Michigan REALTORS Opposes Elimination of Independent Contractor Status and Inclusion of REALTORS in the Michigan Consumer Protection Act; Grand Traverse County Potential Consideration of Onsite Wastewater and Sewage Disposal Regulation; First Draft of Federal Tax Reform Bill “Very Positive” for Real Estate
This week on the GAD Top Three, we cover issues at the local, state, and national levels. At the state level, Michigan REALTORS is fighting another attempt to eliminate the independent contractor status and an effort to open REALTORS up to frivolous cases. At the local level, we go over a summary of the Grand Traverse County Onsite Wastewater and Sewage Disposal Regulation, which may be considered for approval and adoption this Wednesday May 21st. At the national level, the first draft of federal tax reform delivers significant wins for the real estate sector.
1. Michigan REALTORS Opposes Eliminating Independent Contractor Status and Including REALTORS in the Michigan Consumer Protection Act
In case you missed it in the Michigan REALTORS E-news on Thursday, May 8th, two Michigan Senate Bills currently threaten real estate brokers and salespersons' independent contractor status; and a third bill could add additional unnecessary regulation in the form of damages, injunctions, class action lawsuits, incentivizing attorneys to pursue frivolous lawsuits.
Michigan Senate Bills 6 and 7 which were both passed out of the Labor Committee and to the Michigan State Senate Floor would create a new 3-part “ABC” test to determine if a worker is an employee or an independent contractor. These bills are modeled off a California law with an initially high bar that would require most current independent contractors to be classified as employees. However, the California law has over 100 exemptions, including for real estate. The Michigan bills do not contain any exemptions, even though real estate brokers and salespersons have their own specific test under real estate licensing law and under the Internal Revenue Code.
Michigan Senate Bill 134, if enacted, would eliminate a long-standing exemption for licensed professions, including real estate brokers/salespersons, and appraisers, from the Michigan Consumer Protection Act (MCPA). This current exemption has been recognized and upheld by the Michigan Supreme Court. This exemption is important because real estate licensees are already subject to oversight by Licensing and Regulatory Affairs (LARA) for licensing violations and other unethical behavior. This Senate bill would add additional unnecessary regulation in the form of damages, injunctions, class action lawsuits, with an incentive for trial attorneys to pursue frivolous cases with the possibility of collecting attorney’s fees.
For more information check out the Michigan REALTORS Policy Matters report written by Brad Ward, Esq. Vice President of Public Policy and Legal Affairs. The information above is courtesy of Brad Ward and Michigan REALTORS.
2. Grand Traverse County Potential Consideration of Onsite Wastewater and Sewage Disposal Regulation this Wednesday May 21st
As covered in previous GAD Top 3s (Feb. 24th, 2025 and April 28th, 2025) the Grand Traverse County Commission is considering an Onsite Water and Sewage Disposal Regulation (draft regulation as of April 23rd, on pages 8 to 17). Aspire North REALTORS has requested numerous changes to the regulation. Grand Traverse County Health Department officials and Grand Traverse County Commissioners have expressed support for a large portion of these changes. As of this writing on Friday, May 16th the Wednesday, May 21st Grand Traverse County Commissioners agenda has not yet been published. However, it is expected that a new draft of the Grand Traverse County Onsite Wastewater and Sewage Disposal Regulation, will be presented to the Grand Traverse County Commission for potential acceptance and possibly adoption at this May 21st meeting. Here is a quick recap below of the Grand Traverse County Onsite Wastewater and Sewage Disposal Regulation in a nutshell as it is currently written:
- This regulation would require that any property in Grand Traverse County that contains a Onsite Sewage Disposal System (OSDS) or Onsite Water Supply System (OWSS) AND is located within 300 feet of surface water undergo an inspection and receive approval from the Grand Traverse County Health Department.
- Surface water is defined in the regulation as “any body of water above ground, including lakes, streams, rivers or wetlands that retains water for a duration of six (6) months or more.”
- The current effective date, if approved and adopted, would be January 1st, 2026
- Inspections will need to be conducted by a private inspector certified by the Grand Traverse County Health Department, who meets the minimum standards as set forth in Grand Traverse County Health Department Regulation Guidelines.
- If a system is determined to be failing:
- A proposed corrective action plan and third-party estimate needs to be provided within thirty (30) days.
- On or before the closing date or date of transfer one and one half (1 ½) times the estimated cost of the corrective action needs to be placed in an escrow account
- All necessary corrective action needs to be completed within one hundred and eighty (180) days following the Grand Traverse County Health Departments approval of the corrective action, unless prohibited by weather.
Thanks to the review and input of Aspire North REALTORS members some of the specific amendments our association has requested of the Grand Traverse County Onsite Wastewater and Sewage Disposal Regulation include:
- The creation of a map of properties located within 300 feet of surface water.
- Defining items like a wetland and an area of known water quality concern.
- Establishing standards for water sample collection, a timeframe for certification of inspection evaluation reports, and a timeframe for review of corrective action plans.
- Allowance of financing options for Onsite Wastewater and Sewage Disposal system repairs to support the ability of our county's most vulnerable to afford to repair their systems.
- Clarification on how proof of a corrective action plan can be provided to health department officials in a timely manner to ensure compliance and corrective actions to protect citizens and our environment; while understanding that proposed corrective actions in many cases will be dependent on the availability and expediency of private inspection companies.
As this consideration of a Grand Traverse County Onsite Wastewater and Sewage Disposal Regulation and subsequent Grand Traverse County Health Department Guidelines as considered, we will keep you posted in the GAD Top 3. For any questions or feedback please reach out to connor@aspirenorthrealtors.com.
3. First Draft of Federal Tax Reform Bill “Very Positive” for Real Estate
The Federal House Ways and Means Committee on Wednesday, May 14th passed their portion of tax reform legislation and this current version delivers significant wins for the real estate sector. The National Association of REALTORS advocacy team has successfully secured its top five tax priorities in the draft bill. These priorities include:
- An enhanced small business tax deduction
- Strengthening the state and local tax (SALT) deduction
- Make the current lower individual tax rates permanent and increase the child tax credit
- Protections for the mortgage interest deduction (MID)
- No changes to the 1031 or to so-called “Business SALT” deductions for real estate professionals.
Other pro-business provisions include a renewal of the opportunity zone program (current opportunity zones in Northwest Michigan include Garfield Township, the City of Cadillac, portions of Kalkaska County, and Mancelona) with new incentives and include key provisions to support development of affordable housing using the Low-Income Housing Tax Credit (LIHTC). Learn more details about this tax reform package via NAR news release.
