MICHIGAN STATE LAW EXAM WITH
100% CORRECT ANSWERS 2026
Laws that limit the interest charged by lenders are known as:
Usury law
Truth in lending law
RESPA law
Anti-trust law correct answer Usury laws limit the interest rate that lenders and
private owners can charge. Truth in lending law requires lenders to disclose all
finance charges. RESPA law prohibit kickbacks between settlement service
providers. Anti-trust law prohibit unreasonable restraints on trade and commerce
All the following are true with regard to a salesperson's license except:
It is held in custody by the broker
It must be returned to the department within five days of terminating
employment
It must be carried on the salesperson's person when practicing the occupation
It must be renewed every three years correct answer The salesperson (or broker)
carries a pocket card, not a license when practicing the occupation. The broker
keeps custody of the license at the office. The license must be returned to the
department within 5 days, when the broker is notified that the salesperson is
terminating employment and the license must be renewed every three years
based on the date it was issued.
,A purchase agreement was subject to financing and the buyer was rejected by the
lender and notified the broker to rescind the transaction and refund the deposit.
The broker presented the seller with a mutual release document, but the seller
refused to sign it stating that the buyer did not act in good faith and must forfeit
the EMD. What is the status of the EMD?
If the lender issues a rejection letter, the deposit is refunded to the buyerThe
deposit must stay in the broker's trust fund until the dispute is settled
The deposit must be turned over to a third party escrowee until the dispute is
settled
The broker must interplead the deposit correct answer the deposit must stay in
the brokers rust fund until the dispute is settled
Which of the following is not required to be documented in the trust account
records?
The date of depositing the funds into the account
The name of the payee
The purpose of dispersing money
The amount of commission paid to the broker correct answer the amount of
commission paid to the broker
What is the course of action that the department is authorized to take when a
licensee refuses to cooperate in an investigation?
Issue a formal complaint
Seek a subpoena from the Department of Atty. Gen.
Hold a formal hearing
Revoke the license correct answer seek a subpoena from the department of atty
gen
,An agent is showing property located in an unincorporated area. What must the
agent disclose to the buyer?
Property tax will increase more rapidly in comparison to other areas
A list of all the shopping districts and places of worship
The roads may have to be maintained by the homeowner
The buyer must pay special assessments correct answer Unincorporated land can
be used to build a house, but the roads may receive less attention from the county
road commission and may be treated as private roads which means that the
owners must pay for snow removal and other road repairs.
A real estate license expires
October 31 of each year
December 31 of each year
December 31 on biennial basis
Every three years based on the issuance date correct answer every three years
based on the issuance date
A purchase agreement stated that the parties agreed to settle future disputes
through arbitration. Shortly after closing, the purchase discovered infestation in
the house and found evidence that the seller may have known about it but did not
disclose. All the following are true except:
The purchaser can choose to arbitrate or file a lawsuit
If the seller misrepresented the infestation, he may have committed silent fraud
If the parties arbitrate, the results are binding
, If the listing agent knew about the infestation, the purchaser has a claim against
the seller and the agent correct answer If the parties agree to arbitration, they
may not sue each other or appeal the arbitration award to the courts because
arbitration results are binding. The other choices are all true.
A license limitation may include all the following except:
Denial of a license
Time limitation
Periodic audits of books
Attending real estate courses correct answer denial of a license
The Michigan criminal usury limit is set at:
14%
11%
25%
7% correct answer If anyone charges more than 25% annual interest is considered
to have acted in a criminal manner.
Can a licensee pay a commission to another licensee in a different state?
No, unless the out of state licensee has a Michigan license
Yes, because the out of state licensee is automatically licensed in Michigan due to
reciprocity
Only if the out of state licensee carries out the negotiations in Michigan
Yes, a licensed real estate broker may pay a commission to a licensed real estate
broker in another state correct answer The Code allows a broker in Michigan to
100% CORRECT ANSWERS 2026
Laws that limit the interest charged by lenders are known as:
Usury law
Truth in lending law
RESPA law
Anti-trust law correct answer Usury laws limit the interest rate that lenders and
private owners can charge. Truth in lending law requires lenders to disclose all
finance charges. RESPA law prohibit kickbacks between settlement service
providers. Anti-trust law prohibit unreasonable restraints on trade and commerce
All the following are true with regard to a salesperson's license except:
It is held in custody by the broker
It must be returned to the department within five days of terminating
employment
It must be carried on the salesperson's person when practicing the occupation
It must be renewed every three years correct answer The salesperson (or broker)
carries a pocket card, not a license when practicing the occupation. The broker
keeps custody of the license at the office. The license must be returned to the
department within 5 days, when the broker is notified that the salesperson is
terminating employment and the license must be renewed every three years
based on the date it was issued.
,A purchase agreement was subject to financing and the buyer was rejected by the
lender and notified the broker to rescind the transaction and refund the deposit.
The broker presented the seller with a mutual release document, but the seller
refused to sign it stating that the buyer did not act in good faith and must forfeit
the EMD. What is the status of the EMD?
If the lender issues a rejection letter, the deposit is refunded to the buyerThe
deposit must stay in the broker's trust fund until the dispute is settled
The deposit must be turned over to a third party escrowee until the dispute is
settled
The broker must interplead the deposit correct answer the deposit must stay in
the brokers rust fund until the dispute is settled
Which of the following is not required to be documented in the trust account
records?
The date of depositing the funds into the account
The name of the payee
The purpose of dispersing money
The amount of commission paid to the broker correct answer the amount of
commission paid to the broker
What is the course of action that the department is authorized to take when a
licensee refuses to cooperate in an investigation?
Issue a formal complaint
Seek a subpoena from the Department of Atty. Gen.
Hold a formal hearing
Revoke the license correct answer seek a subpoena from the department of atty
gen
,An agent is showing property located in an unincorporated area. What must the
agent disclose to the buyer?
Property tax will increase more rapidly in comparison to other areas
A list of all the shopping districts and places of worship
The roads may have to be maintained by the homeowner
The buyer must pay special assessments correct answer Unincorporated land can
be used to build a house, but the roads may receive less attention from the county
road commission and may be treated as private roads which means that the
owners must pay for snow removal and other road repairs.
A real estate license expires
October 31 of each year
December 31 of each year
December 31 on biennial basis
Every three years based on the issuance date correct answer every three years
based on the issuance date
A purchase agreement stated that the parties agreed to settle future disputes
through arbitration. Shortly after closing, the purchase discovered infestation in
the house and found evidence that the seller may have known about it but did not
disclose. All the following are true except:
The purchaser can choose to arbitrate or file a lawsuit
If the seller misrepresented the infestation, he may have committed silent fraud
If the parties arbitrate, the results are binding
, If the listing agent knew about the infestation, the purchaser has a claim against
the seller and the agent correct answer If the parties agree to arbitration, they
may not sue each other or appeal the arbitration award to the courts because
arbitration results are binding. The other choices are all true.
A license limitation may include all the following except:
Denial of a license
Time limitation
Periodic audits of books
Attending real estate courses correct answer denial of a license
The Michigan criminal usury limit is set at:
14%
11%
25%
7% correct answer If anyone charges more than 25% annual interest is considered
to have acted in a criminal manner.
Can a licensee pay a commission to another licensee in a different state?
No, unless the out of state licensee has a Michigan license
Yes, because the out of state licensee is automatically licensed in Michigan due to
reciprocity
Only if the out of state licensee carries out the negotiations in Michigan
Yes, a licensed real estate broker may pay a commission to a licensed real estate
broker in another state correct answer The Code allows a broker in Michigan to
