Free Michigan Real Estate Practice Exam

Q1.A Michigan broker's trust account reconciliation reveals that the book balance is $47,500, the bank statement balance is $46,800, and the sum of individual client ledger balances is $47,500. Which of the following best describes the broker's compliance status and required action under Michigan Administrative Rule R 339.22301?

• A.The broker is non-compliant; the bank balance discrepancy of $700 must be investigated, explained by outstanding checks or deposits in transit, and resolved before the reconciliation is considered complete.
• B.The broker is fully compliant because the book balance matches the client ledger totals, which is the only three-way reconciliation test required.
• C.The broker should immediately transfer $700 from the operating account to the trust account to cure the shortage without further investigation.
• D.The discrepancy is immaterial under Michigan law because it is less than $1,000, and no corrective action is required.

Q2.Which federal law prohibits lenders from discriminating against loan applicants based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance?

• A.Equal Credit Opportunity Act (ECOA)
• B.Fair Housing Act
• C.Truth-in-Lending Act
• D.Real Estate Settlement Procedures Act (RESPA)

Q3.A seller instructs her Michigan listing broker to enter into a 'net listing' agreement whereby the broker keeps everything above $250,000 as the commission, with no other commission arrangement specified. How does Michigan law treat net listings?

• A.Net listings are fully permitted in Michigan as long as the net price is agreed upon in writing before the property is listed.
• B.Net listings are prohibited in Michigan because they create an inherent conflict of interest between the broker's financial interest and the client's interest, and are grounds for disciplinary action under Article 25.
• C.Net listings are permitted in Michigan only if the seller is represented by an attorney at the time of signing.
• D.Net listings are permitted in Michigan but must be approved in advance by LARA before the listing becomes effective.

Q4.A real estate agent represents a buyer who is purchasing a property that was previously used as a gas station. Under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act), who could potentially be held liable for environmental cleanup costs?

• A.Only the current property owner
• B.The current owner, past owners, operators, and parties who arranged for disposal of hazardous substances
• C.Only the party that originally caused the contamination
• D.Only parties who knowingly caused environmental damage

Q5.In an all-cash transaction, what is the most important verification the seller should require from the buyer?

• A.Confirmation that no financing is involved, in a signed addendum
• B.Verifiable proof of funds — such as a bank or investment account statement — by a specified deadline
• C.An independent appraisal, since cash buyers must still meet value requirements
• D.Only the earnest money amount — no other verification is needed in cash transactions

Q6.A property manager advertises a rental unit stating "Perfect for young professionals, no children or elderly tenants." This advertisement violates the Fair Housing Act because it discriminates based on:

• A.Age only
• B.Familial status only
• C.Neither age nor familial status, as these are business preferences
• D.Both age and familial status

Q7.Under RESPA (Real Estate Settlement Procedures Act), which of the following actions by a real estate licensee would be prohibited?

• A.Recommending a specific lender to a client based on competitive rates
• B.Providing clients with a list of preferred service providers
• C.Attending closing meetings with clients
• D.Receiving a referral fee from a mortgage broker for directing clients to their services

Q8.Under Michigan Administrative Rules R 339.22201, a real estate licensee must retain transaction records for what minimum period?

• A.2 years
• B.3 years
• C.5 years
• D.7 years

Q9.A state real estate board is reviewing the conduct of a licensed salesperson who accepted a referral fee from a title company without disclosing it to the buyer at closing. Under which federal law could this salesperson also face regulatory action beyond the state board's jurisdiction?

• A.The Fair Housing Act (FHA)
• B.The Real Estate Settlement Procedures Act (RESPA)
• C.The Equal Credit Opportunity Act (ECOA)
• D.The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

Q10.Under Michigan's Occupational Code MCL 339.2517, a broker who wishes to engage in designated agency must first satisfy which of the following prerequisites before designating separate agents for the buyer and seller in the same transaction?

• A.The broker must obtain written informed consent to designated agency from both the buyer and the seller before making the designations.
• B.The broker must disclose the designations verbally at the time of offer presentation and obtain written consent only at closing.
• C.Designated agency is permitted without any additional consent because each party is already represented by a different licensee.
• D.The broker must first convert the transaction to dual agency and then obtain consent from only the seller.

Q11.A Michigan real estate salesperson license applicant has passed the PSI licensing examination. Before LARA will issue an active salesperson license, what must the applicant do?

• A.Complete 40 hours of post-license continuing education within the first license cycle
• B.Affiliate with a Michigan-licensed real estate broker and have that broker submit or cosign the license application
• C.Obtain a surety bond in the applicant's own name and file it with LARA
• D.Register independently with LARA and then notify a broker within 30 days of licensure

Q12.A Michigan broker is representing a seller and receives two competing offers simultaneously. The broker's affiliated salesperson also represents one of the buyers, creating an in-house dual-agency situation. Under MCL 339.2517, which of the following actions is the broker legally required to take before proceeding?

• A.The broker must provide written disclosure of the dual-agency relationship and obtain written consent from both the seller and the buyer represented by the affiliated salesperson before presenting either offer or taking any further action.
• B.The broker may present both offers to the seller without additional disclosure because the seller already signed a listing agreement acknowledging potential dual agency.
• C.The broker must withdraw from representing the buyer through the affiliated salesperson and refer that buyer to an outside brokerage before presenting the offers.
• D.The broker needs only the seller's written consent to proceed because the seller is the client paying the commission.

Q13.Under the FHA, an assistance animal is:

• A.Only a service dog trained under the ADA
• B.A pet, subject to all pet rules and pet fees
• C.A service animal OR an emotional support animal that does work or provides emotional support related to a disability — not a pet under the FHA
• D.Only an animal certified by a federal registry

Q14.A real estate salesperson's license has been revoked by the Board of Real Estate Brokers and Salespersons following a disciplinary hearing. Under the Michigan Occupational Code (PA 299 of 1980), what right does the salesperson have to challenge this decision?

• A.The salesperson has no appeal rights once the Board issues a final order of revocation.
• B.The salesperson may appeal the Board's final order to the Michigan Court of Appeals as the exclusive avenue of review.
• C.The salesperson may seek judicial review of the Board's final order in the appropriate Michigan circuit court under the Michigan Administrative Procedures Act.
• D.The salesperson may appeal only to the Director of LARA, whose decision is then final and not subject to court review.

Q15.A member of the public files a written complaint with LARA against a licensed Michigan real estate salesperson alleging misrepresentation. Under the Michigan Occupational Code (PA 299 of 1980), which entity is primarily responsible for investigating the complaint and determining whether formal disciplinary proceedings should be initiated?

• A.LARA's Bureau of Professional Licensing investigators, with the Board advising on whether the conduct violates applicable standards
• B.The local Association of REALTORS® Ethics Committee, which has primary jurisdiction before LARA may act
• C.The Michigan Real Estate Recovery Fund trustees, who must first determine if the complainant suffered a monetary loss
• D.The county circuit court, which must issue a finding of civil liability before LARA can open any disciplinary file