North Dakota Real Estate Broker Exam — All Questions

Which body issues, renews, and disciplines real estate broker licenses in North Dakota?

• a.The North Dakota Association of Realtors
• b.The North Dakota Department of Financial Institutions
• c.The North Dakota Secretary of State
• d.The North Dakota Real Estate Commission✓

North Dakota Century Code section 43-23-05 says a person may not act as a real estate broker or salesperson "without a license issued by the real estate commission," and section 43-23-11.1 gives that same commission the power to investigate, suspend, revoke, fine, require course attendance, or reprimand. The state association of Realtors is a private membership body: it may hold members who join it to a code of ethics, but it cannot grant or take away a license. The Department of Financial Institutions supervises banks and other financial businesses under a different body of law. The Secretary of State receives corporate filings, so a brokerage may register there as a business entity, but that filing does not license the people who practice.

How is the North Dakota Real Estate Commission composed under N.D.C.C. section 43-23-01?

• a.Five members, three of whom must be active real estate brokers, appointed by the governor✓
• b.Five members, all of whom must be active real estate brokers, elected by the state's licensees
• c.Seven members, four of whom must be active real estate brokers, appointed by the state's licensees
• d.Seven members, four of whom must be members of the public, appointed by the attorney general

Section 43-23-01 reads: "The state real estate commission consists of five members, three of whom must be active real estate brokers, appointed by the governor." Section 43-23-02 fills in the rest: the governor appoints each member for a five-year term, terms are staggered so one expires each year, and a commissioner may not serve more than two consecutive five-year terms. The same section provides that a majority of the commission in a duly assembled meeting may exercise all of the commission's duties and powers. Nothing in the chapter makes the seats elective, gives the appointment to the attorney general, or sets the membership at seven.

Under N.D.C.C. section 43-23-11.1(1), when is the North Dakota Real Estate Commission required to investigate a licensee?

• a.When a district court has first ordered the commission to open an investigation
• b.When two or more separate complainants have named the same licensee in a year
• c.When it receives a verified written complaint about that licensee's activities✓
• d.When a licensee's transaction volume passes a threshold the commission sets by rule

The operative sentence draws a line between what the commission may do and what it must do: "The commission upon its own motion may investigate, and upon the verified complaint in writing of any person, shall investigate the activities of any licensee." A verified written complaint therefore triggers a duty, while the commission's own suspicion triggers only a power. North Dakota Administrative Code section 70-02-01-16(1) sets the form: complaints must be in writing on forms furnished by the commission, verified, and must name both parties and state the facts alleged, including times, places, and the persons involved. No provision keys an investigation to transaction volume, to a court order, or to a minimum number of complainants.

A North Dakota licensee receives a complaint filed with the commission. Within what time must the licensee file an answer?

• a.Sixty days from receipt of the complaint
• b.Twenty days from receipt of the complaint✓
• c.Ten days from receipt of the complaint
• d.Thirty days from receipt of the complaint

North Dakota Administrative Code section 70-02-01-16(2) provides that the licensee against whom a complaint has been filed "must, within twenty days from receipt of complaint, file the licensee's answer on forms furnished by the commission," in affidavit form, properly certified, responding factually to the allegations. The same rule sets the other steps: if the investigation shows no violation the complaint is dismissed without a formal hearing and both sides are told in writing, and if it may justify discipline a formal hearing is held on at least twenty days' notice served with a copy of the complaint. Section 43-23-11.1(3) applies the Administrative Agencies Practice Act, chapter 28-32, to those proceedings.

What is the largest monetary fine the North Dakota Real Estate Commission may direct a licensee to pay in a disciplinary order?

• a.Twenty-five thousand dollars, plus the commission's actual costs
• b.Five thousand dollars, plus the commission's actual costs✓
• c.One thousand dollars, plus the commission's actual costs
• d.Ten thousand dollars, plus the commission's actual costs

Section 43-23-11.1(4) provides that in an order imposing discipline "the commission may direct the licensee to pay a fine not to exceed five thousand dollars and actual costs, including attorney's fees, incurred by the commission in the investigation and prosecution of the case," and that all fines collected go into the commission's license fee account. The ceiling applies to the fine alone; costs and attorney's fees are recovered on top of it, so the total a licensee pays can exceed five thousand dollars. Subsection 3 adds the procedural guard: no fine, suspension, revocation, required course attendance, or letter of reprimand may issue except after a hearing on charges duly served on the licensee.

Under N.D.C.C. section 43-23-17, a person who acts as a real estate broker in North Dakota without a license is guilty of:

• a.A class A misdemeanor
• b.A class C felony
• c.A class B misdemeanor✓
• d.An infraction

Section 43-23-17 assigns two different penalties in two sentences: "Any person violating section 43-23-05 is guilty of a class B misdemeanor. Any person violating section 43-23-14.1 is guilty of an infraction." Section 43-23-05 is the license requirement, so unlicensed practice is the class B misdemeanor; section 43-23-14.1 is the broker trust-account section, so mishandling the account is the infraction. A class C felony is the penalty in a different chapter, section 43-23.1-23, for a willful violation of the Subdivided Lands Disposition Act. The license law names no class A misdemeanor at all. Note also that the criminal penalty is separate from the commission's own power to fine, suspend, or revoke.

Under N.D.C.C. section 43-23-14.1, when may the commission examine a North Dakota broker's trust account records?

• a.At any time during regular business hours at the broker's usual place of business✓
• b.Only after the commission has first obtained an administrative subpoena for them
• c.Only while a disciplinary proceeding is pending against that particular broker or firm
• d.Only once in each license year, and then on thirty days' written notice

The closing sentence of section 43-23-14.1 reads: "Trust accounts and other records must be open to inspection by the commission and the commission's duly authorized agents at all times during regular business hours at the broker's usual place of business." The same section requires the broker to keep the books, records, contracts, and other necessary documents at that place of business "so the adequacy of the account may be determined at any time." Administrative Code section 70-02-01-15(1)(c) makes the point again by requiring every broker to sign an authorization form consenting to examination and audit of the account. Section 43-23-11.1(1)(h) makes failing or refusing on demand to produce a document, book, or record a ground for discipline, so refusal is itself the offense rather than a way to force a subpoena.