Key Takeaways
- Michigan licensees must disclose adverse material facts about property condition to all parties
- Agency disclosure must be provided in writing before substantive discussions
- Stigmatized property disclosures (deaths, crimes) are generally not required by law
- Brokers must maintain copies of all disclosure forms and agency agreements
- Lead-based paint disclosure is required by federal law for homes built before 1978
Michigan Disclosure Requirements
Michigan has specific requirements for agency and property disclosures in real estate transactions.
Agency Disclosure Timing
Before Substantive Discussions
Agency disclosure must occur before:
- Discussing specific properties in detail
- Learning about client's needs or motivation
- Discussing financial qualifications
- Negotiating terms of a transaction
Documentation
The agency disclosure should:
- Be in writing
- Explain all available relationship types
- Be signed or acknowledged by the party
- Be retained in transaction files
Property Condition Disclosures
Material Facts
Michigan licensees must disclose material facts that:
- Affect the property's value or desirability
- Are known to the licensee
- Are not readily observable by the buyer
- Would influence a reasonable buyer's decision
What Must Be Disclosed
| Must Disclose | Description |
|---|---|
| Known defects | Structural, mechanical, environmental |
| Property condition issues | Water damage, mold, pests |
| Material facts | Anything affecting value |
| Required by law | Lead paint, etc. |
What Need NOT Be Disclosed
Michigan law generally does not require disclosure of:
| Category | Examples |
|---|---|
| Deaths on property | Murder, suicide, natural death |
| Prior occupant health | HIV/AIDS, other diseases |
| Certain crimes | Violent crimes at property |
| Sex offender proximity | Nearby registered offenders |
Note: While not legally required, agents should be honest if directly asked about these matters.
Federal Disclosure Requirements
Regardless of Michigan state law, federal requirements apply:
Lead-Based Paint Disclosure (Pre-1978 Homes)
For any home built before 1978:
| Requirement | Description |
|---|---|
| EPA pamphlet | Must be provided to buyer |
| Known hazards | Disclose any known lead-based paint |
| 10-day inspection | Buyer has right to inspect (can waive) |
| Signed disclosure | Specific forms must be signed |
Other Federal Requirements
| Disclosure | When Required |
|---|---|
| Flood zone | Required by lenders for federal loans |
| RESPA disclosures | Required for federally related loans |
| Fair housing | Equal opportunity in all transactions |
Seller Disclosure Statement
Voluntary vs. Mandatory
While not mandated by state law in the same way as some states, Michigan transactions commonly include:
- Property condition disclosure forms - Detailing known issues
- Lead-based paint disclosure - Federal requirement
- Seller representations - In the purchase agreement
Best Practices
Agents should:
- Encourage sellers to complete disclosure forms
- Review disclosures for accuracy
- Ensure buyers receive all disclosures
- Document delivery of disclosures
Documentation and Record Retention
Required Records
Brokers must maintain:
- Agency disclosure forms
- Agency agreements
- Transaction files
- Trust account records
- Correspondence
Retention Period
Records should be retained for a minimum period as required by LARA rules, typically several years after the transaction closes or terminates.
Exam Tip: Always document disclosures in writing and keep copies. If it's not in writing, it didn't happen.
What property condition information must Michigan licensees disclose?
Which of the following generally does NOT need to be disclosed in Michigan?