Selling a House in Michigan

Selling a house is one of the most significant legal transactions you'll ever participate in. It's important to know your legal rights and understand the process.

Working With a Real Estate Agent

In Michigan, real estate agents may represent sellers, buyers, or may act as dual agents representing both parties in a real estate transaction. Real estate agents have a "fiduciary duty" to the party that they are representing, in this case, the seller. As a fiduciary, a real estate broker or agent is held by law to owe specific duties to the party he is representing, in addition to duties or obligations stated in a listing agreement, buyer representation agreement, or other contract of employment.

The specific fiduciary duties of a seller's agent include:

• Loyalty
• Obedience
• Confidentiality
• Reasonable care and diligence
• Accounting

Michigan law requires that the seller provide the buyer with a completed Seller's Disclosure Notice on or before the effective date of a contract. This statement must disclose all known structural defects, as well as problems with or information about the heating, plumbing, mechanical, and electrical systems. The seller also must include potential problems of which he or she is aware such as easements, environmental hazards, landfills, flooding, zoning violations or noise problems. It is also the duty of the seller's agent to conduct a visual inspection of the home and report all facts that materially affect the value or desirability of the property.

If you are selling a house built before 1978, you must comply with a federal law called the Residential Lead-Based Paint Hazard Reduction Act of 1992. The Act requires that you disclose all known lead-based paint and hazards in the house.

Purchase Agreements

When you've got a serious buyer, you'll receive a written offer to purchase your home, sometimes called a "sales and purchase agreement," "contract for purchase," "agreement to sell," "sales agreement" or "purchase agreement." The purchase agreement states the finalized terms and conditions for the sale.

The purchase agreement contains specific terms and disclosures, including restrictions and easements, liens on the property, inspections and disclosures.

You won't have very long to decide whether or not to take the offer or propose a counteroffer so it's important to be informed ahead of time.

Common counter-proposal items include:

• A higher purchase price
• A higher deposit
• Giving buyer less time to remove contingencies
• Excluding certain items from the sale
• Providing you move in time to vacate the house after the sale is closed
• A clause making it a contingency that your attorney approve the contract
• A "liquidated damages clause" that details how much money the buyer will owe you if the buyer backs out of the deal for reasons other than the contingencies listed in the contract

Legal Title Issues

Your Michigan real estate lawyer or title company will investigate the legal title of the property you want to sell, and may find issues you'll need to understand.

In Michigan, for example, an implied easement may be present where there is an easement by necessity. Generally, whenever a transfer occurs that results in a "landlocked" parcel and there is no method of access whatsoever, except over the land retained by the seller, or over the land of a stranger, then the necessity is recognized. Another implied easement is recognized when land in one ownership is divided and, at the time of division, one portion is being used for the benefit of the other portion.

The property you're interested in may also be subject to a "lien," which is a charge on the property to satisfy a debt or other obligation owed by the current owner of the property. A lien encumbers property as long as it exists and has been recorded in the public records.

In Michigan, liens on a piece of property may include:

• Construction liens
• Tax liens
• Mechanics lien
• Unpaid federal and state tax liens
• Unpaid child support
• Closing Costs

In Michigan, you may need to pay for the following charges - called " closing costs"-at the time you sell your home:

• Satisfying the remaining balance on loan, if house not paid in full
• Transfer taxes
• Documentary stamps on the deed
• Title insurance
• Property taxes (prorated)
• Broker's commission
• Home inspection

Specific Performance

In Michigan, a seller who agrees to sell a particular property must do so unless the buyer fails to meet all the terms of the purchase agreement. This is called "specific performance," which is a legal action to compel performance of a contract. For this contract remedy, a court orders one party to comply with the terms of the agreement. If you have second thoughts on a particular sale, you'll want to immediately contact an attorney.