Key Takeaways
- Michigan requires purchase agreements to be in writing to be enforceable under the Statute of Frauds
- Earnest money deposits must be handled according to the terms of the purchase agreement
- Time is of the essence clauses make all deadlines strictly enforceable
- Michigan uses standard purchase agreement forms developed by real estate associations
- Contingencies for financing, inspections, and other conditions are common in Michigan contracts
Michigan Purchase Agreements
Real estate contracts in Michigan must meet standard contract requirements plus state-specific provisions.
Contract Requirements
For a valid Michigan real estate contract:
| Requirement | Description |
|---|---|
| Competent Parties | Legal age (18+) and mental capacity |
| Offer and Acceptance | Meeting of the minds |
| Legal Purpose | Transaction must be lawful |
| Consideration | Something of value exchanged |
| Written Form | Statute of Frauds requires writing |
| Property Description | Property must be identifiable |
Standard Purchase Agreement
Michigan real estate transactions typically use standard forms developed by real estate associations.
Key Contract Provisions
| Section | Purpose |
|---|---|
| Purchase Price | Total price and payment terms |
| Earnest Money | Amount, holder, and deposit timing |
| Financing | Loan type, amount, and contingency |
| Inspections | Inspection rights and contingencies |
| Closing | Date, location, and costs |
| Contingencies | Conditions that must be met |
Earnest Money
Earnest money in Michigan:
- Amount is negotiable between parties
- Typically held in broker's trust account or escrow
- Must be deposited according to agreement terms
- Disposition determined by contract terms if deal fails
Key Contract Provisions
Time is of the Essence
Michigan contracts typically include a "time is of the essence" clause, meaning:
- All deadlines are strictly enforceable
- Missing a deadline can be grounds for default
- Extensions must be in writing and agreed by all parties
Common Contingencies
| Contingency | Purpose |
|---|---|
| Financing | Buyer must obtain loan approval |
| Inspection | Property must pass inspections |
| Appraisal | Property must appraise at value |
| Sale of Buyer's Property | Buyer must sell current home |
| Title | Clear title must be deliverable |
Financing Contingency
The financing contingency protects the buyer if:
- Loan application is denied
- Loan terms change significantly
- Appraisal comes in below purchase price
Buyer must diligently pursue financing and provide documentation.
Inspection Contingency
Inspection contingencies may allow:
- Professional inspection of the property
- Negotiation of repairs
- Termination for significant defects
- Price reduction requests
Contract Amendments
Changes to the contract after signing require:
| Change Type | Method |
|---|---|
| Before acceptance | Counter-offer |
| After binding agreement | Written amendment signed by all |
| Extension of deadlines | Amendment to contract |
| Price changes | Amendment with new terms |
When Contract Becomes Binding
A Michigan purchase contract becomes binding when:
- All parties have signed the agreement
- Acceptance is communicated to the offering party
- No counter-offers are pending
Note: Until acceptance is communicated, an offer can be withdrawn.
Under Michigan's Statute of Frauds, what is required for a real estate contract to be enforceable?
What does "time is of the essence" mean in a Michigan real estate contract?