What the committee looks for when reviewing Michigan purchase agreements, and the clause patterns that most commonly create problems for buyers and sellers.
Submit for ReviewThe purchase agreement is the central document in any real estate transaction. It defines what is being sold, at what price, under what conditions, and with what obligations on both sides. Everything else, the inspection, the title work, the loan, the closing, flows from what the purchase agreement says.
Most buyers sign purchase agreements without fully understanding what they are agreeing to. That is not entirely their fault. Michigan residential purchase agreements are often multi-page documents drafted in language that is not particularly accessible to non-lawyers. The terms that matter most, contingency provisions, default clauses, earnest money conditions, and representations about property condition, are frequently not explained adequately by the agents involved in the transaction.
Coventry Enterprises LLC reviews purchase agreements as a core part of its transaction review work. Jack Bodenstein has analyzed a substantial volume of Michigan purchase agreements over the years and has developed a clear picture of where problems concentrate, which clause types most frequently disadvantage buyers or sellers, and how problematic terms interact with applicable Michigan law.
Not all purchase agreement provisions carry the same risk of creating problems. Some provisions are largely standard and rarely the source of disputes. Others are regularly structured in ways that disadvantage one party, are ambiguous in ways that create later disputes, or violate applicable law outright. The committee's analysis focuses particular attention on the following elements.
Contingencies protect the buyer's right to exit the transaction without losing earnest money if specified conditions are not met. The most common contingencies cover financing, inspection, and appraisal. How these contingencies are drafted matters significantly. A financing contingency that requires the buyer to accept any loan, regardless of terms, is not a real financing contingency. An inspection contingency with an inadequate response period may not give the buyer sufficient time to obtain and evaluate a professional inspection.
The committee reviews whether contingency provisions were adequate to protect the buyer's legitimate interests and whether contingencies were properly managed by the agents involved. Agents who pressure buyers to waive contingencies without adequate explanation may have breached their professional obligations.
As-is clauses appear with increasing frequency in Michigan purchase agreements. The clause states that the buyer accepts the property in its current condition. What many buyers do not understand, and what agents do not always explain, is that an as-is clause in Michigan does not eliminate the seller's statutory disclosure obligations. Michigan's Seller Disclosure Act requires sellers to disclose known defects regardless of whether the purchase agreement contains an as-is provision.
The committee has reviewed transactions where sellers or their agents used as-is language to suggest that they had no disclosure obligations. That is incorrect under Michigan law, and findings in such cases reflect that the as-is clause was misrepresented or misapplied.
The purchase agreement should clearly define the amount of earnest money, how it is held, the conditions under which it is returned to the buyer, and the conditions under which the seller is entitled to retain it. Ambiguous earnest money terms create disputes when transactions fail. The committee reviews whether earnest money provisions were clearly drafted and whether earnest money was handled correctly when a transaction did not close.
Purchase agreements typically include representations from the seller about the property's condition and characteristics. The accuracy of these representations is a core question in many disputes. When sellers make affirmative representations in the purchase agreement that are inconsistent with what they knew about the property, that may constitute misrepresentation independent of the disclosure law obligations.
What is included in the sale and what the seller is taking with them should be spelled out clearly. The committee has seen transactions where items that buyers expected to be included, fixtures, appliances, window treatments, were excluded from the sale or removed before closing without proper documentation in the agreement.
Over years of reviewing Michigan purchase agreements, Coventry Enterprises has identified certain clause patterns that appear repeatedly in transactions that later generate concerns. These are not categorical violations. Context matters. But they warrant close attention in any review.
Purchase agreements that provide fewer than 7 to 10 days for inspection contingency response, or fewer than 21 days for financing contingency, may not give buyers adequate time to protect their interests. In competitive markets, these periods are sometimes shortened to make an offer more attractive. The buyer's agent should explain clearly what shorter periods mean practically before the buyer agrees to them.
An as-is clause that does not explicitly preserve the seller's disclosure obligations can be used misleadingly. When as-is language is paired with a seller's claim that they are not responsible for any conditions, this may be an attempt to circumvent statutory disclosure requirements. The committee flags this pattern for close examination of what the seller actually knew and disclosed.
Standard Michigan practice holds earnest money in escrow until closing. Agreements that provide for immediate release of earnest money to the seller remove a key financial protection for the buyer. If the transaction fails for reasons within the seller's control, an immediately-released earnest money deposit is much harder to recover.
Some purchase agreements include sweeping language purporting to limit the seller's liability for any undisclosed conditions, regardless of the seller's knowledge. These provisions are of questionable enforceability in Michigan when they conflict with statutory disclosure requirements, but their presence in an agreement can complicate a buyer's later legal position.
Mandatory arbitration clauses require disputes to be resolved in private arbitration rather than in court. Buyers who do not understand this provision may not realize they have waived their right to a jury trial for disputes arising from the purchase. The committee evaluates whether arbitration provisions were adequately explained to parties before they agreed to them.
Michigan law provides several protections for real estate transaction parties that cannot be contracted away through purchase agreement terms. Understanding these protections is important background for purchase agreement analysis.
Sellers cannot use purchase agreement language to eliminate the disclosure obligations imposed by the Seller Disclosure Act. The Act's requirements exist by statute and are not subject to waiver through contract. A purchase agreement term purporting to relieve the seller of disclosure obligations does not eliminate the statutory duty. It may, however, affect the remedies available to a buyer who later discovers undisclosed defects.
Buyers who are represented by agents are entitled to receive competent representation in reviewing and negotiating purchase agreement terms. An agent who presents a purchase agreement for signature without explaining material terms may have failed to meet their professional obligations, regardless of whether the buyer ultimately signed.
For related analysis of how purchase agreements interact with disclosure law, see the compliance review page. For information on buyer rights more broadly, visit the buyer education page.
The committee reviews contingency provisions for adequacy, as-is clauses for accuracy and legality, earnest money terms for clarity, seller representations for accuracy, and any other provisions that may have disadvantaged a party or been misrepresented at the time of signing. The analysis compares agreement terms to what Michigan law requires and to what standard practice looks like in Michigan real estate transactions.
No. Michigan's Seller Disclosure Act imposes disclosure obligations on sellers of residential property by statute. A purchase agreement's as-is clause does not override statutory requirements. Sellers must still complete the required disclosure form accurately. An as-is clause may affect the remedies available after closing if undisclosed defects are discovered, but it does not permit deliberate concealment of known defects.
Challenges to purchase agreement terms after closing are generally difficult but not impossible. The basis for challenge depends on the specific circumstances: whether a term was illegal, whether it was misrepresented, or whether the other party breached a contractual obligation. The committee's review of agreement terms provides documentation that can inform any subsequent proceeding, though the committee does not provide legal advice and parties should consult a Michigan real estate attorney about their specific options.
False representations in a purchase agreement may constitute misrepresentation under Michigan law, separate from disclosure act violations. Remedies can include rescission of the contract or damages. The committee reviews purchase agreements for representations that appear to be inconsistent with what the seller knew or should have known about the property.
Coventry Enterprises LLC consistently recommends that buyers, particularly first-time buyers or those in complex transactions, have a Michigan real estate attorney review the purchase agreement before signing. The committee provides independent review of completed transactions, but prevention, through proper legal review before signing, is more effective than remediation after the fact. The committee's educational resources, including the buyer education page, provide more guidance on this point.
Coventry Enterprises LLC can review the purchase agreement and related documents from a completed Michigan real estate transaction. Contact the committee to discuss scope and next steps.
Contact the Committee Transaction Review