Property Management in Michigan
Michigan's employment disclosure statute names the seller's agent, not only the seller.
Michigan's Employment Security Act requires the seller's unemployment tax and employee disclosure before the buyer accepts an offer, not before closing, and it makes the seller's agent criminally liable alongside the seller if the disclosure is inaccurate. Two other Michigan rules shape the deal: the Occupational Code lets a buyer's entity designate a principal only if that individual already holds an associate real estate broker's license, and a municipal income tax can attach to the gain depending on which Michigan city the owner lives in.
Detroit–Warren–Dearborn / Grand Rapids–Wyoming–Kentwood / Lansing–East Lansing / Flint
Michigan's unemployment disclosure is due before the offer is accepted
MCL 421.15(g) governs a person or employing unit that acquires the organization, trade, business, or 75% or more of the assets from an employing unit, as a successor described in section 41(2) of the same act. It reaches an asset sale and a transfer of substantially the whole business. In a straight stock or membership interest purchase the employing unit is unchanged and nothing is acquired from it, so whether the subsection's disclosure duty is triggered at all is unsettled. The conservative default is to deliver the disclosure anyway.
The disclosure is due at least 2 calendar days, not including a Saturday, Sunday or legal holiday, before the acceptance of an offer. The transferor, or the transferor's real estate broker or other agent representing the transferor, gives the transferee, on a form provided by the unemployment agency, the amounts of outstanding unemployment tax liability, unreported unemployment tax liability, and the tax payments, tax rates and cumulative benefit charges for the most recent 5 years, together with a listing of all individuals currently employed and a listing of all employees separated from employment in the most recent 12 months. The statute adds that the form must specify whatever else the agency decides a transferee needs in order to estimate future unemployment compensation costs from the transferor's benefit charge and reporting experience. The agency's form is designated UIA 1027.
The two employee listings reach maintenance technicians, leasing staff and seasonal grounds crews, and the five years of tax rates and benefit charges are the record from which a buyer prices what those people will cost it going forward. All of it is handed over before the buyer has committed to anything. Have counsel confirm what the current form asks for before any employee list leaves the building.
MCL 421.15(g) does not define acceptance of an offer, and no Michigan decision construes the phrase for a negotiated acquisition, so the sequencing is a judgment call rather than a rule the statute supplies. Ours is to have the disclosure complete and delivered before the seller signs anything a court could later treat as accepting the offer, which means before the definitive purchase agreement and, in a process that has one, before a signed letter of intent.
Failure to provide accurate information is a misdemeanor punishable by imprisonment for not more than 90 days, a fine of not more than $2,500, or both, and the subsection provides no good-faith defense to that. Civil liability is a separate sentence: the transferor, or the transferor's broker or agent, is liable to the transferee for consequential damages, and there the broker or agent is not liable if they exercised good faith in complying with the disclosure requirement. By its terms the provision reaches the transferor's real estate broker or other agent representing the transferor. We have found no Michigan decision applying that phrase to an M&A adviser, and the surrounding vocabulary is written for real estate transactions, but the language is broad enough that an adviser should assume it may apply and should not be the party certifying the numbers.
One written request caps what the buyer inherits. Where a transferor or transferee has, not less than 10 days before the acquisition, asked the unemployment agency in writing for a statement certifying the status of the transferor's contribution liability, the transferee is not liable for any amount above the certified figure. Without it the transferee's liability for the transferor's unpaid contributions and interest runs to the reasonable value of the organization, trade, business or assets acquired, less any secured interest in those assets owned by the transferee and entitled to priority. The two clocks in the subsection are measured from different events: the certification request counts back from the acquisition, and the disclosure counts back from acceptance of the offer, which in most processes falls months earlier.
A lender or title closer can be the buyer's principal associate broker
Michigan puts a property management company's own operations inside real estate brokerage, because MCL 339.2501(u) includes in the definition of real estate broker a person or business entity that engages in property management as a whole or partial vocation, and MCL 339.2501(r) defines property management as leasing or renting, or offering to lease or rent, real property of others for a fee, commission, compensation or other valuable consideration pursuant to a property management employment contract. The statutory verb is leasing, so rent collection, accounting and maintenance dispatch performed on their own are not property management under MCL 339.2501(r), and the license question turns on whether the target's contracts carry leasing with them.
The constraint a buyer meets first is MCL 339.2505(1)(d). A business entity applying for a broker's license has to designate which of its control persons will perform regulated acts as principals, and it may not designate a control person as a principal unless that person is already licensed as an associate real estate broker. MCL 339.2508(1) then provides that a broker's license issued to a partnership, association, corporation, limited liability company, common law trust or a combination of those entities is not transferable, and that it entitles only the designated principals to act.
At closing the seller's own credential goes first. MCL 339.2508(3) automatically suspends the associate real estate broker's license of a principal who ceases to be connected with the entity, and under MCL 339.2508(4) a principal's associate broker license is not transferable either. The entity's own broker license survives that departure, since MCL 339.2508(5) cascades to salespersons and affiliated associate brokers only where the entity's broker license is revoked. It is left without a designated principal. MCL 339.2508(6) directs the department to allow affiliated licensees a reasonable time to wind up or designate a new principal associate broker on the death or disability of a sole principal associate broker, and a seller walking out at closing is not that.
The experience bar reads worse than it is. MCL 339.2505(7) requires proof of the equivalent of 3 years of full-time experience in the business of real estate and then sets out what counts toward it. A builder earns a year for each 12-month period in which they built and personally sold or leased at least 5 units. A land or condominium developer earns a year for each 2 developments or subdivisions containing at least 10 units or parcels. An attorney earns a year for each year they acted as the attorney for at least 6 real estate transactions. MCL 339.2505(7)(b)(vii) gives a year for each period of at least 40 hours a week and 48 weeks a year worked in a capacity directly related to the acquisition, financing or conveyance of real estate, and names a loan or trust officer of a regulated depository institution or a mortgage company, a corporate real estate officer who is not a licensed broker, and a title insurance company officer engaged in closing escrow accounts and real estate closings. Separately, MCL 339.2504(1)(b)(iv) lets the department credit a law degree or a bachelor's or master's degree in business or finance toward the 90 clock hours of prelicensure coursework, of which at least 9 hours must cover civil rights and fair housing law and all 90 sit on top of the salesperson hours.
In diligence, name the individual on the buyer's side who fits one of those categories. A financial buyer with a former title closing officer or bank real estate officer among its principals can be closer to qualifying than a strategic buyer from a state that licenses none of this work.
MCL 339.2505(3) also requires a broker to maintain a place of business in Michigan and to hold a branch office license for each additional place of business, and a branch located more than 25 miles from the nearest boundary of the municipality holding the main office must be under the direct supervision of an associate broker physically present there on a regular basis during ordinary business hours. A company running Metro Detroit out of one office and West Michigan out of another is selling two licensed locations rather than one.
A second Michigan income tax can attach at the city line
Michigan taxes the gain at 4.25%. MCL 206.51(1)(c) carries a trigger that reduces the rate when general fund growth outruns inflation, and on April 15, 2026 the State Treasurer and the Senate and House fiscal agency directors published the required calculation and it did not fire, so 4.25% stands for the 2026 tax year. Treasury also states that a reduction produced by that trigger is temporary and lasts one year. An owner holding out for a lower Michigan rate is waiting on a one-year event.
Twenty-four Michigan cities levy a tax related to income. Treasury administers Detroit's and the rest administer their own. Under the City Income Tax Act, 1964 PA 284, MCL 141.612(c) taxes a resident individual on dividends, interest, capital gains less capital losses, income from estates and trusts, and net profits from rentals of real and tangible personal property. An owner who lives inside a taxing city therefore pays city tax on the whole gain from selling the company, on top of the state rate. Detroit sits at the statutory ceiling: MCL 141.503(2)(d) permits a city with a population of more than 600,000 to levy up to 2.40% on residents and 1.20% on nonresidents, and MCL 141.503(2)(e) drops that maximum to 2.20% and 1.10% beginning the year after the lighting authority's bonds are fully paid. Those maximums are written for a city of more than 600,000 and fix nobody else's rate.
For an owner living outside the city limits the analysis does not stop at one subsection. MCL 141.613(c) taxes a nonresident only on capital gains less capital losses from sales of, and net profits from rentals of, real and tangible personal property, and only where the gains arise from property located in the city. Read alone it says an out-of-city owner owes nothing on a sale of equity. MCL 141.613(b) is the other half, taxing a nonresident owner of an unincorporated business on the distributive share of net profits as a result of work done, services rendered and other business activities conducted in the city. Where the target is a limited liability company or a partnership, an asset sale can deliver the gain on goodwill and other intangibles as apportionable city net profits even though the owner lives outside the line.
Ann Arbor levies no city income tax, so an owner resident there faces the 4.25% state rate alone, while East Lansing is on Treasury's list. That list changes when a city adopts or rescinds a tax, so confirm both the current status and the levied rate with the city before modeling either.
Questions Michigan sellers ask
- When do I have to give a Michigan buyer my employee list and unemployment tax history?
- MCL 421.15(g) requires the disclosure at least 2 calendar days, not counting a Saturday, Sunday or legal holiday, before the acceptance of an offer, on a form provided by the unemployment agency. It covers outstanding and unreported unemployment tax liability, the tax payments, tax rates and cumulative benefit charges for the most recent 5 years, a listing of everyone currently employed, and a listing of everyone separated in the most recent 12 months. The subsection is framed around an acquisition of the business or 75% or more of the assets, so an asset sale is squarely inside it and a pure stock purchase is unsettled. Acceptance of an offer is not defined for a negotiated deal, so the safe practice is to have the form finished before you sign a letter of intent.
- Can a buyer that has never held a real estate license acquire my Michigan management company?
- Not without naming a principal who already holds an associate real estate broker's license, which MCL 339.2505(1)(d) requires before the designation can be made. The 3-year experience requirement in MCL 339.2505(7) credits loan and trust officers, corporate real estate officers, title insurance closing officers, licensed appraisers, attorneys, builders, investors and developers, so ask a prospective buyer early which of its principals fits one of those categories.
- Will I owe city income tax when I sell?
- It depends where you live and how the deal is structured. MCL 141.612(c) taxes a resident of a taxing city on capital gains, so an owner living inside one of the 24 pays city tax on the whole gain on top of the 4.25% state rate. Ann Arbor levies no city income tax. If you live outside the city, MCL 141.613(c) reaches only gains from real and tangible personal property located there, but MCL 141.613(b) separately taxes a nonresident owner of an unincorporated business on the distributive share of net profits from business conducted in the city, which an asset sale by an LLC or partnership can produce. This firm does not give tax advice.
- Who requests the Michigan tax clearance, me or the buyer?
- Both of you, for different documents. Under MCL 205.27a(1) you file a final return within 15 days of selling the business, and you request the clearance certificate itself on Form 5156. The purchaser separately asks Treasury for the known or estimated tax liability that sets the escrow, and on your written waiver of confidentiality Treasury has 60 days from receiving that request to release it. A purchaser Treasury does not answer within the 60 days is not liable at all. The waiver is the seller's part, and the purchaser's request has to reach Treasury at least 60 days before the target closing date for the answer to arrive in time.
- Will the non-compete a Michigan buyer asks me to sign hold up?
- A covenant given in connection with the sale of a business is analyzed under the Michigan Antitrust Reform Act's common law rule of reason, per Bristol Window & Door, Inc v Hoogenstyn, 250 Mich App 478 (2002). MCL 445.774a, added to that act by 1987 PA 243 and applicable to covenants entered into after March 29, 1985, governs employer and employee covenants, which is the provision that reaches the managers who stay. House Bill 4040 of 2025, introduced January 30, 2025 and referred to the House Committee on Economic Competitiveness with no further recorded action, would repeal that section, prohibit employee non-competes and apply retroactively to agreements already in force, while preserving a carve-out for a covenant given by an owner selling the business or their ownership interest. It is not law, and Michigan has no earnings threshold for non-competes today. Draft the seller covenant as a sale-of-business covenant under Bristol and confirm enforceability with Michigan counsel on the facts of the deal.
Where these facts come from
Everything above that is a rule rather than a judgment is listed here with its publisher and the date it was checked. Licensing, tax and non-compete rules change, sometimes without much notice. None of this is legal or tax advice, and it is not a substitute for your own counsel and CPA.
MCL 421.15(g) makes a person or employing unit that acquires the organization, trade, business, or 75% or more of the assets from an employing unit, as a successor described in section 41(2), liable for contributions and interest due from the transferor at the time of the acquisition, in an amount not to exceed the reasonable value of the organization, trade, business, or assets acquired, less the amount of a secured interest in the assets owned by the transferee that are entitled to priority. Where a transferor or transferee has, not less than 10 days before the acquisition, requested from the unemployment agency in writing a statement certifying the status of the transferor's contribution liability, the transferee is not liable for any amount in excess of the certified amount. At least 2 calendar days not including a Saturday, Sunday, or legal holiday before the acceptance of an offer, the transferor, or the transferor's real estate broker or other agent representing the transferor, shall disclose to the transferee on a form provided by the unemployment agency the amounts of the transferor's outstanding unemployment tax liability, unreported unemployment tax liability, and the tax payments, tax rates, and cumulative benefit charges for the most recent 5 years; a listing of all individuals currently employed by the transferor; and a listing of all employees separated from employment with the transferor in the most recent 12 months. The form must specify any other information the unemployment agency determines is required for a transferee to estimate future unemployment compensation costs based on the transferor's benefit charge and unemployment tax reporting and payment experience. Failure of the transferor, or the transferor's real estate broker or other agent representing the transferor, to provide accurate information required by the subsection is a misdemeanor punishable by imprisonment for not more than 90 days, or a fine of not more than $2,500.00, or both. In addition, the transferor, or the transferor's real estate broker or other agent representing the transferor, is liable to the transferee for any consequential damages resulting from the failure to comply; however, the real estate broker or other agent is not liable for consequential damages if he or she exercised good faith in compliance with the disclosure of information. The unemployment agency's form for this disclosure is designated UIA 1027, Business Transferor's Notice to Transferee of Unemployment Tax Liability and Rate.
Michigan Legislature (Legislative Service Bureau), MCL 421.15. Checked 2026-09-07.
Read verbatim from the statute. Three limits on how this page uses it. First, the good-faith defense in the statutory text is attached only to consequential damages; nothing in the subsection provides a good-faith defense to the misdemeanor. Second, the subsection is framed around a successor described in section 41(2), which is an acquisition of the organization, trade, business or 75% or more of the assets; whether it is triggered by a pure stock or membership interest purchase, where the employing unit is unchanged, is unsettled and no Michigan decision resolves it. Third, whether an M&A adviser is an 'other agent representing the transferor' for this purpose has not, so far as we have found, been decided; the surrounding vocabulary is written for real estate transactions. The UIA 1027 designation is the agency's form number and has not been confirmed against a current copy of the form; what must be disclosed comes from the statute, and any claim about the form's own content or staleness rules should be confirmed with the agency before employee data is circulated.
MCL 421.41(2)(a) defines the successor referred to in MCL 421.15(g) as a person or employing unit that acquires the organization, trade, or business, or 75% or more of the assets, of an employer subject to the act.
Michigan Legislature (Legislative Service Bureau), MCL 421.41. Checked 2026-09-07.
MCL 339.2501(u) includes in the definition of 'real estate broker' an individual or business entity that, for a fee, sells or offers for sale, buys or offers to buy, leases or offers to lease, or negotiates the purchase or sale or exchange of a business, business opportunity, or the goodwill of an existing business for others, and one that engages in property management as a whole or partial vocation. MCL 339.2501(r) defines 'property management' as leasing or renting, or offering to lease or rent, real property of others for a fee, commission, compensation, or other valuable consideration pursuant to a property management employment contract. The section is current through PA 91 of 2026 and was last amended by 2024 PA 122.
Michigan Legislature (Legislative Service Bureau), MCL 339.2501. Checked 2026-09-07.
The definition of property management is tied to leasing or renting, or offering to lease or rent. Services performed on their own without any leasing element, such as rent collection, accounting or maintenance dispatch, are not within that definition; this page does not claim otherwise. Nothing on this page addresses who may broker the sale of the company itself, which is governed by a separate line of authority construing the business-opportunity clause of this definition.
MCL 339.2505(1)(d) provides that where a broker license applicant is a business entity, the application shall designate which individuals who are control persons of the entity will be performing acts regulated by Article 25 as principals, and that an applicant shall not designate a control person as a principal unless that control person is licensed as an associate real estate broker. MCL 339.2505(3) requires a real estate broker to maintain a place of business in this state, to obtain a branch office license for each additional place of business, and, where a branch office is located more than 25 miles from the nearest boundary of the municipality in which the main office is located, to ensure the branch is under the direct supervision of an associate broker who is physically present on a regular basis during ordinary business hours. MCL 339.2505(5) and (6) impose the examination requirement. MCL 339.2505(7) requires proof that each applicant, or each principal of a business entity applicant, has the equivalent of 3 years of full-time experience in the business of real estate, and sets the credit schedule: 1 year for each 12-month period of salesperson licensure closing 5 or more transactions; 1 year for each 12-month period in which a builder built and personally sold or leased at least 5 residential, commercial or industrial units; 6 months for each 5 real property transactions personally negotiated by a real estate investor for their own account, capped at 1 year; 1 year for each 2 developments or subdivisions containing at least 10 units or parcels bought, subdivided and improved by a land or condominium developer; 1 year for each year an attorney acted as the attorney for at least 6 real estate transactions; 1 year for each period equivalent to at least 40 hours per week and at least 48 weeks per year worked by an appraiser licensed under article 26; and, under subparagraph (vii), 1 year for each period equivalent to at least 40 hours per week and at least 48 weeks per year in which the individual worked in a capacity directly related to the acquisition, financing, or conveyance of real estate, or in a position directly involved in a real estate business, including serving as the decision-making authority as a loan or trust officer of a federal or state-regulated depository institution, a loan or trust officer of a mortgage company, a real estate officer of a corporation who is not a licensed real estate broker, or a title insurance company officer engaged in the closing of escrow accounts and real estate closings.
Michigan Legislature (Legislative Service Bureau), MCL 339.2505. Checked 2026-09-07.
The credit schedule is applied by the department, which may also grant credit for other experience approved by rule in consultation with the board. Whether a particular individual's history qualifies is a determination for the department, not a conclusion this page draws for any buyer.
MCL 339.2504(1)(b) requires the applicant, or the individual designated as principal of a business entity applicant under section 2505, to complete at least 90 clock hours of approved prelicensure classroom courses in real estate. At least 9 clock hours must be instruction on civil rights law and fair housing law; the 90 hours are in addition to the hours required to obtain a real estate salesperson's license; and the 90 hours must be completed within the 36-month period preceding the application unless the applicant held an active salesperson license for that period. Under MCL 339.2504(1)(b)(iv) the department may determine by rule that a law degree, or a bachelor's or master's degree in business or finance, is the equivalent of some or all of that classroom coursework.
Michigan Legislature (Legislative Service Bureau), MCL 339.2504. Checked 2026-09-07.
MCL 339.2508(1) provides that a real estate broker's license issued to a partnership, association, corporation, limited liability company, common law trust, or a combination of those entities entitles those individuals designated as principals under section 2505(1) to perform regulated acts, and that such a license is not transferable. MCL 339.2508(2) requires each principal, before performing regulated acts, to apply for and obtain an associate real estate broker's license, subject to the same requirements as a broker applicant. MCL 339.2508(3) provides that the associate real estate broker's license of a principal who ceases to be connected with the entity is suspended automatically. MCL 339.2508(4) provides that an associate real estate broker's license issued to a principal is not transferable. MCL 339.2508(5) provides that if a real estate broker's license is revoked, the licenses of all salespersons employed by that broker and all affiliated associate real estate brokers are automatically suspended pending a change of employer and issuance of a new license. MCL 339.2508(6) provides that in the event of the death or disability of a sole principal associate broker, the department shall allow all affiliated licensees a reasonable time either to wind up the business or to designate a new principal associate broker.
Michigan Legislature (Legislative Service Bureau), MCL 339.2508. Checked 2026-09-07.
Subsection (3) suspends the departing principal's own associate broker license. It does not suspend the entity's broker license; only revocation of the entity's license triggers the cascade in subsection (5). The wind-up period in subsection (6) is available on the death or disability of a sole principal associate broker and is not written to cover a voluntary departure at closing.
MCL 205.27a(1) requires a person who sells out a business or its stock of goods, or quits the business, to file a final return within 15 days after the date of selling or quitting, and requires the purchaser and any succeeding purchasers to escrow sufficient money to cover the amount of taxes, interest and penalties due and unpaid until the former owner produces a receipt from the state treasurer showing payment or a certificate stating that taxes are not due. On the owner's written waiver of confidentiality, the department shall, within 60 days of receipt of the request, release to a purchaser the business's known or estimated tax liability for the purposes of establishing an escrow account. A purchaser who complies with the escrow requirement shall not be held liable for more than the known or estimated tax liability disclosed by the department and held in escrow. The purchaser shall not be held liable if the department has failed to provide the information requested within 60 days. A purchaser who fails to comply is personally liable up to the fair market value of the business less the amount of any proceeds applied to balances due on secured interests superior to the lien provided for in section 29(1). The clearance request is made by the seller on Form 5156, Request for Tax Clearance Certificate or Tax Status Letter.
Michigan Legislature (Legislative Service Bureau), MCL 205.27a. Checked 2026-09-07.
Two filings are involved and they belong to different parties. The seller files the final return and requests the clearance certificate on Form 5156; the 60-day duty in the statute runs from the department's receipt of the purchaser's request for the known or estimated liability, supported by the owner's written waiver of confidentiality. The non-compliance exposure is capped at the fair market value of the business less proceeds applied to superior secured interests; it is not unlimited.
Michigan's individual income tax rate for the 2026 tax year is 4.25%. MCL 206.51(1)(b) sets the 4.25% rate and MCL 206.51(1)(c) contains the trigger under which the rate is reduced for a tax year when general fund growth exceeds inflation. On April 15, 2026 the State Treasurer and the directors of the Senate Fiscal Agency and the House Fiscal Agency published the statutorily required calculation and determined that the reduction was not triggered for the 2026 tax year. Treasury states that a reduction triggered by that provision is temporary and one year in duration.
Michigan Department of Treasury, taxpayer notice, and MCL 206.51. Checked 2026-04-15.
The one-year duration point is Treasury's own characterization of a 2024 Court of Appeals decision, which is not named or cited here and is not quoted as a holding. Confirm the rate for the tax year in which the gain is actually recognized.
Under the City Income Tax Act, 1964 PA 284, MCL 141.612(c) subjects a resident individual to the city income tax on dividends, interest, capital gains less capital losses, income from estates and trusts, and net profits from rentals of real and tangible personal property.
Michigan Legislature (Legislative Service Bureau), MCL 141.612. Checked 2026-09-07.
MCL 141.613(b) subjects a nonresident individual to the city income tax on a distributive share of the net profits of a nonresident owner of an unincorporated business, profession, enterprise, undertaking or other activity, as a result of work done, services rendered and other business activities conducted in the city. MCL 141.613(c) subjects a nonresident individual to the tax on capital gains less capital losses from sales of, and on the net profits from rentals of, real and tangible personal property, if the capital gains arise from property located in the city.
Michigan Legislature (Legislative Service Bureau), MCL 141.613. Checked 2026-09-07.
The nonresident analysis does not stop at subdivision (c). For an owner of a pass-through entity, subdivision (b) can reach gain on an asset sale as apportionable city net profits. How a particular sale is characterized and apportioned is a question for a Michigan tax adviser and for the taxing city; this page does not resolve it.
MCL 141.503(2) permits a city with a population of more than 600,000 to levy a tax at a rate of not more than 2% on corporations and, under subdivision (d), beginning January 1, 2013 and each year after 2013, a rate of not more than 2.40% on resident individuals and 1.20% on nonresident individuals. Under subdivision (e), beginning January 1 of the year immediately succeeding the year in which all bonds, obligations and other evidence of indebtedness issued by a lighting authority have been fully paid, the maximum rates become 2.20% on resident individuals and 1.10% on nonresident individuals.
Michigan Legislature (Legislative Service Bureau), MCL 141.503. Checked 2026-09-07.
These are statutory maximum rates for a city of more than 600,000, not the rate levied by any other city. Detroit levies at the ceiling. The subdivision (e) step-down is contingent on the lighting authority's debt being fully paid, which is a live variable; confirm the current levied rate with the city before modeling it.
24 Michigan cities levy municipality taxes related to income. The Michigan Department of Treasury administers income taxes for the City of Detroit; the remaining city taxing authorities administer their own, and Treasury lists them as Albion, Battle Creek, Benton Harbor, Big Rapids, East Lansing, Grand Rapids, Flint, Grayling, Hamtramck, Highland Park, Hudson, Ionia, Jackson, Lansing, Lapeer, Muskegon, Muskegon Heights, Pontiac, Port Huron, Portland, Saginaw, Springfield and Walker. Ann Arbor does not appear on the list.
Michigan Department of Treasury. Checked 2026-09-07.
Treasury maintains this list and it changes when a city adopts or rescinds a tax. Confirm both the current status and the levied rate with the specific city before relying on either.
MCL 445.774a(1), added to the Michigan Antitrust Reform Act, 1984 PA 274, by 1987 PA 243, permits an employer to obtain from an employee an agreement or covenant that protects the employer's reasonable competitive business interests where it is reasonable as to duration, geographical area and the type of employment or line of business, and provides that to the extent such an agreement is found unreasonable in any respect a court may limit it to render it reasonable and specifically enforce it as limited. Subsection (2) applies the section to covenants entered into after March 29, 1985. There is no wage, salary or earnings threshold in the section. Michigan courts analyze covenants given in connection with the sale of a business under the common law rule of reason rather than the employee test, per Bristol Window & Door, Inc v Hoogenstyn, 250 Mich App 478; 650 NW2d 670 (2002). House Bill 4040 of 2025, introduced January 30, 2025 and referred to the House Committee on Economic Competitiveness with no further recorded action as of September 7, 2026, would as introduced repeal the current section 4a, including its judicial-limitation remedy, and prohibit a business from entering into, obtaining, enforcing or representing that a noncompete applies to a worker, applying to agreements entered into before, on or after its effective date; it preserves a carve-out for a covenant given by a worker who is an owner selling the business or their ownership interest, or who is responsible for the sale of substantially all operating assets, and its 200% of federal poverty line threshold attaches to non-solicitation agreements rather than to noncompetes.
Michigan Legislature (Legislative Service Bureau), MCL 445.774a, and House Bill 4040 of 2025 as introduced. Checked 2026-09-07.
House Bill 4040 is not law and its text is quoted as introduced. Bristol is a Michigan Court of Appeals decision (250 Mich App 478; 650 NW2d 670, decided July 11, 2002, Docket Nos. 226114, 226138, 226139) and the citation was confirmed independently; enforceability of any specific covenant turns on its own facts and should be confirmed with Michigan counsel. Judicial narrowing of an overbroad covenant is the approach in most states and is not presented here as a Michigan differentiator.
Page last reviewed 2026-09-07.
How other states handle the same questions
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