North Dakota Real Estate Broker Exam — All Questions

How long must a North Dakota broker keep records of funds and property of others?

• a.Until the commission has completed its next audit of the broker's trust account
• b.Not less than six years from the date the funds or property were received✓
• c.Not less than three years from the date the funds or property were received
• d.Not less than ten years from the date the transaction closed or was canceled

North Dakota Administrative Code section 70-02-01-15(3)(g) provides that "Every broker shall keep permanent records of all funds and property of others received by the broker for not less than six years from the date of receipt of any such funds or property." The rest of subsection 3 says what those records are: bank deposit slips showing the date, amount, source, and place of deposit; monthly bank statements retained on file; numbered trust account checks with voided checks kept and the account so designated; a journal in chronological order showing receipts and disbursements with a running balance after each entry; a ledger showing the receipts and disbursements of each single transaction and naming both parties; and monthly reconciliation of the account except in a month with no activity. Three years is a different period, the one a continuing education course sponsor must keep student records under section 70-02-04-06(3). Section 43-23-14.1 requires the books to stay at the broker's usual place of business so the adequacy of the account can be determined at any time.

What does "subdivided lands" mean under the North Dakota Subdivided Lands Disposition Act?

• a.Land inside North Dakota platted and offered under a common promotional plan of sale
• b.Land outside North Dakota divided into five or more lots, parcels, units, or interests✓
• c.Land inside North Dakota divided into two or more lots for disposition to the public
• d.Land anywhere in the United States divided into ten or more residential building lots

Section 43-23.1-02(7) defines the term: "'Subdivision' and 'subdivided lands' means any land situated outside the state of North Dakota which is divided or is proposed to be divided for the purpose of disposition into five or more lots, parcels, units, or interests and also includes any land, whether contiguous or not, if five or more lots, parcels, units, or interests are offered as a part of a common promotional plan of advertising and sale." The out-of-state location is what makes the chapter what the examination outline calls out-of-state land sales, and the state real estate commission administers it under section 43-23.1-03. The exemptions turn on the same counting: section 43-23.1-05(1)(b) exempts an offering of fewer than five lots by a person in a twelve-month period, and section 43-23.1-05(2)(b) exempts a plan to dispose to ten or fewer persons. Section 43-23.1-17 requires anyone offering or disposing of subdivided lands within or from this state to be licensed under chapter 43-23 unless the transaction is exempt.

Before disposing of an interest in subdivided lands, N.D.C.C. section 43-23.1-04 requires that:

• a.The purchaser sign a waiver acknowledging the commission's approval of the land
• b.The subdivider's title opinion be recorded in the county where the purchaser lives
• c.The purchaser be given a seven-day right to cancel after the disposition is made
• d.A current public offering statement be delivered with a fair chance to examine it✓

Section 43-23.1-04 makes two things unlawful unless an exemption applies: offering or disposing of an interest in subdivided lands located outside the state before registration, and disposing of any interest "unless a current public offering statement is delivered to the purchaser and the purchaser is afforded a reasonable opportunity to examine the public offering statement prior to the disposition." A statement is not current unless all amendments are incorporated under section 43-23.1-07(3), and section 43-23.1-07(2) says the statement may be used only in its entirety and adds that "No person may advertise or represent that the commission approves or recommends the subdivided lands or disposition thereof," which is why an acknowledgment of approval could not be a lawful condition. A title opinion dated within thirty days of the filing goes into the registration application under section 43-23.1-06(1)(f), not into the county record. The remedy for a violating disposition is that it is voidable at the purchaser's election under section 43-23.1-18(1), and a willful violation is a class C felony under section 43-23.1-23.

A bank closes a sale in which a North Dakota broker represented the seller. The broker must:

• a.See that the seller receives a detailed closing statement and keep a true copy on file✓
• b.Rely on the bank's own file, the bank having prepared the settlement figures
• c.Provide a closing statement only where the seller has asked for one in writing
• d.File a copy of the closing statement with the commission within thirty days

North Dakota Administrative Code section 70-02-03-07 provides that in every real estate sales transaction where the closing is handled by an attorney, bank, or similarly recognized individual or group other than a real estate broker, "it shall be the responsibility of the broker involved to see the party or parties represented by the broker receive a complete, detailed closing statement showing all of the receipts and disbursements handled in such transaction," and the broker must retain true copies of those statements in the broker's files. Section 43-23-11.1(1)(o) states the duty as a disciplinary ground: a broker who fails to deliver such a statement at the time the transaction is consummated, or fails to retain true copies, may be disciplined. Because the duty is stated on the broker, another party's file does not discharge it, and it does not depend on a request. Nothing routes the statement to the commission, though section 43-23-11.1(1)(h) means the commission may demand it. Section 70-02-01-14 adds that a salesperson may not handle a closing except under the broker's direct supervision unless the broker authorizes it.

What is the most the North Dakota real estate education, research, and recovery fund will pay on a claim?

• a.Fifty thousand dollars for each claimant, once every other remedy is exhausted
• b.Sixty thousand dollars per transaction, that being the fund's required minimum
• c.Fifteen thousand dollars per transaction, and fifteen thousand dollars per licensee✓
• d.Twenty thousand dollars per transaction, with no separate ceiling for each licensee

Section 43-23.2-03 lets an aggrieved person who holds a final judgment for fraudulent, deceptive, or dishonest practices, or conversion of trust funds, apply for payment "in the amount of the actual and direct loss up to the sum of fifteen thousand dollars, unpaid on the judgment, provided that nothing contained within this chapter may be construed to obligate the fund for more than fifteen thousand dollars per transaction regardless of the number of persons aggrieved or parcels of real estate involved in the transaction." Section 43-23.2-08 sets the same fifteen thousand dollar ceiling for any one licensee and prorates the money among claimants where it is not enough to pay them all. Sixty thousand dollars is a different figure: section 43-23.2-02(3) is the minimum balance the commission must keep in the fund, and section 43-23.2-02(1) sets the twenty dollar fee a first-time licensee pays into it. Section 43-23.2-04(7) requires the application to be made not more than one year after the judgment becomes final.

A court orders payment from the recovery fund on a judgment against a North Dakota broker. That broker's license is then:

• a.Automatically suspended until the broker repays the fund in full with interest✓
• b.Placed on inactive status until the broker files new proof of insurance coverage
• c.Left unaffected, the fund existing to keep licensees out of formal discipline
• d.Revoked permanently, and the broker may not apply for a license in this state again

Section 43-23.2-09 provides that where the commission pays from the fund toward satisfaction of a judgment, "the license of the broker or salesperson must be automatically suspended upon the effective date of an order by the court as set forth herein authorizing payment from the fund. No such broker or salesperson may be granted reinstatement until having repaid in full, plus interest at the rate of four percent a year, the amount paid from the fund on that person's account. A discharge in bankruptcy does not relieve a person from the penalties and disabilities provided in this chapter." The suspension is therefore automatic but not permanent, and it turns on repayment rather than on insurance. Section 43-23.2-13 makes clear that the fund is no shelter: nothing in the chapter limits the commission's authority to take separate disciplinary action under chapter 43-23, and repaying the fund does not nullify any other disciplinary proceeding. Section 43-23.2-12 subrogates the commission to the judgment creditor's rights to the extent of what it paid.