August 2007 Field Report -
Southeast Michigan
By: Tony Daunt – Southeast Michigan Field Director
RPAC Silent Auction & Putting Challenge
I would like to thank everyone who has helped make these events so successful in previous years through their participation and contributions. This year’s auction will be held at the MAR Convention and Expo on Thursday, September 27, from 7pm-9pm. Please stop by the RPAC booth in the Expo Hall, take a look at all the great auction items and take a shot at winning some beautiful jewelry by testing your putting skills in the RPAC Putting Challenge! Recent years have featured such unique items as golf getaways, sporting and theater tickets, Omaha steaks and even an exclusive tour of the Mackinac Bridge. Last year we collected over $10,000 for RPAC and we intend to surpass that amount this year with your help.
The money we raise through the silent auction and putting challenge events goes to fighting for REALTOR® causes at the federal, state and local levels of government. Participation in these events is greatly needed to help maintain and increase the strength of RPAC at all three levels of government. We look forward to seeing you there!
Corporate Status and REALTORS®
While many of you may be aware, the Michigan Bureau of Commercial Services, Corporation Division (“DLEG”), has recently adopted new administrative procedures concerning corporate status. This new development comes in light of the Michigan Court of Appeals' decision in Miller v. Allstate Insurance Company. In Miller, the Court held that an entity providing professional services could not incorporate under the Business Corporation Act but must incorporate under the Professional Service Corporation Act. As a result, DLEG was compelled to take a closer look at the occupations that they regulate licensure for to determine which occupations would be considered “professions” under state law. The Bureau has reviewed the pertinent sections of the Professional Service Corporations Act and will require the professions specifically listed there to be organized as professional corporations. This means that all shareholders of those corporations must be licensed professionals. These Sec. 2(c) professions include public accountants, doctors, dentists, optometrists, veterinarians, architects, professional engineers, land surveyors, and attorneys. This is not much a departure from the previous treatment. However, the Bureau has also determined that corporations performing services provided by funeral directors, morticians, real estate appraisers, and real estate brokers and salespersons must be formed as professional corporations. Inclusion of these additional professions comes from reviewing the State's licensing statutes for those occupations that provide a "professional service", as described in Sec. 2(c) of the Professional Service Corporation Act ("PSCA"), MCL 450.222(c). Each of these occupations, if it wants to operate within a corporation, must now form a professional corporation.
We are working to understand the additional implications of incorporating under the PSCA. The most understood difference is the criteria required to be under the PSCA. As stated above, your shareholders would have to be licensed professionals as understood by DLEG. Liability under a PSCA, however, is a greater concern. Under the PSCA, the principals in the corporation would be personally liable for their own actions as well as the actions of anybody that is under their direct supervision. This extends to virtually any wrongful acts of misconduct during the commission of the professional service. Under the BCA there exists what is commonly known as the corporate shield that protects the principals from liability for the actions of those that they supervise in the course of business. It is generally understood that one of the biggest advantages to incorporating a business is that the principals of the corporation enjoy broad protection from being held personally responsible for the debts and liabilities of the corporation. That is, creditors and litigants can reach the corporation's assets, but once those assets are tapped they cannot ordinarily also reach the personal assets of the owners or shareholders of the corporation. Comparing the PSCA with the BCA, there is little risk reduction protection under the PSCA.
We have been in contact with DLEG to get a better understanding of what this means to our members. On the face it appears that the new procedure would preclude all real estate brokers from incorporating or being incorporated under the BCA. However, DLEG had determined to not attempt to retroactively apply its administrative procedures (i.e., it would not disturb real estate brokerage firms who had previously incorporated under the Business Corporation Act). However, in the future, real estate brokerage firms would need to incorporate under the PCSA – or form as an LLC. We were able to confirm that they would permit real estate brokerage firms to organize as limited liability companies (“LLC”) and fall outside of the scope of the Miller ruling. This is especially good news for the majority of our members who are organized as LLC’s.
DLEG has posted information on its Web site to clarify matters and has submitted language to the legislature to address the issue in statute. We can only assume that DLEG’s decision not to retroactively pursue real estate brokerage firms who it has determined are improperly incorporated under the Business Corporation Act is in part due to the massive re-filings and re-licensing which would have to take place. We are working closely with DLEG towards clearing up any ambiguity surrounding the corporate status of our member firms. We have been advised that there will be no punishment for continuing as incorporated under the BCA. However, we are working along with DLEG and other interested professions at creating a better approach to dealing with application of the Miller ruling. As more information materializes MAR will keep you posted.
Field Staff Office Visits
We are lucky to have such a capable staff of lobbyists and advocates working on our behalf in Lansing. As your area MAR representative, it is my responsibility to work with these individuals to keep you informed so that you are aware of what your state legislature is doing for (or, in some cases, to) you.
Having said all that, the best way to share the latest news with the largest number of area REALTORS® is to attend your weekly sales meetings and give it to you in person. I am willing and able to travel to any office, at any time, on any day of the week. If you are a broker or an office manager, please take this offer to heart and call me up. My number is: 517-812-4134. If you’re a sales agent, mention this to your broker and get them to bring me in. Not only will you get the latest from the State Capitol but I’ll also bring in bagels, donuts and any other “health” food you request!
top
|
|
August 2007
Field Report
• Field Report
Tony represents:
• Ann Arbor Area
• Dearborn
• Detroit
• CBOR
• Down River
• Grosse Pointe
• Lenawee County
• Livingston County
• MCAR
• Monroe County
• North Oakland County
• Western Wayne Oakland County
Other Field Reports:
Archives:
|
