Minnesota Real Estate Broker Exam — All Questions

A Minnesota buyer takes a deed and does not record it. A later buyer of the same land purchases in good faith for value and records first. As between them, the earlier deed is:

• a.Valid against the later buyer, because it was delivered first
• b.Valid against the later buyer, if the earlier buyer took possession
• c.Void against the later buyer only if the later deed is a warranty deed
• d.Void against the later buyer who recorded first✓

Minn. Stat. 507.34 provides that every conveyance of real estate must be recorded in the county where the land is situated, and that an unrecorded conveyance is void as against any subsequent purchaser in good faith and for a valuable consideration whose conveyance is first duly recorded, and as against an attachment or judgment against the record owner. Delivery alone therefore does not win the race. The section says nothing about possession as a cure. Its closing sentence rejects the last option directly: the fact that the first recorded conveyance is a quitclaim deed does not affect the subsequent purchaser's good faith or by itself give notice of an unrecorded conveyance.

A purchaser of Torrens land in Minnesota receives a certificate of title in good faith and for value. That certificate is subject to:

• a.A purchase agreement the prior owner signed and never performed
• b.A lease of three years or less where the tenant is in actual occupation✓
• c.An unrecorded mortgage the prior owner gave to a private lender
• d.A restrictive covenant that was omitted from the certificate of title

Minn. Stat. 508.25 provides that a person receiving a certificate of title in good faith and for valuable consideration holds it free from all encumbrances and adverse claims except those noted on the last certificate and a short list of statutory exceptions, which includes any lease for a period not exceeding three years when there is actual occupation of the premises under it, along with federal claims, real property tax and special assessment liens, rights in public highways, appeal rights, the rights of a person in possession under a deed or contract for deed from the certificate owner, and outstanding mechanic's lien rights. An unperformed purchase agreement, an unrecorded mortgage, and an omitted covenant are exactly the interests the Torrens certificate cuts off.

Minnesota's mortgage registry tax is imposed at what rate, and on whom?

• a.0.0033 of the secured debt, and the mortgagee is liable
• b.0.0023 of the secured debt, and the mortgagor is liable✓
• c.0.0023 of the property's assessed value, and the mortgagee is liable
• d.0.0033 of the property's sale price, and the mortgagor is liable

Minn. Stat. 287.035 imposes a tax on the privilege of recording a mortgage at a rate of .0023 of the debt or portion of a debt secured by a recorded mortgage of Minnesota real property, and names the mortgagor as the person liable; the tax does not reach lawful interest that may accrue on the debt. The rate .0033 belongs to the deed tax, which section 287.21, subdivision 1 imposes on the net consideration for a deed, with a flat $1.65 where the consideration is $3,000 or less. Assessed value and sale price are the wrong bases: the registry tax follows the debt secured, not the value or the price.

Minnesota's statutory warranties on a new dwelling run for one year, two years, and ten years. The ten-year warranty covers:

• a.Faulty workmanship and defective materials in the finished interior
• b.Major construction defects due to noncompliance with building standards✓
• c.Faulty installation of plumbing, electrical, heating, and cooling systems
• d.Ordinary wear on appliances and fixtures supplied by the builder

Minn. Stat. 327A.02, subd. 1 requires the vendor of a completed dwelling to warrant that for one year from the warranty date the dwelling is free from defects caused by faulty workmanship and defective materials due to noncompliance with building standards, that for two years it is free from defects caused by faulty installation of plumbing, electrical, heating, and cooling systems, and that for ten years it is free from major construction defects. The first two distractors are the one-year and two-year coverages, so pairing either with the ten-year term misreads the ladder. Ordinary wear is not a defect due to noncompliance with building standards. Subdivision 2 provides that these warranties survive the passing of legal or equitable title to the vendee.

Which characteristic is protected in the sale or rental of real property by the Minnesota Human Rights Act but not named in the federal Fair Housing Act?

• a.Familial status of the prospective occupants
• b.National origin of the prospective occupants
• c.Disability of the prospective occupants
• d.Status with regard to public assistance✓

Minn. Stat. 363A.09, subd. 1 lists the characteristics protected in real property transactions as race, color, creed, religion, national origin, sex, gender identity, marital status, status with regard to public assistance, disability, sexual orientation, and familial status. Status with regard to public assistance, along with creed, marital status, sexual orientation, and gender identity, is a Minnesota addition, so refusing to rent because a prospective tenant would pay with a housing voucher raises a state law problem the federal list does not reach. Familial status, national origin, and disability are federally protected as well, so none of them distinguishes Minnesota law. Subdivision 2 applies the same list to brokers, salespersons, and their employees and agents.

A Minnesota salesperson tells owners that the racial composition of their block is changing and that values will fall. Under the Minnesota Human Rights Act this is an unfair discriminatory practice when it is done:

• a.To induce a transaction from which the licensee may benefit financially✓
• b.In writing rather than in a spoken conversation with the owner
• c.Without documentary support for the licensee's prediction of values
• d.After the owner has already signed a listing agreement with the firm

Minn. Stat. 363A.09, subd. 4 makes it an unfair discriminatory practice for a broker or salesperson, for the purpose of inducing a real property transaction from which the person, the person's firm, or any of its members may benefit financially, to represent that a change has occurred or may occur in the composition of owners or occupants with respect to the listed characteristics and to represent that the change will or may result in undesirable consequences such as lower property values, more crime, or worse schools. The prohibition turns on that inducement purpose, not on whether the statement was written, and not on the presence or absence of supporting data. Nothing in the subdivision limits it to conduct before a listing is signed.

Under Minnesota's statute of frauds, a contract for the sale of land signed by the seller's agent is:

• a.Not enforceable unless the seller separately ratifies it in writing
• b.Not entitled to record unless the agent's authority is also recorded✓
• c.Not enforceable unless the agent holds an active real estate license
• d.Not entitled to record unless the agent signs before a notary public

Minn. Stat. 513.05 makes every contract for the leasing of land for longer than one year, or for the sale of any lands or interest in lands, void unless the contract or a note or memorandum of it, expressing the consideration, is in writing and subscribed by the party by whom the lease or sale is to be made or by that party's lawful agent authorized in writing; the section then adds that no such contract, when made by an agent, is entitled to record unless the authority of the agent is also recorded. The written authority is what the section requires, so a later ratification is not the mechanism it names, and licensure is a chapter 82 question rather than a statute of frauds question. Notarization is an acknowledgment requirement and does not supply the missing recorded authority.

Minn. Stat. 336.2A-201, cited in the Minnesota state content outline under the heading "Minnesota Statute of Frauds," actually governs:

• a.Lease contracts for goods under Uniform Commercial Code Article 2A✓
• b.Options to purchase real property held open for consideration
• c.Leases of real property in Minnesota for a term of more than one year
• d.Contracts for deed conveying residential real property

Minn. Stat. 336.2A-201 is the statute of frauds of Uniform Commercial Code Article 2A, which covers leases of goods: a lease contract is unenforceable unless the total payments, excluding payments for options to renew or buy, are less than $1,000, or there is a signed record indicating a lease contract was made and describing the goods leased and the lease term. Leases of real property for more than a year fall under section 513.05, and options and contracts for deed are interests in land governed by chapter 513 and, for contracts for deed, chapters 559 and 559A. The bulletin's heading is broader than the section it cites, so read the citation rather than the heading.

Minnesota requires a seller to disclose the status and location of known wells:

• a.Within ten days after the purchase agreement is fully signed
• b.At the closing, on the settlement statement the closer prepares
• c.Before signing an agreement to sell or transfer the real property✓
• d.Only when the buyer's inspection identifies a well on the property

Minn. Stat. 103I.235, subd. 1, paragraph (a) requires the seller, before signing an agreement to sell or transfer real property, to disclose in writing to the buyer either a statement that the seller does not know of any wells or a disclosure statement giving the legal description and county and a map showing each well's location, indicating for each whether it is in use, not in use, or sealed. A separate well disclosure certificate is signed at closing under paragraph (b), which is why a closing-only answer is incomplete rather than merely late. The duty does not wait on an inspection. A county recorder or registrar may not record a covered deed without the certificate or the statutory "no wells" statement in the deed.

A Minnesota seller whose property is served by a septic system must, before signing an agreement to sell, deliver a written statement that the sewage:

• a.System will be brought into compliance at the seller's expense
• b.Was tested for coliform bacteria within the previous 24 months
• c.Goes to a permitted facility, or is subject to applicable requirements✓
• d.System was installed by a licensed Minnesota plumbing contractor

Minn. Stat. 115.55, subd. 6, paragraph (a) requires the seller, before signing an agreement to sell or transfer real property, to disclose in writing how sewage generated at the property is managed, by delivering a statement that the sewage either goes to a facility permitted by the Pollution Control Agency or does not and is therefore subject to applicable requirements. Where the sewage is not sent to a permitted facility, paragraph (b) requires a description of the system, the legal description and county, a map of its location, disclosure of what the seller knows about compliance status and any straight pipe, and a copy of any inspection report the seller holds. Note that section 115.55 is now titled SUBSURFACE SEWAGE TREATMENT SYSTEMS; the bulletin still calls it Individual Sewage Treatment Systems.

A Minnesota seller knows the property contains an underground storage tank. Before the sale the seller must:

• a.Remove the tank and file a closure report with the Pollution Control Agency
• b.Obtain a written release of liability from the Petroleum Tank Release account
• c.Inform the purchaser in writing of the owner's notification requirements✓
• d.Certify that the tank has been tested for leaks within the past six months

Minn. Stat. 116.48, subd. 5 requires a person who sells a tank intended to be used as an underground or aboveground storage tank, or property that the seller knows contains such a tank, to inform the purchaser in writing of the owner's notification requirements under that section, which include notifying the agency of the tank's age, size, type, location, uses, and contents. Removal and closure are separate regulatory obligations that section 116.48 does not make a condition of sale. No release of liability is issued out of the petroleum tank release program in sections 115C.01 to 115C.09, which provides reimbursement for cleanup costs. A recent leak test is not the disclosure the subdivision calls for.