Free Michigan Real Estate Practice Exam

Q1.Under federal fair housing law, when a dual agent represents both buyer and seller in a transaction, which fiduciary duty presents the greatest legal challenge in maintaining compliance with the Fair Housing Act?

• A.The duty of confidentiality regarding financial information
• B.The duty of reasonable care in property inspections
• C.The duty of accounting for earnest money deposits
• D.The duty of loyalty when one party makes discriminatory remarks about protected classes

Q2.Under contract law, what is the primary purpose of a contingency clause in a real estate purchase agreement?

• A.To allow the seller to cancel the contract without penalty
• B.To make the contract legally binding on both parties
• C.To provide a condition that must be satisfied for the contract to remain in effect
• D.To establish the closing date for the transaction

Q3.Under RESPA's affiliated business arrangement (ABA) disclosure requirements, when must a real estate brokerage provide the required written disclosure if they refer clients to their affiliated mortgage company?

• A.Within three business days after the mortgage application is submitted
• B.No later than the delivery of the Loan Estimate to the borrower
• C.At the time of the referral or when the referral is first discussed
• D.At closing when all settlement service providers are disclosed

Q4.Under the Dodd-Frank Wall Street Reform Act and Regulation Z's loan originator compensation rules, which of the following compensation structures for a mortgage loan originator is PROHIBITED?

• A.A flat per-loan fee paid by the lender regardless of the loan's interest rate or terms
• B.A bonus paid from a lender's overall profits based on aggregate loan volume over a quarter
• C.A commission calculated as a percentage of the loan amount that increases when the borrower accepts a higher interest rate
• D.A salary paid by an employer-lender with a year-end bonus based on overall company performance

Q5.A Michigan homeowner sells their principal residence, which has a taxable value of $120,000 and a state equalized value (SEV) of $200,000, to an unrelated buyer. Under Michigan's Proposal A and the General Property Tax Act (MCL 211.27a), what happens to the property's taxable value for the tax year immediately following the transfer?

• A.The taxable value remains capped at $120,000 because Proposal A protections run with the land and continue to benefit subsequent owners.
• B.The taxable value uncaps and is reassessed at the property's SEV of $200,000, after which the Proposal A annual increase cap applies to the new owner going forward.
• C.The taxable value uncaps and is permanently set at the purchase price, regardless of the SEV, because Michigan law bases taxable value on actual consideration paid.
• D.The taxable value is recalculated at 50% of the purchase price only if the purchase price exceeds the current SEV by more than 20%.

Q6.Under the federal Fair Housing Act, a property manager who refuses to rent an apartment to a family with children because the building is 'adults only' is most likely violating which protected class?

• A.Familial status
• B.National origin
• C.Religion
• D.Sex

Q7.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.

Q8.Under the Equal Credit Opportunity Act (ECOA), a lender is prohibited from discriminating against a loan applicant based on which of the following?

• A.The applicant's credit score
• B.The applicant's debt-to-income ratio
• C.The applicant's national origin
• D.The applicant's employment history

Q9.Under the Michigan Seller Disclosure Act (MCL 565.951 et seq.), when must a seller provide the Seller's Disclosure Statement to a prospective buyer in a residential transaction?

• A.Before the buyer makes a written offer to purchase the property.
• B.Within 72 hours after the purchase agreement is fully executed by all parties.
• C.No later than the day of closing.
• D.Only if the buyer's agent submits a written request for the disclosure.

Q10.According to MCL 339.2513, what is required for a real estate salesperson to receive compensation from a real estate transaction?

• A.Direct payment from the client is acceptable if disclosed
• B.Compensation must be paid through the employing broker
• C.Payment may come from any licensed real estate professional involved in the transaction
• D.Compensation may be paid directly by the title company at closing

Q11.A seller deliberately fails to disclose a known roof defect on the SPDS. After closing, the buyer discovers it and sues. What is the most likely legal theory?

• A.Strict liability — sellers are automatically liable for all undisclosed defects
• B.Fraudulent misrepresentation or concealment — the seller had knowledge and failed to disclose
• C.Breach of warranty — the SPDS operates as a warranty of property condition
• D.Negligence per se — any SPDS omission is automatically a statutory violation

Q12.When multiple listing services (MLS) are involved in a transaction, which document typically governs the commission split between cooperating brokers?

• A.The purchase agreement between buyer and seller
• B.The MLS rules and the listing broker's offer of cooperation
• C.The listing agreement between seller and listing broker
• D.The buyer representation agreement

Q13.A buyer delivers a $5,000 earnest money check to a Michigan salesperson on a Friday evening after the broker's office is closed. Under Michigan law, by when must the salesperson deposit or deliver the earnest money to the employing broker?

• A.Immediately upon receipt, regardless of business hours.
• B.Within 24 hours of receipt.
• C.By the next business day after receipt.
• D.Within three banking days of receipt.

Q14.An appraiser is valuing a rental property that generates $48,000 in annual net operating income. If the capitalization rate for similar properties in the area is 8%, what is the estimated value using the income approach?

• A.$600,000
• B.$384,000
• C.$480,000
• D.$640,000

Q15.A state real estate board is reviewing the license renewal application of a salesperson who was recently found to have violated the Equal Credit Opportunity Act (ECOA, 15 U.S.C. § 1691) by advising a lender to deny a loan application because of the applicant's national origin. Which statement BEST describes the board's authority in this situation?

• A.The board may deny the renewal application because the conduct reflects a lack of honesty and trustworthiness required of licensees, even though ECOA enforcement is primarily a federal matter
• B.The board must renew the license because ECOA violations are exclusively enforced by the Consumer Financial Protection Bureau (CFPB) and the board has no jurisdiction
• C.The board may only act after the salesperson has been convicted of a criminal offense related to the ECOA violation
• D.The board must wait for the federal court to issue a final judgment before it can consider the violation in the renewal process