North Dakota Real Estate Broker Exam — All Questions

Under N.D. Admin. Code section 70-02-03-02.1, whose name must be most prominent in a North Dakota licensee's advertising?

• a.The name of the licensee who took the listing, as the agent responsible for it
• b.The team's name, wherever the licensees advertise their services as a team
• c.The brokerage agency's trade name, as it is licensed with the commission✓
• d.The designated broker's own name, since that broker supervises the advertising

Subsection 2 reads: "Advertising must be done in the real estate brokerage agency's trade name as licensed with the commission and the trade name must be equal to or greater than, in size and visibility, the name of any salesperson, associate broker, or team on the advertising." A licensee's or a team's name may appear, but never larger or more visible than the firm's. Subsection 3 requires the advertising to say how the public can reach the agency, and subsection 4 puts all licensee advertising under the designated broker's supervision while still requiring the agency's registered or trade name and contact information. Subsection 8 adds that teams "may not advertise in any manner which suggests a team is an independent real estate brokerage firm," and subsection 5 forbids deception about the terms of a sale or about the agency's services.

A licensed North Dakota broker advertises, in the broker's own name, a house that the broker owns. The advertisement must include:

• a.The words "Owner/Licensed Broker" following the broker's name in the advertisement✓
• b.The words "For Sale By Owner" in type larger than the broker's name in the advertisement
• c.A statement that the real estate commission has reviewed and cleared the advertisement
• d.The name and license number of a second, unrelated brokerage supervising the sale

Subsection 6 of North Dakota Administrative Code section 70-02-03-02.1 permits a broker to advertise the broker's own property in the broker's own name "provided that following the licensee's name where it appears in the advertisement, the words 'Owner/Licensed Broker' must also appear," and it applies that duty to active and inactive broker licensees alike. Subsection 7 gives the parallel wording for a salesperson, "Owner/Licensed Salesperson." The point of the tag is that the public should know it is dealing with a licensee, which is why a plain owner label understates the position rather than disclosing it. No rule allows a licensee to represent that the commission has approved an advertisement; the commission's rules elsewhere expressly forbid implying its endorsement, for example in section 70-02-02-09 for approved schools.

When may a newly licensed North Dakota salesperson begin licensed activity?

• a.After the salesperson finishes the ninety-hour prelicense course of study
• b.After the broker receives notification of licensure from the commission✓
• c.On the date the salesperson passes both portions of the licensing examination
• d.On the date the salesperson mails the application and the required fees

North Dakota Administrative Code section 70-02-01-10 opens: "A salesperson shall not commence work until the salesperson's broker receives notification of licensure from the commission." Passing the examination and completing the coursework are prerequisites rather than authorizations, and section 43-23-08(4) bars the commission from issuing a license at all until proof of the education is furnished. The consequence of starting early falls on both sides: section 43-23-11.1(1)(r) makes it a ground for discipline where a broker allows an unlicensed salesperson to do any act regulated by the chapter in the broker's name. The same rule adds that a licensee leaving a broker may not take or use agreements secured through that office without the former broker's authorization and must return the former broker's materials and records.

What written policy does N.D. Admin. Code section 70-02-01-21 require of a North Dakota designated broker?

• a.A policy that sets the firm's commission rates for each class of listed property
• b.A policy requiring each licensee to carry independent errors and omissions coverage
• c.A policy that assigns each new listing to a licensee chosen by rotation in the firm
• d.A policy that identifies and describes the agency relationships the firm may offer✓

The rule opens: "The designated broker must have a written company policy that identifies and describes the types of real estate agency relationships in which the agency may engage." A firm that offers representation to both buyers and sellers must also address in that manual how it prevents mishandling of information through formal and informal sharing inside the agency, how office space is arranged, and how personal relationships between agents representing adverse clients are managed. The same section makes the designated broker responsible for supervising teams, requires a written team policy, and requires a chronological written record of all teams and team membership to be produced to the commission on request. Rate-setting is the opposite of what the rules contemplate: section 70-02-01-18 says the commission "neither recommends nor recognizes any agreement to fix or impose uniform rates of commission."

What does N.D. Admin. Code section 70-02-03-05 require of every North Dakota listing contract?

• a.It must state the amount of brokerage as a specific amount or a specific percentage✓
• b.It must state a commission rate no higher than the rate prevailing in that market
• c.It must state that the real estate commission has approved the compensation charged
• d.It must state that the seller may cancel the listing on ten days' written notice

The whole rule is one sentence: "All listing contracts or sales contracts must state the amount of brokerage agreed; either a specific amount or a specific percentage." What it does not do is set or cap the number. Section 70-02-01-18 says the commission "neither recommends nor recognizes any agreement to fix or impose uniform rates of commission on any real estate transaction," so there is no prevailing rate a contract must respect, and section 70-02-01-17 says the commission is not authorized to consider or conduct hearings on disputes over fees or commissions between licensees. Section 70-02-03-04 supplies the related listing requirements: a definite expiration date, and no provision requiring the signer to notify the broker of an intention to cancel after that date.

When must a North Dakota licensee make the written agency disclosure in a one- to four-family residential transaction?

• a.After the purchase agreement has been signed by both the buyer and the seller
• b.At the closing, together with the rest of the transaction paperwork
• c.Only where the party has asked the licensee for representation
• d.At the time of the first substantive contact with the party to the transaction✓

North Dakota Administrative Code section 70-02-03-15.1(2) requires the licensee to "make an affirmative written disclosure identifying which party that person represents in the transaction," and provides that "The disclosure must be made at the time of the first substantive contact between the licensee and any party to the real estate transaction. The disclosure must be represented by a separate written document, and offered to the party to the real estate transaction for signature," with true copies kept in the broker's file. The rule then defines substantive contact: for a seller, before the listing agreement is signed; for a buyer, before the buyer's broker agreement is signed; and for anyone else, before personal financial information is discussed or negotiations begin. Waiting for a signed purchase agreement or for the closing puts the disclosure after the point at which it could have changed anything, and no party can ask for a relationship that has not been explained. For agricultural, commercial, five-or-more-unit residential, and commercial leasehold transactions, section 70-02-03-15 makes the licensee the seller's agent unless all parties agree otherwise in writing.

North Dakota permits a brokerage firm to act as a dual agent in one transaction only where:

• a.The two clients are each represented by a different licensee inside the same firm
• b.Both parties consent in a written agreement made before the representation✓
• c.The designated broker approves the arrangement internally before it is undertaken
• d.The buyer signs a waiver of the agency disclosures otherwise required by the rules

North Dakota Administrative Code section 70-02-03-15.1(7)(c) provides that if a party selects dual agency, "it must be explained that the licensee must enter into a written agreement obtaining the consent of both parties before such representation is authorized," and that the agreement must set out who pays the licensee's fee. Section 43-23-06.1(6) supplies the definition and confirms that dual agency "does not exist unless both the seller and the buyer in a real estate transaction have written agency agreements with the same real estate brokerage firm." That definition also treats two licensees of the same broker each representing a party as dual agency, unless the firm makes written appointments under section 43-23-12.3, which then removes the dual-agent status. A firm cannot consent for its own clients, and a waiver of disclosure removes the very information that would make consent informed. Section 43-23-11.1(1)(d) makes acting for more than one party without the knowledge and consent of all a disciplinary ground.

A North Dakota licensee never made the required written agency disclosure and now sues for the commission. That licensee:

• a.May recover the commission where the disclosure was made orally at the outset
• b.May recover half the commission, the balance being forfeited as a penalty
• c.May not maintain an action to recover any commission, fee, or other compensation✓
• d.May recover the commission where the client can show no actual harm resulted

North Dakota Administrative Code section 70-02-03-15.1(8) provides that "No person required to be licensed by North Dakota Century Code chapter 43-23 may maintain any action to recover any commission, fee, or other compensation with respect to the purchase, sale, lease, or other disposition or conveyance of real property... unless that person's agency relationship has been disclosed to the party or parties to the transaction in accordance with the requirements of this section." The bar is written on the disclosure rather than on damage, so the absence of harm does not restore the claim, and the rule provides for no partial recovery. An oral disclosure suffices only in the narrow case described in subsection 2(c), where obtaining a signed written statement at first substantive contact is impossible as a practical matter, such as telephone contact with an absent party, and only if the written disclosure follows as soon as practicable.

What must a North Dakota licensee do with a written offer to purchase under N.D. Admin. Code section 70-02-03-06?

• a.Tender it promptly to the seller, then deliver executed copies to both parties✓
• b.Hold it until the deadline on the seller's current offer has passed, then present it
• c.Present it to the seller only where it is at or above the property's listed price
• d.Present it to the seller's attorney for review rather than to the seller directly

The rule reads: "A licensee shall promptly tender to the seller every written offer to purchase obtained on the property involved and, upon obtaining a proper acceptance of the offer to purchase, shall promptly deliver true executed copies of same, signed by the seller and purchaser, to both seller and purchaser." The word "every" removes any screening role for the licensee, so price is not a filter. Section 43-23-11.1(1)(t) makes it a disciplinary ground to fail to reduce an offer to writing when a proposed purchaser asks that it be submitted, or to fail to submit all offers received before the seller has accepted an offer in writing and the broker knows of the acceptance. Section 43-23-11.1(1)(k) adds a duty to furnish, on demand, copies of any document to a person whose signature is on it, and section 70-02-03-08 tells the licensee to recommend legal counsel rather than to substitute a lawyer for the client.

May a North Dakota licensee accept a promissory note as the earnest money deposit on an offer to purchase?

• a.Not in any circumstance, since only cash or certified funds may be taken
• b.Yes, provided the note comes due within thirty days of the offer's acceptance
• c.Yes, provided the note is placed in the broker's trust account within one day
• d.Not unless the licensee's principal knows of and permits that arrangement✓

North Dakota Administrative Code section 70-02-03-14 provides that "A broker or salesperson shall not accept any note or any nonnegotiable instrument or anything of value not readily negotiable as a deposit on a contract or offer to purchase without the knowledge and permission of the broker's or salesperson's principal." The rule is a consent rule, not a prohibition: it neither confines deposits to cash and certified funds nor fixes a maturity for the instrument. Nor does routing the note into the trust account cure the omission, because what the rule protects is the principal's informed decision about accepting something that is not readily negotiable. Section 70-02-01-15(2)(c) is the related restraint on the deposit itself: the broker is not entitled to any part of the earnest money as a fee until the transaction has been consummated or terminated.

Before advertising a listed North Dakota duplex, a licensee must hold a written listing agreement containing:

• a.The price, the commission, and the buyer's written preapproval from a lender
• b.The price, the commission, all parties' signatures, and a definite expiration date✓
• c.The price, the commission, and a clause requiring notice to cancel after expiration
• d.The price and the commission, with the remaining terms agreed orally before closing

North Dakota Administrative Code section 70-02-03-04 applies to residential real property of one through four dwelling units and requires the licensee to "obtain a signed listing agreement in writing from the seller, properly identifying the listed property and containing all of the terms and conditions under which the property is to be sold; including the price, the commission to be paid, the signatures of all parties concerned, and definite expiration date prior to the time that the property is advertised or offered for sale." The same rule forbids the opposite of a definite date: the agreement "shall contain no provision requiring a party signing the listing to notify the broker of the party's intention to cancel the listing after such definite expiration date." An exclusive agency or exclusive right to sell listing must say so clearly and a copy goes to the owner at signing. Section 43-23-11.1(1)(n) makes omitting a fixed expiration date, or failing to leave a copy with the principal, a disciplinary ground.

Under N.D. Admin. Code section 70-02-03-05.1, when must a North Dakota licensee obtain a signed buyer's broker agreement?

• a.Before the buyer's loan application goes to a lender for approval
• b.Before the buyer's earnest money is placed in the broker's trust account
• c.Before performing any act at all as that buyer's representative✓
• d.Before writing the buyer's first offer on a particular property

The rule provides that for residential real property of one through four dwelling units "a licensee must obtain a signed buyer's broker agreement from a buyer before performing any act as a buyer's representative." Each of the other moments named comes well after representation has already begun. The rule then lists what the agreement must contain: a definite expiration date; the amount of commission or other compensation; a clear statement explaining the services to be provided and the events or conditions that will entitle the licensee to compensation; and, if the licensee represents both buyers and sellers in the same transaction, a separate dual agency disclosure statement under section 70-02-03-15.1. Section 70-02-03-11 adds that a licensee may not negotiate a buyer representation contract with someone the licensee knows is already bound by an unexpired exclusive right to buy with another broker.

What does N.D. Admin. Code section 70-02-01-11 require of a North Dakota broker's branch office?

• a.It must be managed by a licensee who holds a broker license of that person's own
• b.It must be located in a county other than the county of the principal office
• c.It must maintain a trust account separate from the principal office's account
• d.It must be operated under the same name as the broker's principal office✓

Subsection 8 states it in one line: "The branch office must be operated under the same name as the principal office." Subsection 7 governs display: the branch license is displayed in the branch office or listed on the broker's website, bears the branch address, and bears the name of the licensee designated to actively manage that office. Subsection 3 lets the applicant broker designate either the broker or another licensee as branch manager, and lets the broker manage all branches, so a separate broker credential is not required. Subsection 1 defines a branch as any additional office where a broker maintains more than one, and adds that where the broker maintains a regular office the broker's home is not a branch. The trust account belongs to the broker rather than to a location under section 43-23-14.1, and subsection 4 requires notice to the commission within five days of a change of branch address or supervisor.

A buyer asks a North Dakota licensee whether a listed house was the site of a homicide. The licensee must:

• a.Decline to answer, the subject not being a material defect in the property
• b.Answer from the licensee's own knowledge of the property's past history
• c.Order a public records search and give the buyer the written result
• d.Ask the owner about it and tell the buyer what the owner answered✓

North Dakota Administrative Code section 70-02-01-20 says a psychologically impacted property is "not a material or substantial fact that is required to be disclosed" and that licensees need not volunteer it. The question from the buyer changes that: "However, if the prospective purchaser asks whether the real property may be psychologically impacted, the licensee is required to inquire of the owner whether there are any facts or suspicions that the property is in fact psychologically impacted, and to advise the prospective purchaser of the owner's response. If the owner refuses to answer the inquiry, the prospective purchaser must be so advised." So the duty triggered is a duty to ask and to relay, not a duty to investigate or to answer from memory, and declining to respond ignores the trigger. Section 70-02-01-19 defines the term to cover a suicide, homicide, or other felony and expressly excludes the fact or suspicion that an occupant had HIV or AIDS.

When may a North Dakota broker share a commission with a broker licensed only in another state?

• a.Where the out-of-state broker's share does not exceed half of the total fee
• b.Where the out-of-state broker has filed a consent to service with the commission
• c.Where the out-of-state broker carries on no negotiations in this state by any means✓
• d.Where the out-of-state broker belongs to a recognized multiple listing service

North Dakota Administrative Code section 70-02-03-03 permits the split "if the latter broker does not carry on any of the negotiations in this state either by physically entering the state or by communicating with the broker electronically or through other media." Section 43-23-06.1(9)(h) states the same limit inside the definition of broker. The rule counts remote participation as carrying on negotiations here, so a telephone call or an email into North Dakota defeats the split just as a trip across the state line would. Nothing keys the arrangement to a listing service, to a percentage, or to a filing; a consent to suit belongs to the separate nonresident licensing route in section 43-23-10. Section 43-23-11.1(1)(l) makes paying a commission to a person not licensed under the chapter a disciplinary ground, which is what a broker risks by sharing with someone who has crossed that line.

A North Dakota broker wants to buy a property that is listed with the broker's own firm. Before doing so, the broker must:

• a.Pay the owner the full listed price rather than a price reached by negotiation
• b.Make the broker's true position clearly known to the owner of the property✓
• c.Obtain the real estate commission's written approval of the intended purchase
• d.Release the listing and wait for it to expire under its own written terms

North Dakota Administrative Code section 70-02-03-13(1) provides that a broker "shall not, either directly or indirectly, buy for oneself property listed with the broker or as to which the broker has been approached by the owner to act as broker, nor shall the broker acquire interest in any other property therein, either directly or indirectly, without first making the broker's true position clearly known to the owner," and satisfactory written proof must be produced on request. Subsection 2 applies the same requirement to taking an option, and subsection 4 requires a licensee selling property in which the licensee owns an interest to make that interest known to the purchaser. Section 43-23-11.1(1)(m) makes failing to disclose that intention or true position a disciplinary ground, and subdivision (g) reaches any secret or undisclosed compensation. The commission does not pass on individual purchases, and no provision compels a released listing or a full-price offer.

A North Dakota broker receives earnest money on a listing. Where must the broker place those funds?

• a.In the firm's operating account, tracked there by a separate written ledger entry
• b.In an interest-bearing account, with the interest credited to the buyer at closing
• c.In the broker's office safe as cash until the transaction closes or is canceled
• d.In a separate noninterest-bearing trust account at an insured institution in this state✓

Section 43-23-14.1 requires every broker to "maintain in the broker's name or firm name, a separate, noninterest-bearing trust account designated as such in a federally insured financial institution in this state in which the broker immediately shall place as a demand deposit all funds not the broker's own coming into the broker's possession," and says the requirement includes earnest money deposits. North Dakota Administrative Code section 70-02-01-15(1)(a) requires the account name to carry the words "trust account" or "escrow account," and subdivision (h) repeats that all trust accounts must be noninterest bearing, which is why crediting interest to a party is not an option. The same statute bars commingling and allows only up to five hundred dollars of the broker's own money in the account, specifically identified, to cover service charges, so a ledger entry inside the operating account does not answer the requirement. Cash in a safe leaves no depository record for the commission to examine.

A North Dakota salesperson takes an earnest money check on Tuesday morning. The license law requires that:

• a.The broker deposit it in the trust account within twenty-four hours of its receipt✓
• b.The broker deposit it in the trust account within five banking days of its receipt
• c.The salesperson hold it until the seller has accepted or rejected the buyer's offer
• d.The salesperson endorse it over to the buyer's lender for inclusion in the closing file

North Dakota Administrative Code section 70-02-01-15(1)(f) provides that "Each broker shall deposit all real estate trust money received by the broker or the broker's salesperson in the trust account within twenty-four hours of receipt of the money by the broker or the salesperson unless otherwise provided in the purchase contract." The clock therefore starts when the salesperson takes the check, not when it reaches the broker's desk. Section 43-23-11.1(1)(s) makes the same period a disciplinary standard on both sides: the salesperson must place trust money with the employing broker within twenty-four hours of receipt, and the employing broker must deposit it within twenty-four hours of receiving it from the salesperson. Where the money arrives the day before a holiday or another day the depository is closed, it goes in on the depository's next business day. Nothing permits holding the check to await acceptance or handing it to a lender.

May a North Dakota broker operate without maintaining a designated trust account?

• a.Yes, where every closing in the firm is handled by a title company or an attorney
• b.No, because every licensed broker must keep an open trust account at all times
• c.Yes, where the broker has applied for and received a waiver from the commission✓
• d.Yes, where each salesperson in the firm maintains an escrow account of that person's own

Section 43-23-14.1 provides that "A broker that does not accept trust funds in real estate brokerage transactions and which has applied for and received a waiver from the real estate commission is not required to maintain a designated trust account." The same paragraph closes the gap: if the broker later receives trust funds the broker "shall open a designated trust account as required by this section and deposit any trust funds in accordance with rules adopted by the commission." It also requires a broker to "maintain a record tracking the earnest money associated with all transactions even if the funds are deposited directly with the title company and the broker does not take possession of the funds," so using a title company relieves the broker of the account but not of the record. Salespersons never hold client money in their own accounts under section 43-23-11.1(1)(s). Administrative Code section 70-02-01-05(3) provides separately that an inactive broker need not maintain an active trust account.

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.