3.2 Michigan Seller Disclosure Requirements

The Seller Disclosure Act (1993 PA 92)

Michigan's Seller Disclosure Act, codified at MCL 565.951 and following, requires the transferor of residential real property of one to four dwelling units to deliver a written Seller Disclosure Statement to the buyer. The statement is the seller's good-faith report of the property's condition based on the seller's actual knowledge — it is not a warranty and not a substitute for a professional inspection.

What the statement covers

Timing and the buyer's termination window

The seller should deliver the statement before the buyer makes a written offer. If delivery happens AFTER the offer, the Act gives the buyer a right to terminate:

The right to terminate expires once the property transfers by deed or installment land contract. Worked example: A buyer receives the disclosure by hand at a Tuesday 10 a.m. showing. The 72-hour clock runs to Friday 10 a.m. A written cancellation delivered Friday at 9 a.m. is timely; one delivered Friday at 11 a.m. is too late.

The 'Known Conditions' Standard

The Act asks for what the seller actually knows. A seller who honestly checks 'unknown' for a condition they have never observed has complied — there is no duty to open walls, dig up the yard, or hire inspectors. However, a seller may NOT lie, and may not conceal a known defect. Knowingly checking 'no problem' on a chronically wet basement is fraud and creates liability that survives the closing.

Statutory Exemptions

Several transfers are exempt from the Seller Disclosure Statement requirement:

Critical distinction: An exemption from the statutory form does NOT erase the licensee's common-law and license-law duty to disclose known material facts and to avoid misrepresentation. An exempt foreclosure still requires the agent to answer honestly about a defect they know of.

Overlapping Federal Disclosure

What Sellers Generally Need NOT Disclose

Michigan does not require disclosure of so-called stigma facts: a death on the property, a crime that occurred there, or a prior occupant's illness (HIV/AIDS status is also protected and must not be disclosed). Psychological stigma is not a 'material' physical defect.

Best practice / trap: Even though stigma facts are not required, an agent who is asked a direct question must answer honestly and may not actively mislead. Misrepresentation — not silence about non-material stigma — is what triggers discipline.

Liability, the Licensee's Role, and Other Disclosures

A seller who knowingly conceals or misrepresents a material defect can be liable to the buyer for fraud or misrepresentation, and that liability survives closing — the buyer can sue after moving in. The Seller Disclosure Statement is therefore a shield for an honest seller and a sword against a dishonest one: a seller who truthfully discloses a cracked foundation has shifted the risk to a buyer who chose to proceed.

Where the licensee fits

The Seller Disclosure Statement is the seller's representation, not the agent's. The licensee should never complete it for the seller or guess at answers. However, Michigan license law and common law impose an independent duty on the agent to disclose known material facts about the property to all parties and to refrain from misrepresentation. If an agent personally knows the basement floods every spring, the agent must disclose that even if the seller leaves it blank.

Other Michigan and federal disclosures to know

Scenario: A 1962 Detroit home is being sold. The seller must provide the Seller Disclosure Statement (1-4 unit residential, not exempt) AND the federal lead-based-paint disclosure with the EPA pamphlet and a 10-day inspection opportunity. Skipping the lead disclosure exposes the seller to federal penalties even if the Michigan form is perfect.