North Dakota Real Estate Broker Exam — All Questions

Which statement best distinguishes a North Dakota broker from a North Dakota salesperson?

• a.A broker and a salesperson hold the same authority under the state license law
• b.A broker may operate a brokerage and supervise the salespersons licensed under the broker✓
• c.A salesperson may hold clients' earnest money in the salesperson's own escrow account
• d.A salesperson may be licensed under two supervising brokers at the same time

Section 43-23-06.1(11) defines a salesperson as a person "employed or engaged by a licensed real estate broker" to act for that broker, and section 43-23-12(1) says a license "may not authorize the licensee to transact business under any other broker," so a salesperson works under one broker at a time. Section 43-23-14.1 puts the trust account on the broker, and section 43-23-11.1(1)(s) makes it a disciplinary ground for a salesperson to fail to place trust money with the employing broker, which is why the salesperson never holds an escrow account. The two credentials therefore cannot carry identical authority: the state would have no reason to issue two licenses that permit the same acts.

What is a North Dakota broker associate permitted to do under N.D. Admin. Code section 70-02-01-09?

• a.Maintain a separate trust account for the earnest money on the associate's own listings
• b.Supervise the designated broker of the firm with which the broker associate is affiliated
• c.Perform real estate service with the full knowledge and consent of the supervising broker✓
• d.Act independently as a broker while remaining affiliated with another licensed broker

The rule describes a broker "who does not have an office under the broker's own name, but is affiliated with another licensed broker and performs service similar to that of a salesperson," and says that person "must not at any time act independently as a broker, and shall not perform any real estate service without full consent and knowledge of the broker's supervising broker." It closes by making the designated broker responsible for the affiliated broker associate "to the same extent as though the affiliated broker were an affiliated salesperson," which is the opposite of the associate supervising the designated broker. Because responsibility for a separate trust account rests on the employing broker under Administrative Code section 70-02-01-15(1)(g), the associate does not run one.

Which person is expressly outside the definition of "real estate broker" in N.D.C.C. section 43-23-07?

• a.A person selling real estate at a sale advertised as a bona fide public auction✓
• b.A person who lists other owners' property for a flat fee paid at the closing
• c.A person who refers buyer prospects to a brokerage for a share of the commission
• d.A person who publicly markets an equitable interest in a purchase contract

Section 43-23-07(1)(c) exempts "Any person selling real estate as an auctioneer, provided the sale is advertised as a bona fide public auction." The other three are inside the definition rather than outside it. Listing another owner's property for compensation is section 43-23-06.1(9)(a); referring a prospect for compensation is subdivision (h), which covers a person who "Assists or directs in the procuring of prospects or refers a prospect, calculated to result in the sale, exchange, or leasing of real estate"; and publicly marketing an equitable interest in a purchase contract is subdivision (i), which subsection 2 of section 43-23-07 then confirms is not exempted. The other exemptions in the section cover owners and lessors, attorneys handling court-supervised sales, banks and trust companies, holders of a power of attorney, fiduciaries acting under court order, and public officers.

Under N.D. Admin. Code section 70-02-01-06, when will North Dakota recognize another state's licensee for a reciprocal license?

• a.Whenever the applicant holds a license in good standing in any other state
• b.Whenever the applicant's own state grants licenses to North Dakota residents
• c.Only if the applicant has held the other state's license for at least five years
• d.Only if the commission has a reciprocity agreement with that state's regulator✓

Subsection 4 states the rule negatively and exactly: "North Dakota will not recognize the licensee from another state for a reciprocal license unless an agreement granting reciprocal privileges to North Dakota licensees has been made by the commission with the proper regulatory authorities of that state. The agreement shall set out the terms and the regulations to be followed." Reciprocity is therefore a negotiated instrument between two regulators, not a status an applicant earns by holding a license elsewhere or by pointing to how the other state treats North Dakota licensees. Subsection 5 covers the applicant with no such agreement: someone currently licensed in a nonreciprocal state who has passed that state's licensing examination "need only take the state portion of the examination in North Dakota," and no prelicensure course is required. Good standing and no pending complaints are conditions of any nonresident application under subsection 2, not a substitute for an agreement.

When do North Dakota real estate licenses expire, and by when must the renewal application be made?

• a.They expire two years after issue; renewal must be made sixty days before that date
• b.They expire December thirty-first; renewal must be made on or before November fifteenth✓
• c.They expire June thirtieth; renewal must be made on or before May fifteenth
• d.They expire on the licensee's birthday; renewal must be made thirty days before that date

North Dakota Administrative Code section 70-02-01-04 opens: "All licenses expire on December thirty-first of each year. Persons desiring to continue in business must make proper application for renewal on or before November fifteenth of each year." The rule then states the cost of missing it: loss of the right to charge a commission and possible prosecution for doing business without a license after December thirty-first, and a person whose license was canceled for failure to renew must submit a new application with fees and pass the examinations again. Section 43-23-13.1(1) allows a late renewal, with a late fee for each month or fraction of a month, up to a date the commission sets, after which the license "must be canceled" without notice or opportunity for hearing.

A licensed North Dakota salesperson moves to a new supervising broker. What does N.D.C.C. section 43-23-12(2) require?

• a.Written notice to the commission within five days of the change of broker✓
• b.Written notice to the commission within thirty days of the change of broker
• c.Notice to the former broker only, who then reports the change to the commission
• d.No notice, because the new broker reports the change at the next renewal

The operative sentence is: "Prompt notice in writing, within five days, must be given to the commission by any real estate salesperson of a change of broker, and of the name of the licensed broker into whose supervision the salesperson is about to enter." The same subsection supplies the sanction: "The change of broker by any licensed real estate salesperson, without notice to the commission, automatically cancels that person's license," and it is unlawful for the salesperson to act after supervision ends until the license is reissued to the new broker. The former broker has a duty of its own to notify the commission in writing on termination, so notifying that broker does not discharge the salesperson's duty. Administrative Code section 70-02-01-08 supplies the transfer and release form signed by the licensee and both brokers.

What prelicense education does N.D.C.C. section 43-23-08(4) require of a North Dakota broker applicant?

• a.A sixty-hour broker course of study taken instead of the salesperson course
• b.One hundred twenty approved hours completed within the two prior years
• c.The ninety-hour salesperson course of study plus an additional sixty approved hours✓
• d.The ninety-hour salesperson course of study only, with no further coursework

Subsection 4 sets a floor for the salesperson license of "at least ninety hours in courses of study approved by the commission," then adds: "An applicant for a broker's license must have successfully completed an additional sixty hours in courses of study approved by the commission." The word "additional" is what makes the broker requirement cumulative rather than a substitute, so the broker applicant's total is one hundred fifty approved hours. The same subsection lets an applicant sit the examination before finishing the coursework but bars the commission from issuing the license until satisfactory evidence of completion is furnished. Subsection 5 permits the commission to waive the two-year experience requirement in narrow circumstances but says flatly that "The educational requirements of subsection 4 may not be waived by the commission." A prelicensure course stays valid for two years from completion under Administrative Code section 70-02-01-03(6).

How much continuing education must a North Dakota broker complete in order to renew a license?

• a.Eight hours in each continuing education period, which runs twelve months
• b.Fifteen hours in each continuing education period, which runs twenty-four months
• c.Thirty hours in each continuing education period, which runs twenty-four months
• d.Twelve hours in each continuing education period, which runs twelve months✓

North Dakota Administrative Code section 70-02-04-02 provides that to qualify for renewal "each broker or salesperson must complete twelve hours of continuing education in approved courses every continuing education period," and defines that period as "twelve months preceding the renewal application deadline date." The commission may direct that some or all of those hours fall in named areas such as fair housing and antitrust, environmental issues, license law and ethics, agency law and principles, or contracts. An hour means fifty minutes of instruction, with break time excluded, under section 70-02-04-03. Two exemptions matter at the start of a career: under section 70-02-04-15 a broker is exempt for the period in which the broker passed the broker licensing examination, and a salesperson who completed the ninety prerequisite hours is exempt for the first renewal.