Michigan Real Estate Legislative News.

The state has recently passed three pieces of legislation that effect my friends in the real estate business. Click on the law number to open the complete new law in PDF.

ITEM 1: Minimum Service Requirements--Public Acts 90 and 91 of 2008 (House Bills 4416 and 4417) will become effective July 1, 2008. They create minimum service requirements for licensees who act as sellers' and buyers' agents. These requirements are NOT applicable for licensees acting as transaction coordinators.

A list of duties and services typically provided by licensees acting as agents has been added to the Disclosure Regarding Real Estate Agency Relationships form. When applicable, a licensee must also note on that form when they're acting under a "Limited Service Agreement."

These acts also create a new "Limited Services Agreement" form that must be signed and dated by sellers and buyers when waiving services that are allowed to be waived under these acts.

ITEM 2: Additional Principal Residence Exemption Public Act 96 of 2008 (House Bill 4215) was enacted on April 8, 2008. It provides property tax relief for sellers who have moved out of their homes, but are attempting to sell them. It also allows a seller who has purchased a replacement principal residence to claim exemptions on both the new and old residences while attempting to sell the old residence.

A seller is eligible for an additional exemption for up to three (3) years if the property is not occupied, not leased (it may be available for lease), not used for any business or commercial use, and is currently offered for sale.

To qualify, the seller must file a "conditional" rescission form on or before May 1 for the year claimed. The Michigan Dept of Treasury must create this new form, which is not yet available.

ITEM 3: Owner Built Residence Transfer Act Public Act 6 of 2008 (Senate Bill 577) will become effective August 10, 2008. It attempts to curtail the practice by individuals who are not licensed builders, but who build new residences and immediately resell them. Supposedly, many individuals have essentially made a living by doing this without ever being licensed as residential builders.

Unless there are "unforeseen circumstances," a non-builder owner who builds a new residence may not sell it for at least 365 days after receiving an occupancy permit. The "unforeseen circumstances" exception may be used only once per calendar year.

A non-builder owner who sells the residence within two (2) years after receipt of the occupancy permit must provide the buyer with an "owner-builder notice." The notice must be on a "separate piece of paper" (meaning that incorporating the notice into a Buy-Sell Agreement doesn't comply), must be in a 12-point font or larger, must include a statement that the owner is NOT a licensed Michigan builder, and must be signed and dated by the seller.

An owner who fails to comply with this law is liable for all of the following for up to 24 months after completion of construction, first occupancy, or purchase, whichever occurs later: (1) the cost to repair any defects in workmanship; (2) the cost to bring the structure into compliance with the building code in effect at the time the occupancy permit was issued; (3) the cost for temporary shelter for the buyer if repairs require the buyer to vacate temporarily or if structural defects render the home uninhabitable.

The Horoscope

I have never before torn a horoscope from the newspaper. To be honest, I look at them to marvel at how someone can write something that could universally be interpreted to apply to anyone who would read it. This one has it nailed.

Think about it. Is it possible that where you are is a turning point? Is it just possible that your decision today could effect the rest of your life?

My close friends know that life has not been smooth for me the past year or so. Work, relationships, family have all had some problems. Where we are today, is so totally based upon where we have been. Our destiny is our own. What are you going to do today so that tomorrow is the beginning of the moment you have been waiting for your whole life long?

I am so grateful that I have found work that makes me get out of bed in the morning, excited to start my day. I am grateful for the love and good health of children and grandchildren. Good friends complete that picture. Music rounds out my life. I am at peace in my little part of the planet I call home. My house, my garden, my pond, the TART trail behind my house, the East Arm of Grand Traverse Bay, this wonderful region all complete that picture. Life is good. Yes, I can probably say, I am in a place I have waited my whole life to be.

Do I have some regrets? Sure. Don't we all? But, the bad decisions of my life all go together to make me the strong individual I have become today. Tomorrow will be even better.

More Info on Save the Dream.

The new Save the Dream tools are:

• The Adjustable Rate Mortgage (ARM) Refinance Program that will assist homeowners who have an ARM in refinancing to a 30-year, lower-interest, fixed-rate conventional loan;

• The Rescue Refinance Program that will assist individuals who have a delinquency on their mortgage and who are at risk of losing their home will have a chance to get into a more affordable 30-year, fixed rate, conventional loan.

Both initiatives are targeted at existing homeowners. To qualify for one of the new loan programs, homeowners must meet the same income and sales price limits that other MSHDA loan products require. Household income must be under $108,000, and the purchase price of the home cannot exceed $224,500. The initiatives will be funded by taxable bonds, and homeowners will be responsible for the full value of their refinanced mortgages. The original mortgage does not have to be a MSHDA loan; however, the homeowner must meet MSHDA requirements for the refinance product. This qualifying information is available from approved lenders and directly from MSHDA.

For more details on the Save the Dream refinance programs and other services, a visit to www.michigan.gov/mshda will take seekers to MSHDA’s home page and the Save the Dream icon where up-to-date information about the loans, services, and MSHDA-approved lenders and certified counselors is available. There is also a consumer hotline that helps callers find a counselor locally. That toll-free number is 1-866-946-7432.

Transfer Tax News

Attorney General Clarifies Important Exemption to Michigan Transfer Tax

Attorney General Mike Cox issued an important opinion this week clarifying the proper application of an obscure exemption contained in the Michigan Transfer Tax Act. The opinion, arising out of a request from Representative Martin Griffin (D-Jackson), should afford certain home sellers immediate financial relief as Michigan’s real estate market continues its road to recovery.

Exemption “t”, as designated in the Michigan Transfer Tax Act, sets forth that a seller may seek an exemption from paying the state transfer tax if the following criteria are met:

1. The property must have been occupied as a principle residence, classified as homestead property;
2. The property’s State Equalized Value (“SEV”) for the calendar year in which the transfer is made must be less than or equal to the property’s SEV for the calendar year in which the transferor acquired the property; and
3. The property cannot be transferred for consideration exceeding its true cash value for the year of the transfer.

With property values and corresponding SEV declining due to the struggling economy, home owners and real estate agents first took notice of the exemption’s possible applicability under the state transfer tax. However, absent an official interpretation, there was little awareness of its proper application.

The opinion from the Attorney General uses examples to show how the application would apply. One example illustrating application provides:

If the SEV of the principle residence when acquired in 2006 is $74,000.00 and the SEV when transferred in 2008 is $72,000.00 then criteria one and two above are satisfied. You can establish the true cash value by doubling the SEV at the time of transfer. In this case the true cash value is $144,000. If the sale price in 2008 is $140,000.00 then the sale does not exceed its true cash value. All three criteria are satisfied and the exemption would apply.

The Attorney General’s opinion provides immediate relief to home sellers already faced with the reality of declining value on their single greatest asset. The opinion also provides a uniform reading of the exemption that is necessary to provide consistent application among the various Registers of Deeds across the state as they are already receiving filings for the exemption.

Sellers should be cautioned that a request for the exemption that fails to meet all three criteria could bring a penalty equal to 20% of the tax assessed in addition to the tax due. Additionally, no similar exemption exists in the County Real Estate Transfer Tax Act.

Save the Dream

This was posted on the www.Michigan.Gov site today . This law combined with the proposed federal changes could be the light at the end of the tunnel.

Governor Granholm's "Save the Dream" Legislation Will Help Families Threatened by Mortgage Foreclosure

Contact: Liz Boyd 517-335-6397

March 28, 2007

Radio Address highlights programs that will help at-risk homeowners

LANSING - In her weekly radio address, Governor Jennifer M. Granholm today said she will sign legislation next week that will help preserve home ownership for thousands of Michigan families threatened by mortgage foreclosure.

"Hardly a day goes by that we're not confronted by more bad news about the mortgage crisis and the impact that it's having on the lives of families and the nation's economy," Granholm said. "These new laws will give existing homeowners new refinancing options through the Michigan State Housing Development Authority."

The governor highlighted two programs she proposed last fall that are targeted at existing homeowners who may be facing foreclosure:

- an Adjustable Rate Mortgage (ARM) assist program that will help qualifying homeowners who have an adjustable rate mortgage convert their mortgage to a 30-year, fixed-rate, conventional loan; and,

- the Rescue Refinance program that will help at-risk homeowners who have missed one or more payments by giving them the opportunity to get into a more affordable 30-year, fixed-rate, conventional loan.

"We've also put into place a unique program dedicated to providing information on helping families "save the dream," Granholm added. "Helping Michigan families in danger of losing their homes is not only our priority, it is our duty."

The governor's weekly radio address is released each Friday morning and may be heard on broadcast stations across the state. The address is available on the governor's Web site at ( www.michigan.gov/gov ) for download, together with a clip of the quote above. The radio address is also available as a podcast on the Web site, as well as on iTunes and via RSS feed for general distribution to personal MP3 players and home computers. Links to the audio files and text of today's address follow.

GOVERNOR JENNIFER M. GRANHOLM
Radio Address - Save the Dream, March 28, 2008

Full: http://www.michigan.gov/documents/gov/Gov138_Full_229558_7.mp3
Edited: http://www.michigan.gov/documents/gov/Gov138_Edit_229562_7.mp3
Quote: http://www.michigan.gov/documents/gov/Gov138_Quote_229564_7.mp3

This is Governor Jennifer Granholm. Hardly a day goes by that we're not confronted by more bad news about the mortgage crisis and the impact that it's having on the lives of families and the nation's economy as a whole. While the crisis has led to the downfall of some on Wall Street, it is also affecting Main Street with too many citizens facing the unthinkable: the loss of their home.

That's why last fall, I proposed the Save the Dream legislation to help preserve home ownership for thousands of Michigan families threatened by foreclosure, and I'm pleased to report that thanks to bipartisan support in the Legislature, those bills have been sent to my desk, and I'll sign them into law next week.

These new laws will give existing homeowners new refinancing options through the Michigan State Housing Development Authority.

First, we'll be able to offer an Adjustable Rate Mortgage (ARM) Assist program for qualifying homeowners who've got an adjustable rate mortgage. Homeowners will be able to convert their mortgage to a 30-year, fixed-rate, conventional loan.

A second program - the Rescue Refinance program - will help at-risk homeowners who've missed one or more payments by giving them the opportunity to get into a more affordable 30-year, fixed-rate, conventional loan. Both of these programs are targeted at existing homeowners who may be facing foreclosure.

Signing this legislation into law is just the latest in our effort to help Save the Dream of homeownership. In January, I met with representatives of the nation's leading mortgage servicers who, at our request, are taking steps to protect homeowners who are facing possible foreclosure.

They've agreed to hold down interest rates for many homeowners with adjustable rate mortgages who are making their payments on time and, in some cases, freezing the loan rate for up to five years; and they've agreed to offer advance notice to homeowners with sub-prime mortgages before their rates are scheduled to increase, so they can help homeowners avoid foreclosure.

These mortgage servicers are also committed to working with us to identify methods to help control neighborhood blight, which results from so many of these foreclosures.

We've put into place a unique program dedicated to providing information on helping families save the dream. If you or someone you know is facing the possibility of home foreclosure, you can access more information by calling toll-free: 1-866-946-7432; again, that's 866-946-7432, or by visiting: www.michigan.gov/savethedream.

Helping Michigan families in danger of losing their homes is not only our priority, it is our duty…

Thank you for listening.