Minnesota Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

Under Minnesota's real estate definitions, a brokerage's "primary broker" is:

• a.The salesperson who closed the largest sales volume for the firm last year
• b.The broker on whose behalf the firm's salespersons are licensed to act✓
• c.The attorney the firm retains to review its purchase agreements and deeds
• d.The county official who indexes the firm's listing contracts for the public

Minn. Stat. 82.55, subd. 15 defines "primary broker" as the broker on whose behalf salespersons are licensed to act under section 82.63, subdivision 4; in a corporation, partnership, or limited liability company it is each officer or partner individually licensed to act as broker for the entity. Sales volume is a production measure and confers no license status, so the firm's top producer holds whatever license the firm's top producer happens to hold. Retained counsel advises the firm but is not licensed to act as its broker, and the definition turns on licensure rather than on legal services. County offices index and record instruments affecting title and take no part in designating who is responsible for a brokerage.

Minnesota presumes a person is engaged in the business of selling real estate, and so must be licensed, on engaging as principal in how many transactions in any 12-month period?

• a.Five or more, unless represented by a licensed broker or salesperson✓
• b.Two or more, unless every property sold is residential real property
• c.Ten or more, unless the properties are titled in a business entity
• d.Any number, because an owner selling in person is never exempt

Minn. Stat. 82.55, subd. 19, clause (g) presumes a person is engaged in the business of selling real estate — and therefore within the broker definition — if the person engages as principal in five or more transactions during any 12-month period, unless the person is represented by a licensed real estate broker or salesperson. Two transactions is below the statutory trigger, and the residential character of the property is not what the clause turns on. Ten transactions overshoots the figure the statute names, and holding title in an entity does not move the count. The last option states the opposite of Minnesota law, which regulates dealing for another and reaches an owner selling for the owner's own account only through this pattern-of-sales presumption.

Minnesota's statutory definition of a real estate "trust account" requires that the account itself:

• a.Be opened at the same institution that funds the buyer's mortgage
• b.Be closed and reopened at the beginning of each 24-month license period
• c.Be titled in the name of the salesperson who took the earnest money
• d.Bear interest at the highest current passbook savings account rate✓

Minn. Stat. 82.55, subd. 25 defines a trust account as an account maintained to segregate trust funds from other funds, and requires that it be an interest-bearing account paying the highest current passbook savings account rate of interest and that it not allow the financial institution a right of setoff against money the licensee owes it. Nothing ties the account to the buyer's lender; that would give the lender a relationship to funds it has no claim on. Titling the account to a salesperson contradicts section 82.75, under which the broker maintains the account. Periodic closing and reopening is not required, and section 82.75, subdivision 6 in fact requires ten days' written notice to the commissioner before a broker closes an existing trust account.

Every application for the Minnesota broker examination must be accompanied by proof of how much licensed salesperson experience?

• a.Two years of actual experience within the previous three-year period
• b.Five years of actual experience within the previous seven-year period
• c.One year of actual experience within the previous two-year period
• d.Three years of actual experience within the previous five-year period✓

Minn. Stat. 82.59, subd. 4, paragraph (b) requires proof of a minimum of three years of actual experience within the previous five-year period prior to application as a licensed real estate salesperson in Minnesota or in another state having comparable requirements, or that the applicant is otherwise or similarly qualified in the commissioner's opinion by reason of education or practical experience. Two years within three is the standard several other states use and is shorter than the period Minnesota's statute names. Five years within seven demands more than the statute does, and no such window appears in chapter 82. One year within two is well short of the experience gate, which exists because the broker examination is required to be more exacting than the salesperson examination.

Minnesota's prelicense education requirement for a broker applicant is a course of:

• a.15 hours, of which one hour must be trust account training
• b.90 hours, of which six hours must be fair housing training
• c.60 hours, of which two hours must be agency disclosure training
• d.30 hours, of which three hours must be fair housing training✓

Minn. Stat. 82.59, subd. 8, paragraph (b) requires a broker applicant to complete a commissioner-approved course of study of 30 hours of instruction, of which three hours must consist of training in state and federal fair housing laws, regulations, and rules, and the course must have been completed within 12 months prior to the date of application for the broker's license. Ninety hours describes the total salesperson prelicense sequence rather than the broker course. Sixty hours with two hours of agency training is the salesperson's second course under paragraph (a) of the same subdivision, not the broker course. Fifteen hours matches nothing in chapter 82; the nearest figure is the 15 continuing education credits that section 82.61 requires in the first 12 months of a licensing period.

To pass the Minnesota real estate licensing examination, a candidate must score:

• a.70 percent or higher on the combined total of both examination portions
• b.80 percent or higher on the state portion and 70 percent on the uniform
• c.75 percent or higher on the uniform portion and on the state portion✓
• d.60 percent or higher on either portion if the combined average is 75

Minn. Stat. 82.59, subd. 6 sets a passing grade for both the salesperson's and the broker's examination at a score of 75 percent or higher on the uniform portion and a score of 75 percent or higher on the state portion, and the PSI candidate bulletin repeats that a candidate must get 75 percent correct to pass. A combined total misreads a two-portion standard as one score and would let a strong national result carry a failing state result. Splitting the standard into two different percentages invents a distinction the subdivision does not draw. Averaging the two portions defeats the point of scoring them separately, which is why a candidate who passes one portion needs to retake only the other.

The commissioner may waive the broker examination's experience requirement for an applicant who is:

• a.A licensed practicing attorney whose practice involves real estate law✓
• b.A certified residential appraiser holding an active Minnesota license
• c.An officer of a title insurance company that closes Minnesota sales
• d.A licensed home inspector with ten years in residential construction

Minn. Stat. 82.59, subd. 5, paragraph (b) lists three qualified applicants for a waiver of the real estate licensing experience requirement: an individual with a degree in real estate from an accredited college or university, a licensed practicing attorney whose practice involves real estate law, and a public officer whose official duties involve real estate law or real estate transactions. Home inspection, appraisal, and title work all touch real estate transactions, but none of the three appears in the list, and a waiver provision is read to its terms. The waiver is also time-limited: under paragraph (e) it lapses if the applicant fails to complete the broker's examination within one year from the date it was granted.

When a Minnesota salesperson terminates activity on behalf of a broker, the broker must notify the commissioner within:

• a.Ten days of the termination, on the prescribed form✓
• b.Three days of the termination, by certified mail
• c.Thirty days of the termination, on the prescribed form
• d.Sixty days of the termination, at the next license renewal

Minn. Stat. 82.63, subd. 6 provides that when a salesperson terminates activity on behalf of a broker the salesperson's license becomes ineffective, and within ten days of the termination the broker must notify the commissioner in the form the commissioner prescribes. Three days is shorter than the period the subdivision sets, and no certified-mail requirement appears in it. Thirty and sixty days both run past the statutory window; waiting for renewal would leave the department's record of who is licensed to whom stale for as long as two years, which is the record the ten-day duty exists to keep current. A salesperson may apply to transfer to another broker at any time during the remainder of the license period.

On the death or incapacity of a Minnesota broker, the commissioner may issue a temporary broker's permit lasting:

• a.10 days, renewable twice on payment of the renewal fee
• b.45 days, renewable once on a showing of good faith effort✓
• c.90 days, renewable once on completion of the broker course
• d.24 months, matching the ordinary Minnesota license period

Minn. Stat. 82.63, subd. 12 lets the commissioner issue a 45-day temporary permit on the death, incapacity, or loss of license of a broker to an individual with a minimum of three years of actual experience as a licensed salesperson who is otherwise reasonably qualified, and the permit is renewed once if the applicant shows a good faith effort to obtain a broker's license and an extension will not harm the public interest. Ten days is far too short to wind up or continue a brokerage's pending files. Ninety days and a course condition appear nowhere in the subdivision. Twenty-four months is the ordinary license term under subdivision 5 and would turn an emergency measure into a substitute for licensure.

Minnesota's continuing education requirement for brokers and salespersons is:

• a.24 hours per 24-month period, with at least 8 in the first 12 months
• b.15 hours per 12-month period, with at least 5 taken in a classroom
• c.30 hours per 24-month period, with at least 15 in the first 12 months✓
• d.45 hours per 36-month period, with at least 20 in the first 18 months

Minn. Stat. 82.61, paragraph (a) requires all real estate salespersons and brokers to complete 30 hours of approved real estate continuing education during the initial license period and during each succeeding 24-month license period, and at least 15 of the 30 credit hours must be completed during the first 12 months of the 24-month licensing period. The other three combinations rearrange the totals, the period, or the front-loading rule, and none of them appears in section 82.61. The section also requires at least one hour each license period on agency representation and disclosure and at least one hour on fair housing and other antidiscrimination law.

A Minnesota real estate salesperson may hold a license to act on behalf of:

• a.Two brokers at a time if both primary brokers consent
• b.Any number of brokers if each transaction is disclosed
• c.Two brokers at a time if the firms are affiliated entities
• d.One broker at a time during the same period of time✓

Minn. Stat. 82.63, subd. 4 provides that a salesperson must be licensed to act on behalf of a licensed broker and may not be licensed to act on behalf of more than one broker in this state during the same period of time. Consent of the two brokers does not change that, because the limit is a condition of licensure rather than a private arrangement between firms. Per-transaction disclosure likewise cannot create a second license the statute forbids. The affiliated-entity idea borrows from section 82.63, subdivision 2, which lets a broker hold an additional broker's license for an affiliated business entity; that provision governs brokers, not salespersons.

A written purchase agreement is silent on when earnest money is to be deposited. The listing broker must deposit it within:

• a.One business day of receipt or final acceptance, whichever is earlier
• b.Three business days of receipt or final acceptance, whichever is later✓
• c.Five business days of receipt or final acceptance, whichever is later
• d.Ten business days of receipt or final acceptance, whichever is earlier

Minn. Stat. 82.75, subd. 5, paragraph (c) provides that earnest money received from a potential buyer is deposited into the listing broker's trust account under the terms of the parties' written agreement, and that if the written agreement is silent as to timing, the listing broker deposits the earnest money within three business days of either receipt of the earnest money or final acceptance of the purchase agreement, whichever is later. One and five business days name periods the paragraph does not use. Ten business days is the outside limit in paragraph (d) for disbursement after a transaction is consummated or terminated, not for the initial deposit, and each option that reads "whichever is earlier" reverses the tie-breaker the statute actually applies.

A seller rejects an offer after the listing broker has taken the buyer's earnest money. The broker must return the funds to the buyer:

• a.Not later than the next business day after the rejection✓
• b.Not later than three business days after the rejection
• c.Not later than ten business days after the rejection
• d.Only after both parties sign a written cancellation

Minn. Stat. 82.75, subd. 5, paragraph (c) closes with a plain rule: if the offer is rejected, the earnest money is returned to the potential buyer not later than the next business day after rejection. Three and ten business days both extend a deadline the paragraph states in a single day, and the ten-day figure belongs to paragraph (d), which addresses disbursement after a transaction is consummated or terminated. Requiring a signed cancellation confuses a rejected offer with a disputed deposit; a rejected offer never became a contract, so there is nothing for the parties to cancel and no competing claim to the money.

Minnesota permits a broker to disburse trust funds only on one of a closed list of events. Which is on that list?

• a.A written demand from the party who deposited the funds
• b.A determination by the broker of who is legally entitled
• c.The passage of 30 days after the closing date in the contract
• d.A court order directing disbursement of the funds✓

Minn. Stat. 82.75, subd. 5, paragraph (d) allows disbursement only on a closing of the transaction, a written agreement between the parties, an affidavit as required in section 559.217, or a court order, and requires disbursement within ten business days following consummation or termination if the agreements are silent. A one-sided written demand is not a written agreement between the parties, so it does not open the account. The broker's own view of entitlement is exactly what the closed list removes from the broker's hands, and acting on it risks discipline under section 82.81, subdivision 12. A calendar date is not one of the four events, so time alone never authorizes release.

Which deposit of the broker's own money into a Minnesota trust account is permitted?

• a.A sum advanced to a client to cover the client's earnest money deposit
• b.A sum retained from a commission the broker expects to earn at closing
• c.A sum equal to one month of the brokerage's ordinary operating expenses
• d.A sum identified and used to pay service charges or meet a minimum balance✓

Minn. Stat. 82.75, subd. 4 requires a broker, salesperson, or closing agent to deposit only trust funds in a trust account and not to commingle personal or other funds, with one exception: a sum from personal funds that is specifically identified and used to pay service charges or satisfy the minimum balance requirements relating to the trust account. Advancing a client's earnest money puts the broker's money into a transaction as a party's deposit and is not the identified service-charge cushion the exception describes. Holding an expected commission in trust treats the broker's future revenue as client money. Parking operating funds there is straightforward commingling, which section 82.81, subdivision 12 lists among fraudulent, deceptive, or dishonest practices.

Interest accruing on a Minnesota broker's pooled trust account, less reasonable transaction costs, is paid to:

• a.The Minnesota Department of Commerce for the recovery fund
• b.The Minnesota Housing Finance Agency for the housing trust fund✓
• c.The broker, as compensation for administering the account
• d.The county treasurer where the brokerage maintains its office

Minn. Stat. 82.75, subd. 8, paragraph (a) requires each broker to maintain a pooled interest-bearing trust account for client funds and provides that the interest accruing on it, less reasonable transaction costs, must be paid to the Minnesota Housing Finance Agency for deposit in the housing trust fund account created under section 462A.201, unless the parties to a transaction expressly agree otherwise in writing. The Department of Commerce administers the education, research, and recovery fund under section 82.86, but that fund is financed by licensing fees rather than by pooled trust interest. Paying the interest to the broker would convert client funds' earnings into brokerage income, and county treasurers have no role in the scheme.

A Minnesota broker must retain listings, purchase agreements, trust account records, and canceled checks for:

• a.Three years from closing, or from the listing date if not consummated
• b.Two years from closing, or from the offer date if not consummated
• c.Six years from closing, or from the document date if not consummated✓
• d.Ten years from closing, or from the document date if not consummated

Minn. Stat. 82.72, subd. 3 requires a licensed broker to retain for six years copies of all listings, buyer representation and facilitator services contracts, deposit receipts, purchase money contracts, canceled checks, trust account records, and other documents reasonably related to the brokerage business, with the period running from the date of closing or from the date of the document if the transaction is not consummated. Note that this rule sits in section 82.72, which is titled RECORDS; the PSI outline labels the 82.72-82.73 range "Standards of Conduct," but standards of conduct are section 82.73. Three, two, and ten years each restate the period incorrectly. Storage may be electronic, and disposal must follow the confidential record destruction procedures of the Fair and Accurate Credit Transaction Act of 2003.

How long must a Minnesota broker keep the complaint file maintained for each individual licensed to the broker?

• a.One year from receipt of the written complaint
• b.Six years from receipt of the written complaint
• c.Three years from receipt of the written complaint✓
• d.Until the commissioner closes the related investigation

Minn. Stat. 82.73, subd. 3, paragraph (c) requires a broker to investigate and attempt to resolve complaints about the practices of any individual licensed to the broker, and to maintain for each such individual a complaint file containing all material relating to any complaints received in writing for a period of three years. One year is shorter than the paragraph provides. Six years is the transaction-document retention period in section 82.72, subdivision 3, and applying it here mixes two different rules. Tying the period to a departmental investigation would make retention depend on whether the regulator ever opened one, while the duty attaches to every written complaint the brokerage receives.

A Minnesota brokerage with several offices designates an individual broker to direct and supervise each one. This designation:

• a.Transfers responsibility for each office to the designated individual broker
• b.Ends the primary broker's duty to review the firm's trust account records
• c.Leaves the primary broker with ultimate responsibility for licensees' actions✓
• d.Requires the commissioner's written approval before each office may open

Minn. Stat. 82.73, subd. 3, paragraph (a) requires each place of business of a brokerage to be under the direction and supervision of an individual broker licensed to act on behalf of the brokerage, and states plainly that designation of another broker to supervise a place of business does not relieve the primary broker of the ultimate responsibility for the actions of licensees. That sentence rules out any transfer of responsibility. Supervision is defined in the same paragraph to include review of all trust account books and records, so the duty continues rather than ending. The subdivision calls for the primary broker to keep records naming the supervising broker for each office and to file a written statement of procedures on the commissioner's written request, not for advance approval of each location.

The commissioner of commerce investigates a Minnesota brokerage and finds no violation. Under chapter 45, the brokerage:

• a.May not be charged the costs of that investigation✓
• b.Must pay the investigation costs the commissioner assesses
• c.Must pay half the investigation costs as a shared expense
• d.May recover its own legal costs from the general fund

Minn. Stat. 45.027, subd. 1, paragraph (a), clause (8) lets the commissioner assess a person or entity the necessary expenses of an investigation performed by order of the commissioner, and then provides that a natural person or entity licensed under chapter 60K, 82, or 82B shall not be charged costs of an investigation if the investigation results in no finding of a violation. Charging the full or a shared amount ignores that carve-out, which is the whole point of the sentence for a chapter 82 licensee. Recovery of the licensee's own legal costs from the general fund is a separate remedy the clause does not create; it directs money collected into the general fund, and does not pay money out of it.

Which conduct is an independent ground for the commissioner to deny, suspend, or revoke a Minnesota real estate license?

• a.Failing to join a state or local real estate trade association
• b.Failing to reasonably supervise licensees so as to harm the public✓
• c.Failing to close a transaction within the time the contract names
• d.Failing to obtain a client's consent before advertising a listing

Minn. Stat. 82.82, subd. 1, paragraph (d) lists failure to reasonably supervise brokers, salespersons, or closing agents so as to cause injury or harm to the public among the grounds on which the commissioner may by order deny, suspend, or revoke a license or censure a licensee, provided the order is in the public interest. Trade association membership is voluntary and private; section 82.81, subdivision 12, clause (7) in fact makes it a violation to claim a membership the licensee does not hold. A missed closing date is a contract matter between the parties rather than a licensing ground. Advertising a listing is governed by section 82.69, which requires the brokerage name to be clearly and conspicuously displayed.

The Minnesota real estate education, research and recovery fund may pay an aggrieved person up to what amount per claimant, per transaction?

• a.$50,000, with a $150,000 cap per licensee
• b.$25,000, with a $100,000 cap per licensee
• c.$150,000, with a $250,000 cap per licensee✓
• d.$250,000, with a $500,000 cap per licensee

Minn. Stat. 82.86, subd. 7 lets an aggrieved person with a final judgment apply for the actual and direct out-of-pocket loss in the transaction, excluding attorney's fees and interest, up to $150,000 of the amount unpaid on the judgment, provides that nothing obligates the fund for more than $150,000 per claimant per transaction, and caps the fund's exposure at $250,000 per licensee regardless of the number of claims. Fifty and twenty-five thousand dollars understate the per-claimant figure. The last option shifts each number one step up and would double the fund's exposure to a single licensee. Joint tenants or tenants in common count as a single claimant.

Recovery from the Minnesota real estate recovery fund requires the applicant to have obtained:

• a.A written finding by the commissioner that a licensee acted unreasonably
• b.A signed settlement agreement with the licensee and the licensee's insurer
• c.A referral from a local real estate board after its own ethics hearing
• d.A final judgment against a licensee for a dishonest practice or conversion✓

Minn. Stat. 82.86, subd. 7 opens the fund only when an aggrieved person obtains a final judgment in a court of competent jurisdiction against an individual licensed under chapter 82 on grounds of fraudulent, deceptive, or dishonest practices, or conversion of trust funds arising directly out of a transaction in which the judgment debtor was licensed. A commissioner's finding supports discipline under section 82.82 but is not the judgment the fund provision requires. A private settlement replaces the judgment the statute conditions payment on. A trade-association ethics referral has no statutory role, and the subdivision also bars a licensee from recovering for the loss of a commission or similar fee.

Minnesota's statutory agency disclosure form must be provided to a consumer:

• a.At the signing of the purchase agreement in any real estate transaction
• b.At the first substantive contact in a residential real property sale✓
• c.At the first showing of a property in any real estate transaction
• d.At the closing of a residential real property transaction

Minn. Stat. 82.67, subd. 1 requires a broker or salesperson to provide a consumer, in the sale and purchase of a residential real property transaction, an agency disclosure form at the first substantive contact with the consumer, and states that the disclosures apply only to residential real property transactions. Two of the wrong answers extend the duty to any real estate transaction, which the subdivision's closing sentence rules out. Waiting for the purchase agreement or the closing puts the disclosure after the consumer has negotiated or completed the deal, defeating a form whose stated purpose is to describe the available agency and facilitator options before the consumer chooses. The form is a disclosure, not a contract; representation still requires a written agreement.

Under the Minnesota agency disclosure form, a facilitator owes the party which duty in the absence of a written facilitator services agreement?

• a.Loyalty, and no other fiduciary duty
• b.Confidentiality, and no other fiduciary duty✓
• c.Obedience, and no other fiduciary duty
• d.Reasonable care, and no other fiduciary duty

The statutory form set out in Minn. Stat. 82.67, subd. 3, paragraph IV states in capitals that the facilitator broker or salesperson does not owe any party any of the listed fiduciary duties EXCEPT CONFIDENTIALITY unless those duties are included in a written facilitator services agreement. Loyalty, obedience, and reasonable care are three of the six fiduciary duties the form defines, and they are precisely the duties a facilitator does not owe absent a written agreement. The form also provides that if a facilitator working with a buyer shows a property the facilitator has listed, the facilitator must act as a seller's broker, and the mirror rule applies when a facilitator working with a seller accepts a showing by a buyer the facilitator is representing.

Which situation creates a dual agency under Minnesota law?

• a.Two salespersons licensed to the same broker each represent a party✓
• b.One broker represents the seller while the buyer is unrepresented
• c.Two brokers from unrelated firms each represent a party to the sale
• d.One broker represents the seller and also holds the closing escrow

Minn. Stat. 82.55, subd. 6 defines dual agency as a situation in which a licensee owes a duty to more than one party to the transaction, and lists two establishing circumstances: one licensee representing both the buyer and the seller, and two or more licensees licensed to the same broker each representing a party. The statutory agency disclosure form in section 82.67, subdivision 3 repeats both. Licensees at unrelated firms are two separate brokerages, which is an ordinary cooperative sale. A represented seller and an unrepresented buyer is single agency with a customer on the other side. Holding escrow is a closing function governed by section 82.75 and does not by itself create a second principal.

When circumstances create a dual agency in a Minnesota residential transaction, the required consent of all parties must be obtained:

• a.In a separate letter delivered to each party before closing
• b.In the listing agreement only, signed by the seller alone
• c.In the purchase agreement, set off in a boxed format✓
• d.Orally at the time the conflicting representation first arises

Minn. Stat. 82.67, subd. 4 requires the broker to make full disclosure to all parties of the change in relationship, and then to obtain the consent of all parties in residential real property transactions in the purchase agreement, in the statutory form the subdivision prints, which shall be set off in a boxed format to draw attention to it. A separate letter is not the instrument the subdivision names. A seller-only signature in the listing agreement cannot supply the buyer's consent, and the statute requires the consent of all parties. Oral consent fails a provision that prescribes specific language in a specific document and even prescribes how it is to be laid out on the page.

Which of the following is NOT a material fact a Minnesota licensee must disclose about a property offered for sale?

• a.That a lien recorded against the property secures an unpaid judgment
• b.That the roof leaks whenever there is a sustained heavy rainfall
• c.That the property was the site of a suicide or an accidental death✓
• d.That the septic system was found noncompliant at the last inspection

Minn. Stat. 82.68, subd. 3, paragraph (b) states that it is not a material fact that the property is or was occupied by someone suspected to be infected with HIV or diagnosed with AIDS, was the site of a suicide, accidental death, natural death, or perceived paranormal activity, or is in a neighborhood containing an adult family home, community-based residential facility, or nursing home. The other three are physical or legal conditions that could adversely and significantly affect an ordinary purchaser's use or enjoyment of the property, which is the disclosure standard paragraph (a) sets. Paragraph (c) separately relieves a licensee of any duty to disclose predatory offender registry information if the required written notice is given in a timely manner.

A buyer tells the listing licensee that the buyer will not perform under the signed purchase agreement. The licensee must:

• a.Immediately disclose the intent not to perform to the other party✓
• b.Wait until the contractual closing date and then notify the seller
• c.Keep the statement confidential unless the buyer authorizes release
• d.Report the statement to the commissioner within ten business days

Minn. Stat. 82.68, subd. 4 requires a licensee put on notice by a party that the party will not perform according to a purchase agreement or similar written agreement to convey real estate to immediately disclose that intent to the other party or parties, and, if reasonably possible, to inform the nonperforming party of that obligation before making the disclosure. Waiting for the closing date is the opposite of immediate and would leave the seller acting on a contract the licensee knows is dead. Treating the statement as confidential inverts a duty the subdivision imposes without regard to who the licensee represents. The commissioner is not the recipient; the disclosure runs to the other party to the transaction. The duty does not extend to notice that a party cannot fulfill a contingency.

A Minnesota salesperson may accept a commission or referral fee for acts requiring a real estate license from:

• a.Any party to the transaction who agrees to pay the salesperson directly
• b.The salesperson's own broker, or as that broker authorizes in writing✓
• c.Any licensed broker in the state who participated in the transaction
• d.The title company handling the closing, out of the seller's proceeds

Minn. Stat. 82.70, subd. 1 forbids a licensee to pay or accept a commission, compensation, referral fee, broker price opinion fee, or other valuable consideration for the performance of acts requiring a real estate license from anyone except the broker to whom the licensee is licensed, or was licensed at the time of the transaction, unless that broker authorizes otherwise in writing. Direct payment by a party bypasses the broker through whom compensation must flow. Payment by a cooperating broker is likewise outside the rule unless the licensee's own broker has authorized it in writing; under subdivision 4 the seller authorizes the listing broker, not the salesperson, to share compensation. A title company disbursing to a salesperson is the same defect at the closing table.

A married Minnesota owner holds the homestead in the owner's name alone. A conveyance of that homestead is:

• a.Valid if the owner signs and the deed is promptly recorded
• b.Valid if the nonowner spouse is given ten days' written notice
• c.Valid if the nonowner spouse does not object before closing
• d.Invalid without the signatures of both spouses✓

Minn. Stat. 507.02 provides that if the owner is married, no conveyance of the homestead is valid without the signatures of both spouses, subject to narrow exceptions for a purchase money mortgage under section 507.03, a conveyance between spouses under section 500.19, subdivision 4, and a severance of a joint tenancy under section 500.19, subdivision 5. Recording does not cure an invalid conveyance, since recording gives notice of an instrument rather than validity to it. Notice to the spouse is not a substitute for the spouse's signature, and neither is the spouse's silence. A spouse's signature may be made by a duly appointed attorney-in-fact.

A Minnesota deed grants land to two people and says nothing about the form of co-ownership. Minnesota construes the grant to create:

• a.A life estate in each grantee with a reversion to the grantor
• b.A joint tenancy with a right of survivorship
• c.A tenancy by the entirety if the grantees are married
• d.A tenancy in common between the two grantees✓

Minn. Stat. 500.19, subd. 2 provides that all grants and devises of lands made to two or more persons are construed to create estates in common, and not in joint tenancy, unless expressly declared to be in joint tenancy; the rule does not apply to mortgages or to devises or grants made in trust or to executors. Joint tenancy is therefore the exception a deed must state, not the default. Minnesota does not recognize a tenancy by the entirety, so marriage does not change the construction. Nothing in a silent grant creates successive estates, and subdivision 3 separately abolishes the common law requirement of unity of time, title, interest, and possession for creating a joint tenancy.

Which event severs a Minnesota joint tenancy in real estate?

• a.Entry of a decree dissolving the joint tenants' marriage✓
• b.A joint tenant's unrecorded written declaration of severance
• c.A joint tenant's oral notice of severance to the other tenants
• d.A joint tenant's move out of the jointly owned dwelling

Minn. Stat. 500.19, subd. 5 makes a severance by one joint tenant legally effective only if the instrument of severance is recorded with the county recorder or registrar of titles, or is executed by all of the joint tenants, or the severance is ordered by a court, or a severance is effected by a joint tenant's bankruptcy; the subdivision then provides that a decree of dissolution of a marriage severs all joint tenancy interests between the parties except to the extent the decree declares they continue to hold as joint tenants. An unrecorded unilateral declaration meets none of the four routes, and an oral notice meets none either. Possession is not one of the tests, so moving out changes nothing about title.

Under Minnesota's Subdivided Land Sales Act, offering or selling an interest in subdivided lands in this state is unlawful unless:

• a.The subdivider has posted a performance bond with the county
• b.The subdivider maintains an office within the state of Minnesota
• c.The interest is registered with the commissioner or is exempt✓
• d.The purchaser waives inspection of the public offering statement

Minn. Stat. 83.23, subd. 1 makes it unlawful for any person to offer or sell an interest in subdivided lands in this state unless the interest is registered under that section or the subdivided land or the transaction is exempt under section 83.26. Registration is by notification for subdivisions of not more than 100 lots, units, parcels, or interests, or by qualification with a public offering statement. A county performance bond and an in-state office are not what chapter 83 conditions the offer on. A purchaser waiver runs against the statute's design, which is to put a public offering statement in the buyer's hands rather than to let it be waived away.