A Michigan for sale by owner purchase agreement has to be in writing to be enforceable. Michigan’s Statute of Frauds requires any transfer of an interest in real property to be documented in a written instrument signed by the party making the transfer.1Michigan Legislature. Michigan Compiled Laws Chapter 566 – Frauds and Perjuries A verbal deal on a house is worthless in court, no matter how sincere both sides are. Without an agent in the picture, the purchase agreement is doing all the work: it fixes the price, sets the timeline, spells out the contingencies, and binds both parties from acceptance through closing.
Core Terms the Contract Must Contain
Leaving out a key term is how FSBO deals fall apart weeks in. At a minimum, the document needs:
- The full legal names of everyone with an ownership interest, exactly as they appear on the current deed. If a trust or LLC holds title, name the entity and the authorized signer. Mismatched names cause problems at the county Register of Deeds.
- The legal description of the property. A street address is not enough. Michigan land records use a lot number, block, and subdivision name, or a metes-and-bounds description for rural parcels. Copy it verbatim from the current deed; even small discrepancies can stall recording.
- The purchase price, stated in both words and numerals. Any seller credit toward closing costs should be listed separately.
- The earnest money deposit: amount, who holds it, and how it’s handled if the deal falls through. When a licensed broker is involved, Michigan law requires the broker to deposit earnest money into a custodial trust or escrow account within two banking days of an accepted offer. In a true FSBO deal without a broker, the parties typically designate a title company or attorney to hold the funds in escrow.2Michigan Legislature. Michigan Compiled Laws 339.2512 – Prohibited Conduct
- A specific closing date, or a formula such as “within 45 days of acceptance,” plus who selects the closing agent.
- Signatures of every person on the title. If one co-owner refuses to sign, the contract does not bind anyone.
Once the agreement is signed, any change requires a written amendment signed by all parties. Neither side can unilaterally shift deadlines, price, or other terms.
Required Michigan Disclosures
Seller’s Disclosure Statement
Michigan’s Seller Disclosure Act requires the seller to complete a standardized disclosure form and deliver it to the buyer before the purchase agreement is signed.3Michigan Legislature. Michigan Compiled Laws Act 92 of 1993 – Seller Disclosure Act The form covers major systems and the structure: roof leaks, basement water, plumbing, electrical, heating and cooling, and environmental hazards like underground storage tanks or contamination.4Michigan Legislature. Michigan Compiled Laws 565.957 – Disclosure Form The seller answers based on actual knowledge at the time of signing. The disclosure is not a warranty and does not replace a professional home inspection.
Skipping it is expensive. The statute states in bold capital letters that failing to provide a signed disclosure statement gives the buyer the right to terminate an otherwise binding purchase agreement.4Michigan Legislature. Michigan Compiled Laws 565.957 – Disclosure Form The buyer can walk away even after both sides have signed the contract, simply because the seller never delivered the disclosure.
Some transfers are exempt, including foreclosures, court-ordered sales, transfers between family members, and new construction with no previous occupant. If you’re not sure whether your sale qualifies, complete the disclosure anyway.
Lead-Based Paint Disclosure
Federal law adds a separate rule for any home built before 1978. The seller must disclose any known lead-based paint or lead hazards, provide any records or reports they have, and give the buyer a copy of the EPA pamphlet “Protect Your Family From Lead in Your Home.”5US EPA. Lead-Based Paint Disclosure Rule Section 1018 of Title X The purchase agreement itself must include a Lead Warning Statement, and the buyer gets a 10-day window (unless both parties agree to a different period) to conduct a lead inspection before becoming obligated under the contract.6Office of the Law Revision Counsel. 42 USC 4852d – Disclosure of Information Concerning Lead Upon Transfer of Residential Property This applies whether or not an agent is involved.
Contingencies That Let the Buyer Exit
Contingencies are the escape hatches. Each one names a condition that must be satisfied before the sale moves forward. If the condition fails, the buyer walks away with the earnest money intact. Without them, a buyer can lose thousands over something outside their control.
Financing
Most buyers need a mortgage. A financing contingency gives them a defined window, commonly 30 to 60 days, to secure loan approval. If the lender denies the application inside that period, the buyer cancels and recovers the deposit. Specify the loan type, maximum interest rate, and loan amount.
Appraisal
Lenders will not finance a property above its appraised value. An appraisal contingency protects the buyer if the home appraises below the purchase price. The buyer can then renegotiate downward, cover the gap in cash, or terminate and get the deposit back. Sellers sometimes resist this clause, but most lenders effectively require it by refusing to fund above appraised value.
Inspection
The inspection contingency gives the buyer a set number of days after acceptance, typically 10 to 14 in Michigan residential deals, to hire a professional inspector. If the inspection turns up serious problems, the buyer can ask for repairs, negotiate a price reduction, or cancel outright. Write the exact number of days into the agreement. Vague language like “a reasonable time” invites arguments.
Home Sale
If the buyer needs to sell their current home before closing on yours, a home sale contingency addresses that dependency and sets a deadline for the buyer to close on their existing property. Miss the deadline and the agreement terminates. Sellers often dislike this one because the deal now depends on a transaction they don’t control, but refusing it may narrow the buyer pool.
Who Pays Which Closing Costs
Cutting out the listing agent’s commission is one of the reasons people sell FSBO. Closing costs, however, still apply, and the purchase agreement should spell out who pays what. Otherwise you get arguments at the closing table.
Michigan Transfer Taxes
Michigan imposes both a state and a county real estate transfer tax when property changes hands. The county tax is $0.55 per $500 of the sale price in counties with fewer than two million residents; counties of two million or more are authorized to charge up to $0.75 per $500.7Michigan Legislature. Michigan Compiled Laws 207.504 – County Real Estate Transfer Tax The state tax adds $3.75 per $500. On a $300,000 home in a typical county, that’s $330 in county tax and $2,250 in state tax, for a combined $2,580. The seller customarily pays these, but the contract can allocate them differently if both sides agree.
Title Insurance
Two policies come up. A lender’s policy protects the mortgage company’s interest, and lenders almost always require the buyer to purchase one as a loan condition. An owner’s policy protects the buyer’s ownership rights for as long as they or their heirs own the home. Who pays the owner’s policy varies by local custom in Michigan. Address it directly in the contract.
Recording Fees
After closing, the deed must be recorded with the county Register of Deeds. Michigan’s standard recording fee is $30 per document.8Michigan Legislature. Michigan Compiled Laws 600.2567 – Register of Deeds Fees Charter counties may set their own fee schedules, so the actual cost can vary. The buyer typically pays because the buyer receives the new deed.
Specify the Deed Type
The agreement should say which type of deed the seller will deliver. In most residential sales, buyers expect a warranty deed, which transfers ownership and guarantees clear title free of undisclosed claims or liens. A quitclaim deed transfers only whatever interest the seller happens to have, with no guarantees at all.9Gogebic County. Quitclaim Deed FAQ Quitclaim deeds are common between family members or in divorce, but they’re a red flag in an arm’s-length sale. If your contract is silent on deed type, the buyer has no assurance the seller can actually deliver clean title.
Signing the Agreement
Michigan adopted the Uniform Electronic Transactions Act in 2000, which gives an electronic signature on a purchase agreement the same legal weight as ink on paper.10Michigan Legislature. Michigan Compiled Laws Act 305 of 2000 – Uniform Electronic Transactions Act Both parties must agree to conduct the transaction electronically; you cannot force someone to use e-signatures. Platforms like DocuSign and HelloSign satisfy the law when both sides consent.
However you sign, every person on the title has to sign. A married couple both listed on the deed both need to sign, even if only one of them negotiated. After execution, each party should keep a complete copy of the agreement and every attachment, including the seller’s disclosure and any lead-based paint materials.
From Signature to Closing
The signed agreement kicks off a sequence with its own deadlines. Missing one can give the other party grounds to terminate.
The earnest money is delivered first, usually within one to three days of acceptance. A title company is the safest holder in a FSBO deal. The funds sit in escrow until closing and then get applied to the purchase price. If the deal collapses under a valid contingency, the escrow holder returns the deposit to the buyer.
Next is the inspection period. The buyer schedules a professional inspection and, for pre-1978 homes, potentially a lead inspection. Objections have to be raised inside the contingency window; once it expires without action, the contingency is generally waived.
The title company runs a title search in parallel, checking public records for outstanding liens, unpaid taxes, boundary disputes, and other encumbrances. If something turns up, an old contractor’s lien that was never released for example, the seller has to clear it before closing or the buyer can walk.
The purchase agreement should also state exactly when the buyer takes physical possession. Most residential deals set possession for the day of closing. If the seller stays on for a period after closing under a rent-back arrangement, spell out the daily rate, the end date, and who carries insurance during the window. The buyer typically schedules a final walk-through 24 to 48 hours before closing to confirm the property is in the promised condition, any negotiated repairs are done, and nothing has been damaged or removed since the inspection.
What Backing Out Costs
A signed purchase agreement is a binding contract. Walking away without a valid contingency has consequences.
If the buyer defaults, refusing to close without a contractual reason, the seller’s primary remedy is usually keeping the earnest money. Many Michigan agreements include a liquidated damages clause that makes the deposit the seller’s sole compensation for the buyer’s breach. State this clearly so both sides know the stakes before signing.
If the seller defaults, refusing to close, accepting a higher offer, or unable to deliver clear title, the buyer has options. The buyer can demand the earnest money back and walk away. They can sue for actual damages, such as temporary housing costs or the difference in price if they have to buy a comparable home for more. In some cases the buyer can pursue specific performance, a court order compelling the seller to complete the sale. Courts grant specific performance more readily in real estate than in most contract disputes because every parcel is considered unique, and money alone cannot make a buyer whole if they lose the specific home they contracted for.
Where to Get the Form
Michigan does not require a single official purchase agreement form for private residential sales. Title companies operating in the state typically provide templates tailored to Michigan requirements. The State of Michigan publishes its own “Offer to Purchase Real Property” form for state-owned property sales,11State of Michigan. Offer to Purchase Real Property which is designed for government transactions but illustrates the level of detail a Michigan agreement should contain.
When filling out any template, copy the legal description verbatim from the current deed. Don’t paraphrase or abbreviate. Enter the price, earnest money, contingency deadlines, and closing date precisely. Attach the seller’s disclosure statement and, for pre-1978 homes, the lead-based paint disclosure and pamphlet. PDF is convenient for exchange between parties and lenders, but keep signed originals or verified electronic copies for your records.
FSBO deals lack the built-in oversight an agent provides. If the property value is significant or the deal has unusual terms, having a real estate attorney review the agreement before both sides sign is one of the cheaper forms of insurance available. A few hundred dollars in review fees can catch problems that would cost thousands after closing.