Michigan Real Estate Salesperson Exam –
Verified Practice Questions & Answers
with Detailed Rationales (2026 Edition)
Question 1
A broker receives an earnest money deposit on a transaction.
Under Michigan law, the broker must deposit the funds into a
trust account within:
A. 24 hours of receipt
B. 2 banking days
C. 5 business days
D. 10 calendar days
Correct Answer: B
Rationale: Michigan administrative rules generally require
earnest money deposits to be placed into a trust (escrow)
account promptly, typically within 2 business banking days of
receipt unless otherwise instructed in writing. This ensures
fiduciary protection of client funds and prevents commingling.
Question 2
Which action would MOST likely constitute the unauthorized
practice of law by a real estate salesperson?
,A. Filling in blanks on a pre-approved contract form
B. Explaining commission structures to a client
C. Advising a client on legal consequences of easements
D. Coordinating inspections with inspectors
Correct Answer: C
Rationale: Salespersons may complete standard forms but
cannot interpret legal consequences or give legal advice.
Advising on easements’ legal effects crosses into legal
interpretation, which is reserved for attorneys.
Question 3
Under Michigan law, a real estate license automatically
becomes inactive when:
A. The licensee changes brokerages
B. The license is placed on probation
C. The licensee fails to complete continuing education on
time
D. The licensee requests inactive status in writing
Correct Answer: D
Rationale: A license becomes inactive when the licensee
voluntarily requests inactive status or fails renewal
requirements. Changing brokerages does not affect license
status if properly transferred.
Question 4
,Which of the following BEST describes an “eminent domain”
action?
A. A private restriction limiting property use
B. Government seizure of property with compensation
C. Transfer of ownership through inheritance
D. Government taxation of real property
Correct Answer: B
Rationale: Eminent domain is the government’s constitutional
power to take private property for public use with just
compensation, such as for roads or utilities.
Question 5
A buyer discovers a material defect after closing that the
seller intentionally concealed. The buyer’s BEST legal remedy
is:
A. Rescission only
B. Specific performance
C. Fraud damages lawsuit
D. Automatic deed revocation
Correct Answer: C
Rationale: Intentional concealment of defects constitutes
fraud, allowing the buyer to pursue monetary damages or
rescission. Deeds are not automatically revoked.
Question 6
, Which clause in a listing agreement protects a broker after
expiration if the buyer was procured during the listing
period?
A. Escalation clause
B. Protection (tail) clause
C. Novation clause
D. Assignment clause
Correct Answer: B
Rationale: A protection or “tail” clause ensures the broker
earns commission if a ready, willing, and able buyer
introduced during the listing period purchases the property
after expiration.
Question 7
Which property interest is NOT considered freehold?
A. Fee simple absolute
B. Life estate
C. Leasehold estate
D. Fee simple defeasible
Correct Answer: C
Rationale: Leasehold estates are non-freehold interests
because they represent possession without ownership.
Freehold estates involve ownership rights.
Question 8
Verified Practice Questions & Answers
with Detailed Rationales (2026 Edition)
Question 1
A broker receives an earnest money deposit on a transaction.
Under Michigan law, the broker must deposit the funds into a
trust account within:
A. 24 hours of receipt
B. 2 banking days
C. 5 business days
D. 10 calendar days
Correct Answer: B
Rationale: Michigan administrative rules generally require
earnest money deposits to be placed into a trust (escrow)
account promptly, typically within 2 business banking days of
receipt unless otherwise instructed in writing. This ensures
fiduciary protection of client funds and prevents commingling.
Question 2
Which action would MOST likely constitute the unauthorized
practice of law by a real estate salesperson?
,A. Filling in blanks on a pre-approved contract form
B. Explaining commission structures to a client
C. Advising a client on legal consequences of easements
D. Coordinating inspections with inspectors
Correct Answer: C
Rationale: Salespersons may complete standard forms but
cannot interpret legal consequences or give legal advice.
Advising on easements’ legal effects crosses into legal
interpretation, which is reserved for attorneys.
Question 3
Under Michigan law, a real estate license automatically
becomes inactive when:
A. The licensee changes brokerages
B. The license is placed on probation
C. The licensee fails to complete continuing education on
time
D. The licensee requests inactive status in writing
Correct Answer: D
Rationale: A license becomes inactive when the licensee
voluntarily requests inactive status or fails renewal
requirements. Changing brokerages does not affect license
status if properly transferred.
Question 4
,Which of the following BEST describes an “eminent domain”
action?
A. A private restriction limiting property use
B. Government seizure of property with compensation
C. Transfer of ownership through inheritance
D. Government taxation of real property
Correct Answer: B
Rationale: Eminent domain is the government’s constitutional
power to take private property for public use with just
compensation, such as for roads or utilities.
Question 5
A buyer discovers a material defect after closing that the
seller intentionally concealed. The buyer’s BEST legal remedy
is:
A. Rescission only
B. Specific performance
C. Fraud damages lawsuit
D. Automatic deed revocation
Correct Answer: C
Rationale: Intentional concealment of defects constitutes
fraud, allowing the buyer to pursue monetary damages or
rescission. Deeds are not automatically revoked.
Question 6
, Which clause in a listing agreement protects a broker after
expiration if the buyer was procured during the listing
period?
A. Escalation clause
B. Protection (tail) clause
C. Novation clause
D. Assignment clause
Correct Answer: B
Rationale: A protection or “tail” clause ensures the broker
earns commission if a ready, willing, and able buyer
introduced during the listing period purchases the property
after expiration.
Question 7
Which property interest is NOT considered freehold?
A. Fee simple absolute
B. Life estate
C. Leasehold estate
D. Fee simple defeasible
Correct Answer: C
Rationale: Leasehold estates are non-freehold interests
because they represent possession without ownership.
Freehold estates involve ownership rights.
Question 8
