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HB 5227

AN ACT RELATING TO EDUCATION -- COUNCIL ON ELEMENTARY AND SECONDARY EDUCATION

2025 Regular Session Introduced by Susan Donovan and 9 co-sponsors

HB 5227 tightens real estate licensing rules, requires clearer disclosures and trust-account practices, bans payments to unlicensed persons, and strengthens recordkeeping and enfor

06/26/2025 Effective without Governor's signature
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Bill Summary · HB 5227

Summary — HB 5227 (Introduced 2025)

Purpose

HB 5227 amends section 2512 of the Michigan Occupational Code (1980 PA 299) to revise and clarify a range of prohibited conducts for real estate licensees (brokers, associate brokers, and salespersons). The bill updates trust-account requirements, agency disclosure and buyer-agency practices, restrictions on paying unlicensed persons, recordkeeping, and related enforcement/timeliness provisions.

Key provisions

  • Lists licensee misconduct that may trigger discipline (subject to statutory penalties):

    • Acting for more than one party in a transaction without the parties’ knowledge (except property management).
    • Failing to provide the required written agency disclosure to prospective buyers or sellers (per section 2517).
    • Associate brokers or salespersons representing another broker without employer’s express knowledge/consent.
    • Failing to account for or remit money belonging to others.
    • Changing business location without notifying the Department.
    • Brokers failing to return a salesperson’s license within 5 days (sec. 2507).
    • Property-management violations of sec. 2512c(2), (5) or (6).
    • Sharing fees/commissions with unlicensed persons (general ban), with a narrow exception allowing payment to an out‑of‑state broker who did not conduct the negotiation in Michigan; commercially prepared lists are excluded from the ban.
    • Developing/using market analyses that do not comply with sec. 2601(a)(ii).
    • Failing to provide the minimum services required under sec. 2512d(3) when operating under a service provision agreement unless waived in writing by the seller/lessor.
    • Trust/escrow account rules (applies except for property management accounts):
    • Brokers must retain and account for deposits pending closing/termination.
    • Salespersons must deliver deposits to their broker on receipt.
    • Prohibits commingling of client funds with broker business/personal accounts.
    • Broker may maintain multiple trust accounts and deposit up to $2,000 of its own funds per trust account to cover fees/minimums, which must be tracked in records.
    • Deposits payable to the broker must be placed into custodial trust/escrow no later than 2 banking days after notice that an offer is fully accepted.
    • Detailed recordkeeping requirements and department inspection authority; trust accounts must designate the broker as trustee and permit withdrawals without prior notice.
    • If an escrowee other than the broker is named in the purchase agreement, the licensee holding the deposit must deliver it to that escrowee within 2 banking days after notice of acceptance.
    • Prohibits void/unenforceable “right-to-list” home sale agreements (per sec. 2512g).
    • Requires written buyer agency agreement disclosing broker compensation before assisting a buyer in developing/negotiating offers (prospective buyers are considered customers until such written agreement). Exception: a seller’s agent or transaction coordinator may prepare an offer for an unrepresented buyer if done per that buyer’s instructions.

  • Enforcement timeliness: complaints seeking penalties must be filed no later than 18 months after the alleged violation or (if tied to a transaction) the date the transaction is completed — whichever is later.

Who is affected

  • Real estate brokers, associate brokers, and salespersons licensed in Michigan.
  • Prospective buyers and sellers (through changes to agency disclosure and buyer-agency rules).
  • Unlicensed individuals who might be paid finders’ fees or commissions (payments to unlicensed persons are broadly prohibited).
  • Out‑of‑state brokers (limited payment exception when they did not conduct negotiations in Michigan).

Procedural/timeline notes

  • Introduced March 14, 2025; read and referred to committee in April and again in November 2025; electronically reproduced 11/06/2025. Introduced by Rep. Parker Fairbairn.
  • Enactment is conditional: the bill’s amendatory act “does not take effect” unless two companion bills (HB 5228 and HB 5229 of the 103rd Legislature) are also enacted. The bill is tie‑barred to HB 5228 and HB 5229.

Other observations

  • The section references penalties under the occupational code’s penalty articles; readers should consult the code (articles 5 and 6) and related sections cited (e.g., 2507, 2512c, 2512d, 2512g, 2517, 2601) for full procedural and penalty details.

Compiled from official sources — confirm details with the bill’s official record.

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