Agency relationship disclosure must be given as required by Michigan law.
Before you read
Test yourself first: 5 questions
Question 1 of 5
Which of the following actions would most likely be considered prohibited conduct under Michigan license law?
Answer: A. Substantial misrepresentation is a classic prohibited act and grounds for discipline. Disclosing material defects, properly handling trust funds, and promptly presenting offers are all required, proper behaviors, not violations.
Question 2 of 5
An individual sells only buildings and land they personally own. Under Michigan law, this owner:
Answer: C. A property owner selling or leasing their own real estate is generally exempt from Michigan's licensing requirement, because the license is required for handling real estate belonging to another for compensation, not one's own property.
Question 3 of 5
A Michigan salesperson applicant must satisfy which of the following before being issued a license?
Answer: A. A salesperson applicant must complete the required approved prelicensure education and pass the state licensing examination as conditions of licensure. Holding a trust account or a prior out-of-state license is not a prerequisite.
Question 4 of 5
Commingling, as prohibited for Michigan brokers, is best described as:
Answer: B. Commingling is the improper mixing of clients' trust/escrow money with the broker's own personal or business funds. Michigan brokers must keep trust funds in a separate account and not commingle them with operating capital.
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.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Sellers of residential property must provide a Seller's Disclosure Statement.
- Federal lead-based-paint disclosure applies to homes built before 1978.
- Agency relationship disclosure must be given as required by Michigan law.
- Client and customer funds must be held in a designated trust or escrow account.
- Commingling broker funds with client trust funds is prohibited.
- Deposits and trust funds must be deposited promptly per LARA rules.
- Brokers must keep accurate trust-account records available for LARA review.
- Funds are disbursed only as authorized by the transaction or the parties.
Michigan Required Disclosures & Escrow/Trust Handling: FAQs
Is Michigan Required Disclosures & Escrow/Trust Handling 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.
