Alaska Real Estate Broker Exam — All Questions

A property under an unexpired Alaska management contract is going to be sold. Under 12 AAC 64.550, the sale must be authorized by:

• a.specific language in the contract, or a separate listing agreement✓
• b.a majority written vote of the tenants occupying the building
• c.the commission, which reviews a change of use in advance
• d.the notice that would be required to end a periodic tenancy

12 AAC 64.550(d) provides that “[t]he sale or exchange of a property that is subject to an existing property management contract must be authorized by specific language in the property management contract or by a separate listing agreement.” Management authority and listing authority are separate grants, so a manager cannot market the building for sale on the strength of the management contract alone. Tenants have no vote in the owner's decision to sell, and nothing in AS 08.88 or 12 AAC 64 sends the question to the commission. 12 AAC 64.550(c) is the related rule on money: funds may be moved between accounts held for the same owner only with the owner's written authorization, fully identified in each ledger.

An Alaska licensee represents a buyer. Under AS 08.88.620, the licensee is not obliged to:

• a.keep the buyer's confidential information private after the deal
• b.disclose a conflict of interest to the buyer in a timely manner
• c.show property for which no written agreement to pay a fee exists✓
• d.advise the buyer to get expert advice beyond the licensee's field

AS 08.88.620(6) requires a licensee representing a buyer or lessee to make “a good faith and continuous effort to find real estate for the buyer or lessee,” but subparagraph (B) removes any obligation to “show to the buyer or lessee real estate for which there is not a written agreement to pay compensation to the licensee.” The other three are duties the section does impose, and AS 08.88.625 makes the duties in AS 08.88.615 and 08.88.620 unwaivable except for the good-faith-effort duties in AS 08.88.620(5) and (6) themselves. The confidentiality duty in AS 08.88.620(4) survives the end of the relationship, as AS 08.88.660(c) confirms.

An Alaska salesperson manages rental property. Under 12 AAC 64.550, that management activity must be conducted:

• a.in the registered name of the real estate company involved✓
• b.under a separate property management license from the state
• c.in the licensee's own name, as the fee is paid to the licensee
• d.in the owner's name, with the licensee acting as bookkeeper

12 AAC 64.550(a) requires that “[a] licensee engaged in property management shall conduct property management activity in the registered name of the real estate company with which the licensee is affiliated.” That follows from AS 08.88.331, under which a salesperson or associate broker performs licensed activity only through the employing broker. Alaska issues no separate property management license: AS 08.88.161(3) and (4) fold collecting rent, collecting property management fees, and practicing or negotiating to practice property management into the ordinary broker, associate broker and salesperson licenses.

An Alaska licensee owns a fourplex and rents the units out. Under 12 AAC 64.550, the licensee must disclose in writing to tenants and prospective tenants:

• a.that the licensee is licensed, and the affiliated firm's name✓
• b.the price the licensee paid and the current mortgage balance
• c.the licensee's commission split with the employing broker
• d.the names of the other tenants and the rent each one pays

12 AAC 64.550(e) requires that “[a] licensee that owns rental real property shall disclose in writing to all tenants and prospective tenants of that property that the licensee holds a real estate license and the name of the company with which the licensee is affiliated.” 12 AAC 64.570(b) adds more for licensee-owned rentals: the ownership must also be disclosed under AS 08.88.391 as a conflict of interest, and the broker must be given the ownership position and percentage, copies of all financial records and rental agreements, and an update whenever that information changes. What the rule does not require is disclosure of the licensee's own price, financing, compensation, or other tenants' business.

Under 12 AAC 64.240, an Alaska broker takes the property management fee out of the trust account:

• a.annually, when the owner's year-end accounting is delivered
• b.at any time, provided the ledger still shows a positive balance
• c.monthly, once that contract's receipts and expenses are settled✓
• d.in advance, at the start of each month of the management term

12 AAC 64.240(c) provides that a broker “shall disburse from a trust account the fee earned for providing property management services” and that “[t]he disbursal must be made on a regular monthly basis after the collection of monthly receipts and disbursement of expenses for that management contract are completed.” Taking the fee in advance or at will would also collide with 12 AAC 64.250, which forbids withdrawing trust funds without fully complying with the recordkeeping requirements of 12 AAC 64.220 and forbids paying the broker's own business or personal obligations out of trust money.

An Alaska licensee managing rentals does not put prepaid rents and security deposits into a trust account. Under 12 AAC 64.560, that failure is treated as:

• a.fraudulent or dishonest conduct under the licensing statute✓
• b.a bookkeeping lapse to be corrected at the next audit
• c.a matter for the landlord-tenant courts, not the commission
• d.acceptable where the owner gave written permission first

12 AAC 64.560 states that “[f]ailure of a licensee engaged in property management to deposit prepaid rents or security deposits in a trust account as required by AS 34.03 (Uniform Residential Landlord and Tenant Act) is considered fraudulent or dishonest conduct within the meaning of AS 08.88.071(a)(3)(A)(iv)” — the same disciplinary ground that reaches outright fraud in a sale. The owner cannot consent it away, and the commission's jurisdiction runs alongside whatever remedies the tenant has against the landlord. AS 34.03.070(c) is the underlying duty: prepaid rent and security deposits must be deposited promptly, wherever practicable, in a trust account at a bank, savings and loan association, or licensed escrow agent.

Rent on an Anchorage apartment is $1,400 a month. Under AS 34.03.070, the largest combined security deposit and prepaid rent the landlord may demand is:

• a.one month's periodic rent
• b.two months' periodic rent✓
• c.three months' periodic rent
• d.four months' periodic rent

AS 34.03.070(a) provides that a landlord “may not demand or receive prepaid rent or a security deposit, however denominated, in an amount or value in excess of two months' periodic rent,” and then lifts the ceiling entirely for expensive units: “[t]his section does not apply to rental units where the rent exceeds $2,000 a month.” At $1,400 the cap applies, so two months' rent is the limit. AS 34.03.070(h) allows one further deposit on top of that, but only for a pet.

On top of the ordinary deposit ceiling, AS 34.03.070 lets an Alaska landlord take an extra deposit for a tenant's pet. That extra deposit:

• a.may not exceed one month's rent, and not for a service animal✓
• b.may not exceed two months' rent, and applies to any animal
• c.is unlimited, as it is negotiated apart from the rental deal
• d.must be held by the tenant's veterinarian, not the landlord

AS 34.03.070(h) permits an additional security deposit “from a tenant who has a pet on the premises that is not a service animal,” provides that it “may not exceed the periodic rent for one month,” and requires it to be “accounted for separately from prepaid rent or a security deposit received under (a) of this section” and applied “only to the amount of damages that are directly related to the pet of the tenant.” AS 34.03.070(i)(2) defines a service animal as one individually trained to do work or perform tasks directly related to and for the benefit of an individual with a disability.

A month-to-month tenant gives proper 30-day notice, moves out and leaves no damage. Under AS 34.03.070, the landlord must mail the written notice and refund within:

• a.7 days after the tenancy ends
• b.14 days after the tenancy ends✓
• c.21 days after the tenancy ends
• d.30 days after the tenancy ends

AS 34.03.070(g) runs two clocks. Where the landlord or tenant has given notice complying with AS 34.03.290, “the landlord shall mail the written notice and refund … within 14 days after the tenancy is terminated and possession is delivered by the tenant,” except that the landlord “shall have 30 days … if costs are deducted for damages that the landlord has suffered because of the tenant's noncompliance.” Where the tenant did not give complying notice, the landlord gets 30 days. This tenant gave proper notice and there is nothing to deduct, so the 14-day clock governs. A willful failure to comply exposes the landlord to twice the amount withheld under AS 34.03.070(d).

An Alaska tenant's rent is unpaid when due. Under AS 34.03.220, the landlord may terminate only after written notice giving the tenant at least:

• a.3 days to pay the rent in full
• b.7 days to pay the rent in full✓
• c.10 days to pay the rent in full
• d.14 days to pay the rent in full

AS 34.03.220(b) provides that “[i]f rent is unpaid when due and the tenant fails to pay rent in full within seven days after written notice by the landlord of nonpayment and the intention to terminate the rental agreement if the rent is not paid within that period of time, the tenancy terminates.” Only one written notice of default is needed for any one default, and the landlord may accept a partial payment and extend the eviction date accordingly. The ten-day figure belongs to a different situation — AS 34.03.220(a)(2), material noncompliance with the rental agreement or with AS 34.03.120 affecting health and safety.

A property manager wants to show an occupied Alaska rental to a prospective buyer. Absent an emergency, AS 34.03.140 requires the landlord to give the tenant at least:

• a.12 hours notice of the intention to enter
• b.24 hours notice of the intention to enter✓
• c.48 hours notice of the intention to enter
• d.72 hours notice of the intention to enter

AS 34.03.140(c) provides that “[e]xcept in case of emergency or if it is impracticable to do so, the landlord shall give the tenant at least 24 hours notice of intention to enter and may enter only at reasonable times and with the tenant's consent,” and forbids abusing the right of access or using it to harass the tenant. AS 34.03.140(a) is the matching duty on the tenant: consent may not be unreasonably withheld where the landlord wants to inspect, make necessary or agreed repairs, supply agreed services, or exhibit the unit to prospective or actual purchasers, mortgagees, tenants, workers or contractors. AS 34.03.140(b) allows entry without consent in an emergency.

Under 12 AAC 64.180 an Alaska broker's trust account must sit in a federally insured bank authorized to do business in the state, and the account name must:

• a.include the broker's license number and office address
• b.match the registered brokerage name exactly, word for word
• c.carry the commission's own taxpayer identification number
• d.include the words “trust account” or “trustee account”✓

12 AAC 64.180(a) requires every broker to “establish one or more trust accounts in a federally insured bank authorized to do business in this state,” and provides that “the name of the account so established must include the words ‘trust account’ or ‘trustee account.’” The broker who opens the account is its trustee and is responsible for all signatories under 12 AAC 64.180(c); all trust accounts must be demand accounts under 12 AAC 64.180(e); the account name, number and bank must be filed with the commission under 12 AAC 64.180(b); and 12 AAC 64.110(e)(5) puts the account numbers on the office registration form as well.

The bank charges monthly maintenance fees on an Alaska broker's trust account. Under 12 AAC 64.180 and 12 AAC 64.250, the broker:

• a.must move to a bank that levies no maintenance charge at all
• b.must bill each client a proportionate share of them monthly
• c.may keep up to $100 of the broker's own funds there for them✓
• d.may pay them from the clients' funds already in the account

12 AAC 64.180(d) provides that “[i]f maintenance expenses are charged against a trust account, the broker shall deposit a sum of money not exceeding $100 to the trust account for the purpose of paying the maintenance expenses of the account,” topping it up when necessary but never holding more than $100 there. 12 AAC 64.250(3) forbids using trust funds to pay those expenses, and 12 AAC 64.250(4) forbids commingling the broker's own money into the account except for exactly this allowance. 12 AAC 64.220(c) requires a separate ledger to account for the service-charge money.

A closing has funded and an Alaska salesperson is owed a share of the commission. Under 12 AAC 64.250, the broker may not:

• a.withdraw the brokerage's own commission from the trust account
• b.keep a separate ledger for each transaction in the trust account
• c.give the principals an accounting of the funds held in trust
• d.pay the salesperson's commission straight from the trust account✓

12 AAC 64.250(1) forbids a broker to “pay a salesperson's commission directly from the trust account.” The brokerage's own commission is a different matter and does come out of the trust account: 12 AAC 64.240(a) requires each withdrawal to be separate and identified to the specific transaction, and 12 AAC 64.240(b) gives the broker 15 days after the transaction closes or is otherwise settled to take it. Keeping a per-transaction ledger is required by 12 AAC 64.220, and refusing the principals an accounting is itself prohibited by 12 AAC 64.250(6).

How often must an Alaska broker reconcile the trust account, and against what, under 12 AAC 64.220?

• a.Monthly, cross-checking the bank balance against the ledgers✓
• b.Quarterly, against the brokerage's general operating account
• c.Annually, against the closing statements for the year's deals
• d.Only when the commission's designee gives notice of an audit

12 AAC 64.220(f) requires trust accounts to “be reconciled monthly” in three steps: reconciling the bank statement with the check register, reconciling the monthly deposits and expenditures with the independent transaction ledger for each transaction, and cross-checking the bank balance with the sum of the transaction ledgers. 12 AAC 64.220(d) requires a ledger for every transaction, including ones where the deposit is held by a cooperating broker, a title company or another third party. Failure to comply with the trust account rules is deemed fraudulent and dishonest conduct by 12 AAC 64.260, which routes it straight to AS 08.88.071(a)(3)(A)(iv).

An Alaska broker's trust account earns interest. Under 12 AAC 64.210, that interest:

• a.does not belong to the broker, and the rate goes to the trustor✓
• b.belongs to the broker as a fee for administering the account
• c.must be remitted to the real estate recovery fund each quarter
• d.must be paid to a commission-approved real estate scholarship

12 AAC 64.210 provides that “[i]f a trust account bears interest, that fact and the rate of interest must be disclosed to the trustor,” and that “[t]o avoid commingling funds, interest earned does not belong to the broker.” Alaska routes no trust interest to the recovery fund or to education: AS 08.88.450(a) funds the recovery fund from licensee payments under AS 08.88.455, retained claim filing fees, income earned on the fund's own investments, and money deposited under AS 08.88.450(c).

12 AAC 64.125 defines adequate supervision by an Alaska broker. It expressly includes:

• a.attending in person every closing an affiliated licensee conducts
• b.personally signing every listing agreement the firm has taken in
• c.re-interviewing each client before any offer is presented to them
• d.reviewing files for completeness before the transaction is recorded✓

12 AAC 64.125(b) says adequate supervision by a broker and an associate broker in charge “includes providing for the review of files for completeness and accuracy and ensuring all required real estate related documents are on file, including all applicable local, state, and federal forms before the recording of the transaction,” communicating office policies to affiliated licensees, and supervising for compliance with the brokerage policies required by AS 08.88.685(a)(1) – (5). 12 AAC 64.125(e) allows the supervision itself to happen by computer, electronic mail, telephone or facsimile, but requires all transaction records to stay in the office where the supervised licensee is registered. Failing to supervise adequately is grounds for discipline against the broker under 12 AAC 64.125(a).

AS 08.88.685 and 12 AAC 64.117 require every Alaska broker to adopt a written policy manual. That manual must be:

• a.available to the commission and to the public on request✓
• b.filed with the commission before the office may open up
• c.approved by a majority of the affiliated licensees first
• d.reissued by the broker at the end of each calendar quarter

AS 08.88.685(a) requires the broker to “adopt written policies and procedures available to the commission and to members of the public on request” that require licensees to comply with all real estate laws, to act fairly and honestly, to notify the broker of any legal dispute or allegation of wrongdoing, to keep in regular communication with the broker, and to identify the relationships the firm may engage in. 12 AAC 64.117 adds required content: how the designated licensee is determined, when the broker becomes the designated licensee, neutral licensees, one licensee representing a party while assisting an unrepresented party, office-wide confidentiality, and supervision of teams. Nothing calls for pre-filing, a licensee vote, or quarterly reissue.

An Alaska broker of record will be away and cannot supervise even remotely. Under 12 AAC 64.078, the broker may hand supervision to:

• a.the brokerage's unlicensed office manager for thirty days
• b.no one; the office must suspend business until the return
• c.an associate broker, or by written contract another broker✓
• d.any affiliated salesperson with three years of experience

12 AAC 64.078(a) lets a temporarily absent broker of record supervise transactions, trust accounts or licensees “by computer, modem, facsimile, or telephone communications.” Where that is not possible, 12 AAC 64.078(b) gives two routes: in an office where an associate broker is available, the broker of record “may designate an associate broker to supervise transactions, trust accounts, or licensees including creating and signing transaction documents”; where none is available, the broker “may enter into a written contract with another broker” to do the same, and that substitute broker stays employed at their own registered office. Either way 12 AAC 64.078(c) requires notice to the commission on an approved form signed by both. A salesperson and an unlicensed manager are not eligible.

An Alaska broker discharges a salesperson for violating the licensing law but never tells the commission why. Under 12 AAC 64.090, that silence:

• a.is permitted, as the reasons are a private employment matter
• b.shifts responsibility for the acts to the salesperson's next broker
• c.constitutes ratification of the salesperson's acts by the broker✓
• d.opens a ninety-day period in which the license is held in abeyance

12 AAC 64.090(c) requires that when an associate broker or salesperson “is discharged or released from a broker's employ for violating the provisions of AS 08.88 or this chapter, the broker shall notify the commission, in writing, of the release or discharge circumstances and reasons for the broker's action,” and then states the consequence in terms: “Failure to immediately notify the commission constitutes ratification of the acts of the associate broker or salesperson by the broker.” AS 08.88.071(c) points the same way, attributing an employee's conduct to the broker where the broker knows of it and agrees “either actively or by remaining silent,” or ratifies it afterwards.

AS 08.88.291 and 12 AAC 64.110 require an actively licensed Alaska broker to:

• a.keep an office only where the brokerage employs other licensees
• b.register a mailing address, with no physical office required
• c.establish and maintain a principal office located in this state✓
• d.keep an office in each judicial district where property is listed

12 AAC 64.110(a) provides that “[a] real estate broker holding an active license shall establish and maintain a principal office in this state,” and AS 08.88.291(a) makes failure “to maintain a place of business in the state or to inform the commission of its location and the names and addresses of all real estate licensees employed at each location” grounds for suspension or revocation of the broker's license. The office registration form under 12 AAC 64.110(e) asks for the physical location as well as the mailing address, and 12 AAC 64.110(g)(2) requires the broker to provide for acceptance of legal service at the registered business address. Nothing ties offices to judicial districts, and the duty does not depend on employing other licensees.

Under AS 08.88.311 and 12 AAC 64.120, an Alaska branch office must be supervised by an associate broker who:

• a.has that branch as a principal office and supervises only it✓
• b.visits the branch at least once in every calendar month
• c.also holds the broker of record's written power of attorney
• d.supervises no more than three branch offices at one time

AS 08.88.311(a) requires a branch office to “be under the direct supervision of a real estate associate broker whose principal place of business is that office,” and adds that “[a]n associate broker may serve in the capacity of direct supervisor at only one office”; 12 AAC 64.120(b) repeats the point. AS 08.88.311(b) requires the branch to bear and be advertised only in the name of the principal office, though it may indicate that it is a branch. Operating a branch office without licensed personnel or without an associate broker in charge is grounds for suspension or revocation of the broker's license under 12 AAC 64.120(c).

An Alaska salesperson supervised from the principal office works out of a home office that is neither a principal nor a branch office. Under 12 AAC 64.128, the salesperson may not:

• a.meet clients there, or store any transaction records at the house
• b.work from a home office at all without a commission waiver
• c.be supervised by telephone or e-mail rather than in person
• d.display a business sign there, or use its address in advertising✓

12 AAC 64.128(c) says an associate broker or salesperson working out of a home office that is not a principal or branch office may not give the appearance or impression that it is one, may not “display a sign at the home office showing the name of the real estate business,” and may not “use the address of the home office in any form of advertising, business letterhead, or business cards” — the principal or branch office address must be used instead. Working from home is otherwise allowed: 12 AAC 64.128(a) simply holds the supervising broker to the ordinary supervision duties of 12 AAC 64.125, which 12 AAC 64.125(e) permits to be discharged electronically.

AS 08.88.351 fixes how long an Alaska broker keeps transaction records and when the clock starts. The period is:

• a.three years, running from the day the listing was taken
• b.five years, running from when the licensee leaves the firm
• c.seven years, running from the day the deed was recorded
• d.three years, running from when the listing or sale ends✓

AS 08.88.351(a)(1) requires the broker to “keep a complete record, for three years, of all real estate transactions in which the broker or employed licensees of the broker engaged.” AS 08.88.351(c) explains the clock: the three-year requirement “begins at the initiation of a transaction and continues, as applicable, until three years after the date” a listing agreement ends, a sales transaction closes or otherwise ends, a management contract ends, or another contractual or fiduciary obligation ends. So the period runs from the end of the engagement, not from the day the listing was signed or the deed recorded. A licensee must separately keep records of transactions in which the licensee was a principal for at least three years under AS 08.88.351(b)(1).

On termination of employment, an Alaska broker's records go to a business entity that is not another licensed broker. Under AS 08.88.351, the broker must:

• a.obtain the commission's written approval of the transfer first
• b.destroy any records the receiving entity declines to accept
• c.convert the records to microfilm before making the transfer
• d.ensure by contract that they stay available for three years✓

AS 08.88.351(a)(6) requires a broker, “if records are delivered to a partnership, corporation, or business entity other than another licensed broker upon termination of employment,” to “ensure by contract the maintenance and availability of those records for a minimum of three years in accordance with this section.” The obligation is discharged by contract rather than by commission approval, and destroying records would defeat both this rule and AS 08.88.351(a)(5), which requires account records and other documents to be made available to the commission on request for an investigation or audit.

An Alaska broker is closing the brokerage office. Under 12 AAC 64.111, what must go to the commission with the closing form?

• a.A final reconciliation signed by the brokerage's outside auditor
• b.A list of every client the brokerage served in the past decade
• c.A surety bond covering the brokerage's outstanding obligations
• d.A bank statement showing a zero balance in the trust accounts✓

12 AAC 64.111(a) requires a broker, before closing an office or branch office, to submit the commission's completed closing form, “a bank statement showing a zero balance in the trust accounts or appropriate trust funds documentation,” the name, address and telephone number of the custodian of records together with the location where the last three years of brokerage transaction records may be accessed, and a completed form for license transfer or change of status. 12 AAC 64.111(b) requires the broker to keep a trust account open “until the broker has distributed all the money due to be received to the proper person or entity or until the transaction … is transferred to another brokerage.”