Before you read
Test yourself first: 5 questions
Question 1 of 5
A Michigan salesperson tells prospective buyers that a neighborhood is 'changing' and steers minority buyers toward certain areas. This conduct is:
Answer: A. Steering based on protected class violates both federal and Michigan fair housing law. Michigan licensees who engage in discriminatory practices are subject to license discipline in addition to fair housing liability, so it is squarely within LARA's enforcement scope.
Question 2 of 5
Which entity has the authority to discipline a Michigan real estate licensee for violations of the licensing act, including suspension or revocation of a license?
Answer: B. Disciplinary authority over Michigan real estate licensees rests with LARA, acting through the Board of Real Estate Brokers and Salespersons. It can investigate complaints and impose sanctions such as fines, suspension, or revocation.
Question 3 of 5
If an investigation finds evidence that a Michigan licensee violated the Occupational Code, what is the typical next step before discipline is imposed?
Answer: A. Before disciplinary sanctions are imposed, a licensee is generally entitled to due process through an administrative hearing, including notice of the allegations and an opportunity to be heard and present a defense.
Question 4 of 5
Which of the following disciplinary sanctions is within the authority of Michigan's regulators against a licensee who violates the Occupational Code?
Answer: C. Michigan's regulators may impose administrative discipline such as suspension or revocation of a license, fines, censure, or conditions on licensure. Criminal sentencing is a court function, not an administrative sanction.
Question 5 of 5
A Michigan salesperson deposits an earnest money check into their personal checking account instead of the broker's trust account. This conduct is best described as:
Answer: B. Mixing client or third-party funds with personal funds is commingling (and depositing into a personal account can constitute conversion). Michigan license law prohibits this; trust money must be held in the broker's designated trust/escrow account. It is a state license-law violation subject to LARA discipline regardless of later intent or buyer consent.
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What you need to know
Disciplinary sanctions range from censure and fines to suspension or revocation of a license, and a licensee is entitled to notice and a hearing before final action. Michigan also maintains a Real Estate Recovery Fund that can compensate consumers holding unsatisfied court judgments arising from a licensee's fraud or conversion, subject to statutory caps. A licensee whose misconduct results in a fund payout may have the license suspended until the fund is reimbursed.
Michigan License Discipline & Enforcement: FAQs
Is Michigan License Discipline & Enforcement on the real estate exam?
Yes. State License Law is a scored domain on the Michigan real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Michigan test this differently?
Michigan applies its own license law on top of the national portion. This page covers the Michigan rules specifically, which is what the state section of your exam tests.
