Session 1:
Types of Licenses:
Brokers License: Can only have 1 broker in an agency it can issued to a person or the
name of the entity.
● Everything has to be in the name of the broker as licensed
● They must have a physical address in MIF
● 90hrs+9hrs on FH+3 years experience (real estate experience, can be a
developer/builder)
● 130 hours of pre license education are required to qualify for a broker license
Associate Brokers License: Can do everything that a broker can do, same
requirement as the broker they have to work for a broker.
a. Principal associate broker: they are owner, partner, officer or member(owner of
LLC) they can have more than one, but can’t transfer.
b. Non-principal associate broker: they are not owner, partner, officer or member,
they can only have one non-principal associate broker license. But they can
transfer.
Salesperson’s license: No need for for experience+40 hrs minimal education+4hrs
FH, have to work for only 1 broker in MI. 7 states accept MI license education: AL,
Georgia, Maine, Mississippi, Nebraska, Oklahoma, Virginia
a. Independent contractor: they receive 1099 form
Must meet 2 requirements:
1. Must have a contractor with their broker agreeing to pay their own taxes
2. Not less than 75% of their income from their broker has to be for real
estate transactions.
b. Employee: Receives a W2, employer is required to withhold taxes, pay
compensations and employment tax, and half the social security
If a salesperson is discharged from employment with a broker, the broker must deliver
or mail the salesperson's licnese to LARA within 5 days.
Ways to open up a business:
1.Sole proprietor: means only have 1 owner
a. Individual Name: could be in the person’s legal name
b. Assumed name: something other than their legal name, has to be registered with
a county clerk, they must forward a certified copy to the department of licensing
and registry Affairs (LARA)
[These 3 must be registered with the state]
,2. Partnership: In MI, you only need to have 1 person to have a partnership, the
partnership obtains the broker’s license, must to have at least one general partner that
is a principal associate broker.
a. General partnership: all of the partner are general partners and have 100%
liability each, all general partners act in real estate and must be principal
associate brokers.
b. Limited partnership: must have 1 or more general partner and 1 or more limited
partner. Limited partner’s liability is just their investment. Limited partner shall not
have any license in the entity.
c. Limited liability partnership(very common): Each member’s liability is limited to
their own acts and partinipation. LLP obtains the broker’s license, they must have at
least one principal associate broker to run the entity.
[These 3 must be registered with the state]
3. Corporation: the corporation obtains the broker’s license, they must have at 1
principal associate broker to run the entity. All active officers in real estate must be
principal associate brokers. Sales person can’t be active officers in a real estate
corporation.
[These 3 must be registered with the state]
4. Limited Liability Company(LLC): The entity obtains the broker’s license, they must
have at least 1 active member that obtains the principal associate broker license.
All trust or escrow account records must be maintained for a period of not less than 3
years from the date of inception of the records.
Session 2:
Terms to watch out for:
Shall- Must by law
Should- Prefered by law
May-With legal permission
Can-Legal ability
Watch out for words of restriction:
Anwer questions generally unless they give words of restriction
Always
Never
All
Only
1
,Real Estate Law you should know well:
● Statue of frauds- Certain contracts have to be in writing to be enforced in the
court of law -a lease can be orally binding for one year or less
a. Anything that conveys interest in real estate
b. Anthing that takes more than a year to complete
● Parol Evidence Rule- prohibits oral testimony from being used to add to, to
subtract from, or to contradict a written agreement unless you can prove fraud or
you need to clarify.
● Statue of Limitation- Is a time limit that you have a legal resourced to sue
another party
a. Latches: is where the court can dismiss a case when someone acts
unreasonable causing an undue hardship.
● Sherman anti-trust (Page 111 in Law book)- This law prohibits interference
with the free flow of trade in commerce.
a. Can’t price fix
b. Can’t boycott
c. Can’t restrict territories
d. Can’t tie agreements
Penalties:
Felony up to $100,000 punitive damages and 3 year in jail and treble damages
Agency:
1. Definition of Agency: A relationship where one party called the principal
empowers another party called an agent to perform a service. An agency
relationship is a legal relationship between principal and agent.
2. The agency relationship is independent of any compensation arrangement.
3. Parties to an agency relationship
a. Principal-the person that empowers the agent to perform the service, also
called the client.
b. Agent-the person that empowered to perform the service
c. Sub-Agent-a person that is under the person that was empowered to
perform the service
Sales people are always agents of their broker and subagents to anybody
that hires their broker
4. Duties owned in an agency relationship:
a) Fiduciary Duties- It’s Agent’s duty to act to the best interest of the
principal
2
, Confidentiality- This last forever unless it’s released
Loyalty- This one is compromised in a dual agency
Obedience- Only obey legal instructions
Trust
Due Diligence(care)
Accountability
Disclosure
b) Fiduciary duties are owed to whom: gent owes these duties to the
principal.
c) Vicarious liability: where principals become liable for all of their agents'
wrongful acts.
5. How are Agency relationships created?
a. Expressed- Can be oral or written as stated fact
b. Implied- When you lead someone to believe you are their agent
c. Ostensible-when a third party does something that creates an agency
responsibility
6. How much authority can be granted in an agency
a. Universal Agency-when the agent is empowered to almost everything to
their principal, such as the power of attorney
b. General Agency- where the agent is empowered to act in an area of
trade, the relationship between the broker and the salesperson. such as a
property management agreement.
c. Special Agency-where the agent is empowered to perform one act, such
as a listing agreement or buyer agency contract.
7. Client vs customer
a. Client-these are the people who empower the agent and they owe the
fiduciary duties to them
b. Customer- these are third parties that do not hire the agent, no fiduciary
duties
1. Honesty and fairness
2. Agency Disclosure
3. The licensee has an absolute duty to disclose known
hidden(Latent) defects
a. Latent defects- These are hidden defects, has to disclose
b. Patent defects- Visible defects
Sellers have to disclose all known defects on 1-4 family residential transaction
The licensee must disclose known latent (hidden) defects
3
Types of Licenses:
Brokers License: Can only have 1 broker in an agency it can issued to a person or the
name of the entity.
● Everything has to be in the name of the broker as licensed
● They must have a physical address in MIF
● 90hrs+9hrs on FH+3 years experience (real estate experience, can be a
developer/builder)
● 130 hours of pre license education are required to qualify for a broker license
Associate Brokers License: Can do everything that a broker can do, same
requirement as the broker they have to work for a broker.
a. Principal associate broker: they are owner, partner, officer or member(owner of
LLC) they can have more than one, but can’t transfer.
b. Non-principal associate broker: they are not owner, partner, officer or member,
they can only have one non-principal associate broker license. But they can
transfer.
Salesperson’s license: No need for for experience+40 hrs minimal education+4hrs
FH, have to work for only 1 broker in MI. 7 states accept MI license education: AL,
Georgia, Maine, Mississippi, Nebraska, Oklahoma, Virginia
a. Independent contractor: they receive 1099 form
Must meet 2 requirements:
1. Must have a contractor with their broker agreeing to pay their own taxes
2. Not less than 75% of their income from their broker has to be for real
estate transactions.
b. Employee: Receives a W2, employer is required to withhold taxes, pay
compensations and employment tax, and half the social security
If a salesperson is discharged from employment with a broker, the broker must deliver
or mail the salesperson's licnese to LARA within 5 days.
Ways to open up a business:
1.Sole proprietor: means only have 1 owner
a. Individual Name: could be in the person’s legal name
b. Assumed name: something other than their legal name, has to be registered with
a county clerk, they must forward a certified copy to the department of licensing
and registry Affairs (LARA)
[These 3 must be registered with the state]
,2. Partnership: In MI, you only need to have 1 person to have a partnership, the
partnership obtains the broker’s license, must to have at least one general partner that
is a principal associate broker.
a. General partnership: all of the partner are general partners and have 100%
liability each, all general partners act in real estate and must be principal
associate brokers.
b. Limited partnership: must have 1 or more general partner and 1 or more limited
partner. Limited partner’s liability is just their investment. Limited partner shall not
have any license in the entity.
c. Limited liability partnership(very common): Each member’s liability is limited to
their own acts and partinipation. LLP obtains the broker’s license, they must have at
least one principal associate broker to run the entity.
[These 3 must be registered with the state]
3. Corporation: the corporation obtains the broker’s license, they must have at 1
principal associate broker to run the entity. All active officers in real estate must be
principal associate brokers. Sales person can’t be active officers in a real estate
corporation.
[These 3 must be registered with the state]
4. Limited Liability Company(LLC): The entity obtains the broker’s license, they must
have at least 1 active member that obtains the principal associate broker license.
All trust or escrow account records must be maintained for a period of not less than 3
years from the date of inception of the records.
Session 2:
Terms to watch out for:
Shall- Must by law
Should- Prefered by law
May-With legal permission
Can-Legal ability
Watch out for words of restriction:
Anwer questions generally unless they give words of restriction
Always
Never
All
Only
1
,Real Estate Law you should know well:
● Statue of frauds- Certain contracts have to be in writing to be enforced in the
court of law -a lease can be orally binding for one year or less
a. Anything that conveys interest in real estate
b. Anthing that takes more than a year to complete
● Parol Evidence Rule- prohibits oral testimony from being used to add to, to
subtract from, or to contradict a written agreement unless you can prove fraud or
you need to clarify.
● Statue of Limitation- Is a time limit that you have a legal resourced to sue
another party
a. Latches: is where the court can dismiss a case when someone acts
unreasonable causing an undue hardship.
● Sherman anti-trust (Page 111 in Law book)- This law prohibits interference
with the free flow of trade in commerce.
a. Can’t price fix
b. Can’t boycott
c. Can’t restrict territories
d. Can’t tie agreements
Penalties:
Felony up to $100,000 punitive damages and 3 year in jail and treble damages
Agency:
1. Definition of Agency: A relationship where one party called the principal
empowers another party called an agent to perform a service. An agency
relationship is a legal relationship between principal and agent.
2. The agency relationship is independent of any compensation arrangement.
3. Parties to an agency relationship
a. Principal-the person that empowers the agent to perform the service, also
called the client.
b. Agent-the person that empowered to perform the service
c. Sub-Agent-a person that is under the person that was empowered to
perform the service
Sales people are always agents of their broker and subagents to anybody
that hires their broker
4. Duties owned in an agency relationship:
a) Fiduciary Duties- It’s Agent’s duty to act to the best interest of the
principal
2
, Confidentiality- This last forever unless it’s released
Loyalty- This one is compromised in a dual agency
Obedience- Only obey legal instructions
Trust
Due Diligence(care)
Accountability
Disclosure
b) Fiduciary duties are owed to whom: gent owes these duties to the
principal.
c) Vicarious liability: where principals become liable for all of their agents'
wrongful acts.
5. How are Agency relationships created?
a. Expressed- Can be oral or written as stated fact
b. Implied- When you lead someone to believe you are their agent
c. Ostensible-when a third party does something that creates an agency
responsibility
6. How much authority can be granted in an agency
a. Universal Agency-when the agent is empowered to almost everything to
their principal, such as the power of attorney
b. General Agency- where the agent is empowered to act in an area of
trade, the relationship between the broker and the salesperson. such as a
property management agreement.
c. Special Agency-where the agent is empowered to perform one act, such
as a listing agreement or buyer agency contract.
7. Client vs customer
a. Client-these are the people who empower the agent and they owe the
fiduciary duties to them
b. Customer- these are third parties that do not hire the agent, no fiduciary
duties
1. Honesty and fairness
2. Agency Disclosure
3. The licensee has an absolute duty to disclose known
hidden(Latent) defects
a. Latent defects- These are hidden defects, has to disclose
b. Patent defects- Visible defects
Sellers have to disclose all known defects on 1-4 family residential transaction
The licensee must disclose known latent (hidden) defects
3
