CONTENTS
Introduction 2
How To Use This Supplement 2
Definitions 2
Relationship Between Household Real Estate and Licensees 3
Supervision of Real Estate Salespersons 3
Unlicensed Support Staff 4
Out-of-State Licensees 4
Transfer of Licenses 4
Agency Relationships with Clients 5
Types of Agency Relationships 5
Agency Disclosure 6
Duties Owed to Clients 6
Disclosure of Material Facts 8
Delivery of Written Offers and Acceptances 8
Non-Discrimination 8
Real Estate Operations Policies 9
Main Office and Branch Offices 9
Trust Accounts 9
Third Party Referrals 9
Advertising 9
Pocket Cards 10
Electronic Records or Signatures 10
Commission Payments 10
Recordkeeping 11
Transaction Forms 11
Licensee’s Personal Purchase or Sale of Property 11
Grounds for Disciplinary Action 12
The Household Real Estate Brokerage Manual, this Supplement, and the Michigan Audit Checklist, should be used by the Principal Associate Broker to ensure that all Household Real Estate real estate brokerage activities in Michigan are consistent with state rules and regulations. The Principal Associate Broker should use this Supplement and the Michigan Audit Checklist when conducting his or her mandatory, annual internal audit.
The Principal Broker must also review: (1) Chapter 339, Article 25 of the Michigan Occupational Code; and (2) R 339.22101 through R 339.22667 of the Michigan Administrative Code. This review is to ensure that no new rules or regulations were added that would impact Household Real Estate’s brokerage services in Michigan. This annual audit and review will ensure that Household Real Estate is in compliance with all Michigan laws, regulations, and policies as enforced by the Michigan Department of Licensing and Regulatory Affairs.
Words will be used in this Supplement that may seem interchangeable. To avoid any confusion, please refer to the definitions below. To the extent these definitions conflict with those in the Brokerage Manual, the definitions below control:
A Real Estate Broker or Associate Broker must supervise the work of all affiliated Real Estate Salespersons, including employees and independent contractors. This supervision includes, but is not limited to:
Unlicensed support staff, also called unlicensed assistants, are unlicensed persons who assist Licensees with administrative, clerical, or personnel activities that do not require a real estate license. Unlicensed support staff may:
Unlicensed assistants may not perform the following tasks:
Unlicensed Assistants Information
The following guidelines are presented in an attempt to reduce your exposure to potential risk in
the employment of unlicensed assistants.
Unlicensed Assistants MAY NOT:
Unlicensed Assistants MAY:
NOTE: Keys should not be given to unlicensed persons for the purpose of showing a listed property. You are responsible for the properties you have in your listing inventory and should only give a key to a licensee who is able to show proper ID
An Agent who violates state license law by allowing an unlicensed assistant to practice real estate on their behalf subject themselves to one or more of the following penalties:
Household Real Estate employees who are not residents of the state of Michigan may become licensed as Associate Brokers or Real Estate Salespersons by satisfying the necessary licensing requirements. Additionally, any nonresident applicant must submit this consent form, acknowledging that any claim against them arising under Michigan Licensing Laws may be brought in the State of Michigan.
If a Real Estate Salesperson is terminated or leaves their employment by giving written notice to the Real Estate Broker, the Real Estate Broker must send the Real Estate Salesperson’s license to the Department within 5 days. If the Real Estate Salesperson does not provide written notice of their departure, the Department shall notify the Real Estate Broker that it has received an application for a transfer of license, at which point the Real Estate Broker should send the Real Estate Salesperson’s license to the Department as provided above.
A Real Estate Broker must also notify the Real Estate Salesperson in writing, delivered or mailed to their last known residence address, that the Real Estate Broker has submitted their license to the Department.
An Associate Broker’s license that is issued to a Principal Associate Broker is non-transferable. If the Principal Associate Broker ceases to be employed by Household Real Estate, his or her license will be suspended automatically.
In the event of the death or disability of the Principal Associate Broker, Household Real Estate may designate a new Principal Associate Broker within a reasonable time period, not to exceed one year. If a new Principal Associate Broker is not designated after a period of one year, the licenses of all affiliated salespersons and Nonprincipal Associate Brokers employed by the Broker will be automatically suspended.
The Principal Associate Broker must immediately notify Household Real Estate if their license is suspended or revoked for any reason.
Michigan offers the following types of agency relationships: Seller Agency, Subagency, Buyer Agency, Dual Agency, and Designated Agency. Household Real Estate offers Buyer Agency, Seller Agency, and Designated Agency.
Seller Agency
A Seller’s Agent, under an Agency Agreement with a seller, acts solely on behalf of the seller. A seller can authorize a Seller’s Agent to work with subagents, Buyer’s Agents and/or Transaction Agents. Seller’s Agents must disclose to the seller known information about the buyer which may be used to the benefit of the seller.
Subagency
A subagent is an agent who has agreed to work with the Seller’s Agent, and who, like the Seller’s Agent, acts solely on behalf of the seller. Subagents must disclose to the seller known information about the buyer which may be used to the benefit of the seller. Household Real Estate does NOT currently permit Licensees to act in the capacity of a subagent. If Household Real Estate decides to change this internal policy, it will communicate this change to all Licensees.
Buyer Agency
A Buyer’s Agent, under an Agency Agreement with a buyer, acts solely on behalf of the buyer. Buyer’s Agents must disclose to the buyer known information about the seller that may be used to benefit the buyer.
Dual Agency
Michigan permits Dual Agency, where, with the written consent of both the buyer and seller, a single Licensee represents both the buyer and seller in the transaction. In a Dual Agency situation, the Licensee will not be able to disclose all known information to either the seller or the buyer. Household Real Estate does NOT currently permit one Licensee to represent both the buyer and seller in a single transaction. Household Real Estate will inform all Licensees if this policy changes.
Designated Agency
Household Real Estate is a Designated Agency brokerage. This means that Household Real Estate DOES allow two different Household Real Estate agents, referred to in Michigan as Affiliated Licensees, to handle each side of a single transaction. In a Designated Agency situation, a Client has an agency relationship with only the individual Real Estate Salesperson working directly with the Client and that Real Estate Salesperson’s Supervisory Broker.
Affiliated Licensees who represent different parties in the same transaction must notify their Clients that their employing Real Estate Broker represents both the buyer and the seller before an offer to purchase is made or presented.
A Designated Agent’s knowledge of confidential information of a Client is not imputed to any Licensee that does not have an agency relationship with that Client. A Designated Agent should not disclose confidential information of a Client to any other Licensee, whether or not they are an Affiliated Licensee. An exception to this rule is that a Designated Agent may disclose confidential information to any Supervisory Broker for the purposes of seeking advice or assistance for the benefit of the Client.
Under a Designated Agency relationship, Household Real Estate and any Supervisory Brokers identified in the Designated Agency Agreement are considered to be disclosed consensual dual agents.
Licensees must disclose to a potential buyer or seller the types of agency relationships available and the Licensee’s duties under each type of agency relationship. The agency disclosure must be in writing and must substantially conform to the “Disclosure Regarding Real Estate Agency Relationships” found here. The agency disclosure form should be provided to a potential buyer or seller before they disclose any confidential information to the Licensee.
Agency Agreement
A Licensee who enters into an Agency Agreement with a Client must provide, at the time of signing, an executed copy of the Agency Agreement. The Agency Agreement must be fully completed by the Licensee before being presented to the Client for signature. The Agency Agreement must include a definite expiration date. It may not contain any provision requiring the Client to notify the Real Estate Brokerage of the Client’s intention to cancel the Agency Agreement upon or after the expiration date.
Licensee’s Fiduciary Duties
Licensees owe the following fiduciary duties to Clients:
A Client may not waive any of these fiduciary duties. Minimum Services
In addition to the fiduciary duties above, Licensees must provide the following services to Clients:
transaction on any terms or conditions that are contrary to the terms or conditions of an executed purchase agreement, absent the written consent of the parties
Limited Service Agreement
Buyers and sellers may relieve a Seller or Buyer’s Agent of the obligation to perform certain services identified above by signing a limited service agreement. Only the following services may be waived in a limited service agreement:
Licensees may not, directly or indirectly, misrepresent material facts. Licensees should disclose to a buyer or seller material facts within their knowledge about the condition of the real estate offered for sale or purchase. Notwithstanding the foregoing, a Licensee is not required to disclose:
A licensee who represents a Client is not required to disclose to that Client information obtained through a present or prior agency relationship with another Client.
A Licensee representing a buyer must deliver to the buyer a signed copy of any offer to purchase immediately after it has been signed by the buyer. A licensee should make certain that all terms and conditions of the transaction are included in the written offer.
Licensees must promptly deliver all written offers to purchase to the seller upon receipt. But a Licensee will not be subject to disciplinary action for failing to submit to a seller any additional offers to purchase that are received after the seller has accepted an offer and the sales agreement is fully executed, unless the Agency Agreement requires subsequent offers to be presented.
Upon obtaining a signed acceptance of an offer to purchase, Licensees must deliver copies of the acceptance to the buyer and seller.
Licensees must conduct all brokerage activities without respect to the race, color, religion, sex, national origin, handicap, or familial status of the Customer or Client. All listing agreements must state that discrimination because of religion, race, color, national origin, age, sex, disability, familial status, or marital status is prohibited.
Household Real Estate shall maintain at least one main office in Michigan. All additional offices must obtain a branch office license and, if a branch office is more than 25 miles from the location of the main office, Household Real Estate must designate an Associate Broker to exercise direct supervision over that branch office. The Associate Broker must be physically present at the branch office on a regular basis to supervise and manage the business during ordinary business hours.
If any main or branch office changes locations, the Principal Associate Broker must provide written notice of the change of address to the Department.
Household Real Estate does not currently hold client funds or property in trust on behalf of customers or clients. Licensees are explicitly prohibited from holding any funds on behalf of clients. If Household Real Estate changes this policy, the change will be communicated to Licensees, this Supplement will be updated, and training will be provided regarding required policies and procedures for the handling of customer funds under Michigan Licensing Laws.
Customers and Clients have the right to freely pick a third party Service Provider (as that term is defined in the Household Real Estate Brokerage Policy Manual) of their choice, including a home inspector, or any other contractor, regardless of whether they are a buyer or seller. Any collusion between a Licensee and a third party vendor is explicitly prohibited.
Licensees may refer a client to Household Real Estate Open Book, so that the client may find a vendor that fits their needs. Additionally, a Licensee may offer a vendor referral, so long as the Licensee offers a minimum of three (3) options from which a client can choose. If a Licensee refers a vendor to a buyer or seller with whom they have or had a relationship including, but not limited to, a business or familial relationship, then full disclosure of the relationship must be provided in writing prior to the buyer or seller using the services of the vendor.
Licensees must comply with all state and federal laws regarding referrals, including RESPA.
All advertising must be approved by Household Real Estate Design and Household Real Estate Legal. A Real Estate Salesperson or Associate Broker may only advertise to buy or sell real property under the supervision of, and in the business name of, Household Real Estate. All advertising must include the following information:
Advertising may include the name of an Associate Broker or Real Estate Salesperson, so long as the name of the employing Real Estate Broker (Household Real Estate) is in equal or greater type size than the name of the Associate Broker or Real Estate Salesperson.
A Licensee representing a seller under an Agency Agreement may not advertise the property to the public as “for sale by owner” or otherwise mislead the public to believe that the seller is not represented by a Real Estate Broker.
Licensees generally may not use “games of chance,” such as lotteries, contests, games, prizes or drawings as advertising tools. In limited circumstances, Licensees may offer an incentive program that involves the elements of chance and a prize, so long as (1) the Licensee does not receive or expect to receive consideration (a financial benefit) and (2) the incentive program is not part of the promotion of a specific piece of real estate.
An individual may not act as an Associate Real Estate Broker or Real Estate Salesperson unless he or she has received from the Department his or her certificate of license and Pocket Card or a temporary license. The Department will deliver a Real Estate Salesperson’s license and Pocket Card to their employing Real Estate Broker. The Real Estate Broker must retain custody and control of the Real Estate Salesperson’s certificate of license and deliver the Pocket Card to the Real Estate Salesperson.
Licensees must keep their Pocket Card or temporary license or a photocopy or digital image of the Pocket Card or temporary license on their person at all times when engaging in real estate brokerage services.
The use of electronic records or digital signatures for any real estate transaction requires the prior agreement of the parties.
All commissions and valuable consideration arising from a real estate transaction must be paid to a Real Estate Salesperson’s employing Real Estate Broker. A Real Estate Salesperson is not allowed to accept commission from any person other than the Real Estate Broker that employs the Real Estate Salesperson.
A Real Estate Broker may pay a commission to a real estate broker licensed in another state if the nonresident real estate broker does not conduct any negotiation Michigan for which a commission is paid.
The Managing Broker must maintain records in accordance with Household Real Estate’s Record Management Policy and Retention Schedule.
Additionally, any Licensee must allow an authorized representative of the Department to enter any of its places of business during normal business hours. The Department’s authorized representative may inspect any document or record that the Department determines is reasonably necessary for an investigation of the Licensee or a review of the business activities of the Licensee.
All offers and counteroffers must be written on statewide, MLS, and/or local realtor association forms approved by Household Real Estate. Transaction forms prepared by third parties may not be used without prior approval of the Principal Associate Broker. Licensees receiving offers or counteroffers containing transaction documents prepared by third parties, such as a “builder’s addendum,” a brokerage firm’s addendum, or other unique transaction document unfamiliar to the Licensee must seek advice from the Principal Associate Broker. Licensees shall be familiar with and able to explain generally to their Customers and Clients the terms of all forms used by Household Real Estate.
Licensees shall not create forms or draft language beyond “filling in the blanks” in the forms. Drafting complex language is strictly prohibited. If language must be drafted, it should be reviewed by the Principal Associate Broker before being presented to a Client for review or signing.
Licensees shall not advise Customers or Clients on the legal effect of any particular clause or term. Licensees shall not suggest, draft, or select any documents of title (i.e., deeds), draft or recommend language for any easement, right of first refusal or the like, or other ancillary agreement between the parties to a transaction.
Licensees may act as a principal in the purchase or sale of property, so long as they follow Household Real Estate’s personal deal policy and fully disclose their license status in writing to the other party in the transaction.
Before a Licensee may sell property in which the licensee owns or has an interest, he or she must disclose to the prospective buyer that they are a licensee and the facts surrounding their interest in the property. This disclosure must be made before an offer to purchase is signed.
Before purchasing a property or option to purchase a property, or otherwise acquiring a property (either directly or indirectly), a Licensee must disclose that they are a Licensee to the seller. This disclosure must be made before the seller is asked to sign a purchase agreement or option to purchase.
These disclosures must be provided to the Department upon request.
Licensees must not engage in the following acts: