution. The cost approach is a method of pricing based on land value and the cost of building, or replacing an existing structure. The capitalization approach is a pricing method for commercial real estate.

Equity means the owner's amount of value in the property at any given time. Equity can be calculated by taking the property's recent appraised value and subtracting the remaining balance on any existing mortgages. For example, a home appraised at $300,000 with a remaining mortgage principal of $240,000 would mean $60,000 equity for the owner.

The secondary mortgage market is the federal reserve and various government agencies (HUD, FHA, FANNIE MAE, etc.) The secondary mortgage market regulates and provides funding for the primary mortgage market, which consists of consumers and lending institutions. The secondary mortgage market provides liquidity, or cash, for the primary mortgage market to lend to consumers.

Agency fiduciary duties in Michigan are Loyalty, Obedience, Accounting, Confidentiality, Care, and Disclosure. Warranty, Control, and Due process are not fiduciary duties.

An agency relationship can only be established by signing a written service provision agreement, typically a listing agreement or an exclusive buyers agency agreement. There is no agency relationship without a signed, written contract. The agency disclosure form is not a contract and does not establish an agency relationship.

A material fact is any information concerning a property's condition or its situation that could influence the decision-making of a relevant party. Material facts would be the condition and age of the roof, the known presence of environmental hazards, the home's proximity to a firing range or industrial site, and other such issues.

Any mistake in a contract invalidates that contract. A wrong postal address, even with the correct legal description, would invalidate a contract. The intentional misrepresentation of facts in a contract is typically described as fraud.

Novation is the simultaneous voiding of an existing contract and replacing it with a new contract. The terms and parties of the new contract are normally different from the previously existing contract. For example, buyer Stephen wishes to no longer be contractually obligated to purchase Olivia's home. If Stephen can find a new buyer willing to contract with Olivia, he can propose the novation of his contract.

Deeds are written documents that convey or transfer the title. The title is considered transferred when a new deed is offered by the grantor and the grantee accepts it. Brokers don't sign titles and the abstract of title is a summary of the history of ownership.

When racial animus or discrimination is expressed by a client, the agent must end the agency relationship and inform their broker of the situation. It is not the role or duty of a broker or salesperson to engage the client in conversation over the discrimination or to convince them otherwise.

Agency can only be established by signing a service provision contract. To create an agency relationship with buyers, the exclusive buyer agency agreement is used. To create an agency relationship with sellers, a listing agreement is used. When an agent shows customers (meaning not a client) a property, they are acting as a sub-agent of the seller, and are therefore limited in the services and advice they can offer the potential buyer.

Retaliatory eviction is when a landlord attempts to evict a tenant because the tenant has angered the landlord, but not breached the lease agreement. Leases are contracts and eviction may only happen if the tenant breaches the lease. The legal manner of eviction is called actual eviction. Constructive eviction is when a landlord attempts to make the premises uninhabitable, such as turning off the heat or water, to pressure a tenant to move. Constructive eviction is illegal.

In Michigan, a section of any township is 1 square mile, which equals 640 acres. Randall purchased a 1/4 of a section which equals 160 acres, or a quarter of 640. Randall also purchased a half section, which equals 320 acres. Added together, Randall purchased 480 acres - 320 + 160 = 480.

The Department (LARA) cannot revoke someone's license without a hearing. However, they may immediately suspend a license temporarily if it is believed that a licensee is a threat to the public. In the case of our question, the Department would be required to open an investigation within 15 days of receiving the complaint. Todd's broker would be informed of the complaint and his records would likely be subpoenaed.

All licensed real estate salespersons must complete a total of 18 hours of continuing education credits over the course of their three-year licensing cycle. However, every licensed real estate salesperson must complete at least two hours of continuing education in legal updates, each year.

Sellers should be notified as soon as possible when an offer is received. All offers must be shown to sellers, and if there is more than one offer, all offers must be disclosed and shown at the same time. It is up to the seller to determine the timing and order of reviewing the offers.

A special agent is one hired to complete a transaction or series of transactions aimed at achieving a single goal. Once the goal is met, the agency ends. Real estate salespersons and brokers are special agents in that the agency is aimed at buying or selling a house and once that goal is achieved, the agency ends. Tom, by signing a service provision contract with Sonja has established an agency relationship with her, making her his agent and he her principal, or client.

The Michigan Right to Farm Act protects farmers from being declared a nuisance and/or fined as long as they are operating according to standard farming practices. Occasionally, nearby residents of a farm may complain to authorities about dust, odors, or noise. As long as the farmer is conducting the farm according to acceptable farming practices, it is legal and any complaints will not be acted upon.