MSHDA Considering Real Estate Transfer Tax to Fund Housing Development and Rehab, Annual Fair Housing Continuing Education Bill Moving Forward, and State Legislation to Provide Guardrails for Right to List Home Sale Agreements Coming Soon
Things are starting to heat up in the Michigan State Legislative as there are rumors of a potential end of session shortly following the November 7th election day (teaser for a future GAD Top 3). The GAD Top 3 this week focuses on three of the most impactful issues on the real estate industry currently under consideration at the state level: A potential real estate transfer tax to fund housing development and housing rehab projects by MSHDA, Michigan State House passes a bill to establish 1 hour of annual mandatory Continuing Education focused on Fair Housing Law, and legislation being drafted to provide guardrails for Right to List Home Sale Agreements. Information, courtesy of Aspire North REALTORS® President-Elect and Michigan REALTORS® Public Policy Committee Member, Jessica Brutzman.
1. MSHDA Considering Real Estate Transfer Tax to Fund Housing Development and Rehab
The Michigan State Housing Development Authority (MSHDA) recently proposed increasing the state portion of the real estate transfer tax to create funding to support new and rehabbed housing at certain income levels. While they have not yet proposed a specific percentage increase, MSHDA would like to raise about $50 million annually via this proposed real estate transfer tax. They envision this as a tax credit program like the proposed Neighborhood Homes and Investment Act in Congress and see the transfer tax as a means of providing a stable source of funding along with it being linked specifically to housing. Michigan REALTORS met with the Director of MSHDA, Amy Hovey, on the proposal and let her know that Michigan REALTORS has been and continues to be opposed to the real estate transfer tax and any increases. Definitely something to keep an eye on.
2. Annual Fair Housing Continuing Education Bill Moving Forward
This past Wednesday, September 27th Michigan House Bill 4717 was passed by the Michigan House of Representatives and will now move the Michigan State Senate for consideration. Currently, real estate licensees are required to take 18 hours of continuing education (CE) during your 3-year licensing cycle - 2 hours annually of legal education (6 hours total for the 3-year licensing cycle) and 12 hours of elective education. This proposed change would maintain the required 18 hours of CE during a 3-year licensing cycle with the amendment that real estate licensees complete 1 hour of mandatory CE focused on Fair Housing Law each calendar year. This would amend the mandatory 18 hours of CE during a 3-year licensing cycle CE requirements to:
- 6 hours of Legal Education (2 hours annually)
- 3 hours of Fair Housing Law (1 hour annually)
- 9 hours of Elective Continuing Education
Fair Housing is currently a requirement for prelicensure for both brokers and salespersons, but it is not mandated past the initial license. Michigan REALTORS Policy Committee feels strongly that licensees should receive up-to-date training in Fair Housing. We could see this bill move very quickly to the Michigan State Senate to possibly be enacted before the start of 2024. More news on this front soon, I’m sure.
3. State Legislation to Provide Guardrails for Right to List Home Sale Agreements Coming Soon
You may remember from the June 26th edition of the GAD Top 3 speaking on the “Right-to-List” contracts starting to occur in northern Michigan. Specifically, a program called the “Homeowner Benefit Program” was offering “Right-to-List” contracts by a Florida brokerage (MV Realty) paying an upfront amount of money (ranging from $300 to $5,000) for homeowners to sign an agreement stating if they decide to sell their home MV Realty has the exclusive right to list their home on commission for the next 40 years. In addition to the right to list, the real estate firm also secures the right to list by placing a lien on the property. Michigan REALTORS has been working to put together state legislation that better defines this practice and provides guardrails to protect prospective sellers. A third draft of a bill is currently being prepared by the Legislative Service Bureau which would:
- Provide a statutory definition as follows: “Right-to-list home sale agreement” means an agreement whereby the owner of residential real estate provides a real estate broker with an exclusive right to list the real estate for sale at a future date in exchange for monetary consideration or an equivalent to monetary consideration.
- Provide a more consumer-facing framework for these agreements to better and more transparently operate, as follows:
Sec. 2519. A right-to-list home sale agreement shall not be enforceable if the agreement:
(a) Is not in writing signed by all persons with an ownership interest in the real estate; or
(b) Is for a period longer than 2 years; or
(c) Does not include an option allowing the owner to terminate the agreement early in exchange for an amount that is not greater than the original consideration paid to the owner plus six percent per annum from the date of such payment through the date of termination; or
(d) Does not include in a conspicuous manner on the first page of the agreement both the period for which the agreement is effective and an explanation of the early termination option. - A non-compliant right-to-list home sale agreement would be a violation of the Occupational Code.
