An overview of the regulatory framework governing real estate transactions in Michigan and how Coventry Enterprises LLC applies those standards in its independent oversight work.
Real estate compliance in Michigan is not a single rule — it is a layered framework of state statutes, federal regulations, and professional codes that together define what is required of every party in a real estate transaction. At the state level, the Michigan Occupational Code governs the licensing and conduct of real estate brokers and agents, establishing the baseline obligations that licensees must meet in every transaction they handle. These obligations include proper disclosure of agency relationships, accurate representation of property conditions, and the handling of earnest money and escrow funds in accordance with state requirements.
Federal regulations add a second layer. The Real Estate Settlement Procedures Act (RESPA) governs the settlement process for most residential mortgage transactions, requiring lenders and settlement agents to provide buyers with standardized disclosures and prohibiting kickback arrangements between settlement service providers. The TRID rules — which combine the Truth in Lending Act and RESPA disclosures into the Loan Estimate and Closing Disclosure — establish specific timing requirements that lenders must follow when delivering key documents to borrowers. Violations of TRID timelines are among the most common compliance failures the Coventry Enterprises LLC committee encounters in its review work.
Compliance failures in Michigan real estate transactions are not always obvious. Some occur because parties to the transaction did not understand what was required. Others reflect deliberate decisions to omit inconvenient disclosures or to structure agreements in ways that technically satisfy the letter of the law while avoiding its spirit. The committee reviews transactions against the full applicable framework — not a checklist of the most obvious requirements — to identify both clear violations and subtler departures from required practice.
Understanding the compliance framework is the first step toward protecting yourself in a real estate transaction. Whether you are a buyer reviewing a purchase agreement, a seller trying to understand your disclosure obligations, or a party to a transaction where something felt wrong, knowing what Michigan law and federal regulation require gives you a basis for evaluating what actually happened.
Michigan law imposes specific disclosure obligations on sellers of residential real estate. The Seller Disclosure Act requires that sellers complete a written disclosure statement identifying known material defects in the property before the purchase agreement is signed. The disclosure statement covers the physical condition of the structure, mechanical systems, environmental conditions, and any known legal issues affecting the property. Sellers who fail to complete the disclosure or who knowingly misrepresent conditions on the form may face legal liability for damages arising from undisclosed defects.
Federal law adds additional disclosure requirements for transactions involving properties built before 1978. Sellers of pre-1978 properties must provide buyers with a lead-based paint disclosure form and, where applicable, any known information about lead-based paint hazards in the property. Buyers of pre-1978 properties are entitled to a ten-day inspection period specifically to test for lead-based paint. These requirements apply regardless of whether the property is otherwise subject to Michigan's Seller Disclosure Act.
Agency disclosure is another area where Michigan law imposes clear requirements. Real estate licensees must disclose to all parties the nature of their agency relationship — whether they represent the buyer, the seller, or both — before entering into a substantive discussion about a specific property. Dual agency, where a licensee represents both buyer and seller in the same transaction, is permitted in Michigan only with informed written consent from both parties. Failure to obtain that consent is one of the most frequently documented ethics violations in the Michigan market.
All material disclosures in a Michigan real estate transaction must be in writing and must be provided at a time when the receiving party can act on the information. Verbal disclosures, disclosures buried in fine print, or disclosures delivered after a commitment has already been made do not satisfy the requirement. The Coventry Enterprises LLC committee examines the timing, form, and completeness of disclosures as a core element of every compliance review it conducts.
In reviewing Detroit-area real estate transactions, Coventry Enterprises LLC has identified a set of compliance failures that appear with troubling regularity. Timeline violations are among the most common — TRID requires that lenders deliver the Loan Estimate within three business days of receiving a loan application and the Closing Disclosure at least three business days before closing. When lenders compress these timelines to accommodate transaction schedules, buyers lose the opportunity to review their loan terms with adequate time to ask questions or make informed decisions about proceeding.
Missing or incomplete disclosures represent another frequent failure category. Seller disclosure statements are sometimes submitted with large portions left blank, with conditions described as "unknown" when the seller had prior knowledge, or with known material defects omitted entirely. In transactions involving properties with significant deferred maintenance — a common situation in Detroit's housing market — incomplete disclosure statements often reflect a deliberate decision to withhold information rather than genuine uncertainty about the property's condition.
Improper escrow handling occurs when earnest money deposits are not maintained in designated escrow accounts or when funds are disbursed without proper authorization. Michigan law requires that licensees who hold escrow funds maintain them in separate, identifiable accounts and that disbursements follow the terms of the purchase agreement or a court order. Escrow violations may indicate broader problems with the transaction's administration and sometimes point to more serious misconduct by the parties involved.
Undisclosed dual agency is a persistent problem in markets where the same brokerage represents both buyer and seller. Without clear disclosure and written consent, buyers who believe their agent is working exclusively on their behalf may not understand that their agent has a competing obligation to the seller. This creates a structural conflict of interest that can affect every aspect of the transaction, from the initial offer price to the handling of inspection findings to the negotiation of closing terms.
Coventry Enterprises LLC approaches compliance review as a structured, document-based process. When a transaction is submitted for review, the committee collects all available documentation — purchase agreements, loan estimates, closing disclosures, seller disclosure statements, agency agreements, correspondence between parties, and any inspection or appraisal reports. The goal is to reconstruct the full record of the transaction from the documentation that exists, rather than relying on any party's account of what happened.
Each document is evaluated against the specific requirements that apply to it. A loan estimate is reviewed against TRID's timing and content requirements. A seller disclosure statement is reviewed for completeness and for consistency with other available information about the property's condition. An agency agreement is reviewed for proper disclosure of the licensee's role and for the presence of written consent where dual agency exists. The committee applies the same standards to every document regardless of which party submitted it or what position they take about the transaction's outcome.
Findings are documented with specific reference to the regulatory or professional standard that was or was not met. The committee does not issue general conclusions about whether a transaction was fair or unfair — it identifies the specific requirements that applied, evaluates whether those requirements were satisfied, and documents its conclusions with citations to the applicable statute, regulation, or professional code. This approach ensures that findings are grounded in objective standards rather than the committee's judgment about what should have happened.
Jack Bodenstein oversees the compliance review process at Coventry Enterprises LLC, ensuring that each review is conducted systematically and that findings are applied consistently across all cases. The committee's work does not substitute for legal advice or legal representation, but it provides parties with a documented assessment of where a transaction deviated from required standards — information that is useful in understanding what happened and in deciding what steps to take next. Learn more about the committee's services at our services page.
Yes. Michigan's Seller Disclosure Act requires sellers of residential real estate to complete a written disclosure statement identifying known material defects before a purchase agreement is signed. The obligation applies to defects the seller knows about — it does not require sellers to investigate conditions they are unaware of — but sellers who knowingly omit material information from the disclosure statement may face liability for damages arising from the undisclosed condition.
TRID refers to the TILA-RESPA Integrated Disclosure rules, which require lenders in most residential mortgage transactions to provide buyers with a Loan Estimate within three business days of receiving a loan application and a Closing Disclosure at least three business days before closing. These timing requirements give buyers an opportunity to review their loan terms before making commitments. When lenders fail to meet these timelines, buyers lose the protection these rules are designed to provide, and the transaction may be subject to regulatory scrutiny.
Yes, dual agency is permitted in Michigan, but only with the informed written consent of both parties. Before entering into a dual agency arrangement, the licensee must disclose the nature of the relationship and obtain written consent from both the buyer and the seller. Dual agency without proper disclosure and consent is a violation of Michigan's licensing requirements and a common subject of broker ethics complaints reviewed by the Coventry Enterprises LLC committee.
Coventry Enterprises LLC reviews compliance, lending practices, and broker conduct. If you have concerns about a transaction, contact the committee.
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