Does anyone here invest in Michigan? And if you do what have been your experiences with the Broker Licensing requirements. As it stands if you sell more than 4 properties in any 12 month period you are required to be a Broker as they now say your primary income or livelihood is as a Dealer.
Are any of you out there doing lease options and Land Contracts?.
Let me rephrase that. Are there any other states out there require a broker license? And how do you get around it if you do.
Framer35,
There is a little more to MI licensing law than that, and every person I know seems to disagree on the interpretation, including people at the state, and people running RE schools.
Judge for yourself, here’s the link:
http://www.cis.state.mi.us/bcsc/forms/real/redbook2.pdf
It’s on Page 66, R339.22319
Let’s see, I can represent myself in a court of law. I can not be accused of practicing law with out a license, a fool maybe, but nothing else.
But apparently I do not have the right in the state of Michigan to dispose of things I own as I see fit. Bad enough I have to pay taxes, and filing fees, now I have to pay another individual, who will have done nothing, a commission for doing nothing. Or I have to jump through the hoops of a jealous governing body who could not help a seller and I could, and become that which could not help the seller.
THIS IS UN-AMERICAN!! IT ALL SMACKS OF BLATANT PINKO COMMUNISM
R 339.22319 Licensure required for owner of real estate engaging in sale as principal vocation; acts constituting principal vocation; sale of real estate owned by broker or associate broker; licensee to reveal ownership or interest when selling property licensee owns or has interest in.
Rule 319. (1) Licensure as a real estate broker is required of an owner of real estate who engages in the sale of real estate as a principal vocation, unless the owner engages the services of a real estate broker. Acts constituting a principal vocation include any of the following:
(a) Engaging in more than 5 real estate sales in any 12-month period.
NO FLIPPING HOUSES OR WHOLESALING, AT LEAST NOT MORE THAN FIVE A YEAR.
(b) Holding one’s self out to the public as being principally engaged in the sale of real estate.
NO ADVERTISING WITH “I BUY HOUSES” ADS. DEFINITELY DON’T TELL ANY ONE YOU ARE AN INVESTOR OR HAND OUT BUSINESS CARDS.
(c) Devoting over 50% of one’s working time, or more than 15 hours per week in any 6-month period, to the sale of real estate.
DON’T DARE TO DUE YOUR DUE DILIGENCE, LEARN INVESTING, MAKE OFFERS ETC.
(2) A sale of real estate by a real estate salesperson, other than his or her principal residence, shall be deemed to be done as a principal vocation of the salesperson and the sale shall be through a licensed broker.
DON’T DARE TO SELL YOUR SUMMER COTTAGE. OR YOUR RENTALS
(3) Sales of real estate owned by, or under option to, a broker or associate broker are subject to the provisions of the code and these rules.
(4) In selling property owned by a licensee or in which a licensee has any interest, the licensee shall reveal the facts of his or her ownership or interest and his or her licensure to the purchaser, in writing, before the offer to purchase is signed. Satisfactory written proof of this disclosure shall be provided by the licensee upon request by the department. History: 1991 MR 4. Effective May 1, 1991. [b][/b][i][/i]
I WOULD SUPPOSE THEREFORE THAT ALL REI INVESTORS IN MICHIGAN ARE REAL ESTATE AGENTS? Somehow I do not believe this.
AND IF NOT THEY GET THEIR PRIVATES SLAPPED? WHAT THEN? DOES THE STATE THEN FINE THEM THE 7% SALES COMMISSION AND GIVE IT TO THE BOARD OF REALTORS?
>:( >:(
Framer35,
You did your reading!
As far as your comments go, you’re preaching to the choir. We Michiganders have all been there before.
Just remember that nowhere does it say you have to PAY a broker for those houses over 5. And if you do pay that broker, it doesn’t say how much. That’s between you and the broker. Happy negotiating.
As far as I can tell, through reading board minutes and people I have spoken with, there has never been a case brought against an individual in MI for practicing real estate without a license. Anyone out there correct me if I am wrong. You’d think the powers that be would be more interested in the rampant mortgage fraud!
Plus in MI it is so ridiculously easy to get an RE license it is absurd. Have a pulse? I really don’t think that representation by an agent/broker does much to protect the poor naive consumer at all.
Since this is a public forum, I’ll stop myself there!
Sounds to me like the Realtors have a Union up there and are lobbying the state legislature to emplace laws to restrict personal sales such that you almost have to use a Realtor.
…and Framer, your state is not technically entrenched in “BLATANT PINKO COMMUNISM…”, it’s “blue”…but, for my money, that’s just about the same difference…
Keith
If it’s true that there has never been a case brought against someone in MI for practicing real estate without a license…I can certainly see why. I am not a lawyer, but the way the law is written is pretty vague at best. It would be interesting to see how that would hold up in court if it ever did happen.
I loved the pinko communism remark. Living in MI, i can’t say I disagree. That was funny.
My comments were somewhat tongue in cheek. If only for the absurdity of thinking of enforcing this law actually trying to do so.
I had heard of this law from several People. An Aunt who was an RE Agent, and two particular lawyers I had review my paperwork. All were well meaning and attempting to make me aware of certain issues. One lawyer was supposed to send me the legal code for this, but I still had not gotten it. The other was curious as to how I was going to deal with it. He acknowledged that basically making a ruckus and doing things of questionable nature might attract notice and give cause for someone to hold that over my head. He did not seemed to concerned about any real consequences if I kept my nose clean.
I would assume it is more of a case of needing to have some power over unscrupulous investors. They, the powers that be, can say, “You don’t have a License”. Despite the fact that fraud of any kind is against the law, the legislature always needs more laws to say they are out to protect us.
In that line of thought, I always thought that in general, vandalism was bad and therefore against they law. But if you have ever read the info boards at a rest stop you will find that they have specific laws and ordinances against vandalizing a rest stop. Some how a rest stop is different being government property maybe, but it rates it’s own laws.
Seems to me they could say, "if it ain’t yours and you break it on purpose you have to pay for it. But just like this licensing issue they could not leave well enough alone.
It doesn’t say anything about an LLC, land trust, corp, etc selling 5+ houses and paying you a salary… 
*I’m not a lawyer, this does not constitute legal advice, please consult with someone that has passed the bar and actually lives in MI." /end:disclaimer
Rich
Exactly,
My worry more than anything was the overzealous, and jealous realtor, in the interests of “defending the innocent” (probably his lost commission) would start to make things uncomfortable. I have since gone on to talk to several more realtors and brokers. some of them are actually nice people.
Now I am just trying to find a nice Title Company that won’t be scared away from doing a closing for me when I sell to a buyer when they cash out all of my Land Contracts. In trying to explain subto to them they got all worried about the disclosure laws. Interesting enough i told one of them after they said that they do do L/O that they also “violated” the DOS. They did not believe me.
One of the other Title companies said flat out that they do not work with FSBO’s as they know their bread and butter is Realtors. I wonder if they know that it is illegal to refuse to do so. Truly I think they just don’t want to educate home-owners and would be investors. Which would have been an honest answer, and not potential get them into trouble.
I do not have to tell the Lender, nor does the title company, the seller or a realtor. In the state of Michigan the only thing that I have to do is include in bold print essentially " Selling the house may not relieve the mortgage holder of any obligation to repay the mortgage lien, that is will still remain in their name". No problem, why lie, they are my partner in this deal for all intents and purposes.
and until I get five houses purchased and can afford the $50 to form another LLC, I won’t worry about the License thing.
But the Land Trust thing. Been to enough lawyers to find out about the legality of it. Simply put, not illegal, just not recognized. The pitfall? Say that I did use a trust, land trust, Pac Trust, Bronchick, or Gatten as the usual procedure is to transfer the beneficial interest, the sale would not be recognized and the original owner could rightfully claim that he did not sell it to me. Meaning I would effectively lose all claim to any stake in the property. Worse though would be if I had sold it to someone else on a L/C and this came up before the execution of their contract. I would potentially be committing fraud by selling something I did not own.
Mind you there were some other problems that I was told about, but the fraud thing was enough.