Nebraska Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

Under the Nebraska Real Estate License Act, the State Real Estate Commission is made up of:

• a.Nine members chosen by the Legislature from a list the state association submits
• b.Seven licensed brokers appointed by the Governor, two from each congressional district
• c.The Attorney General as chairperson plus six members elected by Nebraska licensees
• d.The Secretary of State as chairperson plus six members appointed by the Governor✓

Section 81-885.07(1)(a) creates the commission as the Secretary of State, who chairs it, and six gubernatorial appointees. Three of those six must be active licensed brokers with at least five years in the business, one from each congressional district; the other three are at large — one representative of the public, one salesperson with at least three years, and one broker with at least five. The Attorney General holds no seat: under section 81-885.09 that office supplies the commission with legal opinions instead. Commissioners are appointed by the Governor rather than elected by licensees, and the Legislature does not make the appointments.

What is the term of a member appointed to the Nebraska Real Estate Commission?

• a.Six years, and the member may serve only one full term of that length✓
• b.Three years, and the member may serve two consecutive terms in a row
• c.Five years, and the member must sit out one year before reappointment
• d.Four years, and the member may serve any number of consecutive terms

Section 81-885.07(2) directs the Governor to appoint a successor for a term of six years and limits an appointed member to one six-year term in addition to any partial term served filling a vacancy. The same subsection requires at least four members to be present at any official meeting, and treats the action of a majority of members as the action of the commission. A member may not hold any other elective or appointive state or federal office while serving.

When must the Nebraska Real Estate Commission investigate the actions of a licensee?

• a.Whenever a court has first entered a civil judgment against that licensee
• b.On the sworn written complaint of any person; it may also act on its own motion✓
• c.Whenever a client of that licensee files a sworn written complaint, but not otherwise
• d.Whenever the licensee's designated broker files a sworn written complaint

Section 81-885.24 opens by providing that the commission may act upon its own motion and shall act upon the sworn complaint in writing of any person. Two things follow. The duty is triggered by any person, so the complainant need not be a client or the licensee's broker. And no court judgment is a precondition — the commission's investigative and disciplinary track runs independently of civil litigation, which is why Clark v. Tyrrell held that double jeopardy has no application to discipline under this section.

How far in advance must the Commission notify a Nebraska licensee of a disciplinary hearing?

• a.At least sixty days before the date set for the hearing
• b.At least thirty days before the date set for the hearing
• c.At least twenty days before the date set for the hearing✓
• d.At least ten days before the date set for the hearing

Section 81-885.25(2) requires written notice of the date and place of the hearing at least twenty days before that date. Under subsection (1) the commission must first send the licensee a copy of the complaint containing the charges and give a hearing, unless the licensee waives the hearing and executes a consent order. Where the licensee is an associate broker or salesperson, the commission also mails a copy of the notice to the employing broker's last known business address.

What limits the total civil fine the Nebraska Real Estate Commission may impose on one complaint?

• a.A flat five hundred dollars for every separate violation the complaint alleges
• b.The greater of five thousand dollars or the commission earned in each transaction at issue✓
• c.A flat ten thousand dollars, without regard to the transactions the complaint covers
• d.The lesser of one thousand dollars or the commission earned in the transaction at issue

Section 81-885.10(1) lets the commission fine a licensee for each violation alleged in a complaint on which it finds guilt, capping the total for each complaint at the greater of five thousand dollars or the total commission the licensee earned in each transaction the complaint covers. The fine may stand alone or accompany censure, suspension, revocation, or a consent decree. A different ceiling governs unlicensed activity: under section 81-885.03(3), violating a cease and desist order exposes the violator to the greater of one thousand dollars per day or all money earned as commission.

A Nebraska salesperson seeking a broker's license by the standard route must show:

• a.One year of active licensed service and ninety class hours beyond the salesperson courses
• b.Two years of active licensed service and sixty class hours beyond the salesperson courses✓
• c.Three years of active licensed service and no further course work of any kind
• d.Four years of active licensed service and thirty class hours beyond the salesperson courses

Section 81-885.13(3)(a) requires the applicant to have first served actively for two years as a licensed salesperson or broker and to furnish evidence of sixty class hours in addition to the hours required for the salesperson license. Rule 299 NAC 1-004.01 reads "served actively for two years" as full-time experience, or, if less than full time, a period equal to two years of full-time work. The ninety hours in three courses is the salesperson's own prelicense requirement under section 81-885.13(2). The alternative in section 81-885.13(3)(b) is not a longer service period but a hardship route, open on special application and hearing where a brokerage cannot retain a designated broker with the two years' experience.

Which activity falls inside the Nebraska statutory definition of a broker?

• a.Drafting the deed that conveys title to the buyer at closing
• b.Appraising real estate for a lender in a federally related transaction
• c.Surveying a parcel to establish where its boundary lines run
• d.Auctioning real estate for another in expectation of compensation✓

Section 81-885.01(2)(b) writes auctioneering into the definition, reaching any person who auctions, offers, attempts, or agrees to auction real estate. Appraisal for a federally related transaction belongs to the Real Property Appraiser Act; section 81-885.16 lets a licensee give a broker's price opinion or comparative market analysis but forbids calling it an appraisal. Preparing the deed is legal work, and 299 NAC 5-003.01 treats preparing a land contract or trust deed for closing without an attorney's approval as unworthiness. Surveying is a separate licensed profession.

Which person is outside the reach of the Nebraska Real Estate License Act?

• a.A nonresident broker who negotiates the sale of Nebraska farmland by phone
• b.An unlicensed assistant who discusses the asking price with prospective buyers
• c.A personal representative selling estate property under the authority of a will✓
• d.A resident apartment manager who also lists other owners' houses for sale

Section 81-885.04(3) exempts a person acting as a receiver, trustee in bankruptcy, personal representative, conservator, or guardian, or acting under a court order or under the authority of a will or trust instrument. The other three all fall inside the act. Section 81-885.04(9) lets an unlicensed person facilitate initial contact but expressly forbids discussing price or the customer's motivation. Section 81-885.04(4) exempts a resident manager only for leasing in connection with that employment, not for listing other owners' property. And section 81-885.03 makes even a single negotiating act sufficient contact with Nebraska, so the nonresident needs a license under section 81-885.17.

An unlicensed person working under Nebraska's initial-contact exemption may not:

• a.Discuss the price the prospective customer would be willing to offer or accept✓
• b.Identify the entity that employs the unlicensed person placing the call
• c.Give the name of the broker on whose behalf the contact is being made
• d.Send written material the broker created by email or United States mail

Section 81-885.04(9) permits an unlicensed person to supply lists of potential purchasers or make the initial contact, but bars discussing the services the broker offers, the customer's motivation or motivating factors, and the price the customer would offer or accept. The three permitted acts are in fact required or expressly allowed: the person must identify himself or herself, the employing entity, the broker, and the broker's business at the beginning of any contact, and may pass along written material the broker created. Under section 81-885.24(36) the broker must also hand that person a copy of section 81-885.04 or written instructions explaining the exemption.

A Nebraska licensee who prepares a comparative market analysis in the ordinary course of business:

• a.May prepare it, but may not describe the result as an appraisal✓
• b.May prepare it only for the federally related transactions a lender orders
• c.May prepare it and may describe it as an appraisal once it is put in writing
• d.May prepare it only after obtaining a state real property appraiser credential

Section 81-885.16(1) exempts the licensee from the Real Property Appraiser Act for a broker's price opinion or comparative market analysis given in the ordinary course of business, with the express proviso that it not be referred to as an appraisal. Where the licensee is paid something other than a commission or brokerage fee for it, subsection (2) requires the opinion to be written, signed, dated, and to carry a bold fourteen-point disclaimer. Subsection (3) points the other way from the last option: such an opinion is confined to transactions other than federally related ones and may not be the sole basis of value for originating a loan.

Nebraska will issue a nonresident broker's license only if the applicant proves completion of:

• a.A ninety-hour approved course in general real estate principles and practice
• b.A sixty-hour approved course on Nebraska closing and settlement procedure
• c.A twelve-hour approved class on trust accounting and transaction records
• d.A three-hour approved class on the License Act and the agency sections✓

Section 81-885.17(3)(c) conditions the nonresident license on adequate proof of a three-hour commission-approved class specific to the Nebraska Real Estate License Act and sections 76-2401 to 76-2430, and subsection (7) adds an affidavit certifying the applicant has reviewed and is familiar with the act and rules. The applicant also files a certified copy of the resident-jurisdiction license, pays the fee, and submits to fingerprinting and a criminal history check. The ninety hours is the resident salesperson's prelicense requirement, and the twelve hours in section 81-885.13(9) falls due within a hundred eighty days after any license is issued.

A Nebraska broker who opens a second place of business in the state must:

• a.Obtain a second broker's license issued in the branch office's own name
• b.Obtain a branch office license and place any licensed salesperson in charge
• c.Obtain a branch office license and place a broker or associate broker in charge✓
• d.Record the second location with the register of deeds in that county

Section 81-885.19(2) requires a branch office license for each additional place of business, on payment of an annual fee the commission sets at not more than fifty dollars, and provides that the broker or an associate broker shall be the manager — a salesperson may not run a branch. Rule 299 NAC 2-012 defines a branch office as a location other than the main office where licensees spend substantial time on licensed business, advertise that they can be reached there, and keep what would ordinarily count as a business office; a model home used temporarily is not one. Nothing is filed with the register of deeds, and no second broker's license issues.

What follows when an active Nebraska licensee fails to file the required errors and omissions certificate?

• a.The commission refers the matter to the Attorney General for prosecution
• b.The commission imposes a civil fine while the license stays on active status
• c.The commission places the license on inactive status until it is filed✓
• d.The commission revokes the license after holding a formal disciplinary hearing

Section 81-885.55(3) requires a certificate of coverage on file for every licensee who does not join the commission's group policy, and directs the commission to place the license on inactive status until it receives one; returning to active status then costs the transfer fee under section 81-885.14. Every licensee other than an inactive broker or salesperson must carry the coverage. Subsection (4) supplies the one escape: if the commission cannot obtain group coverage at a reasonable premium not exceeding five hundred dollars, the requirement does not apply for that year.

All advertising by a Nebraska real estate licensee must prominently display:

• a.The broker's business name as recorded with the Commission✓
• b.The license number of the salesperson who secured the listing contract
• c.The street address of the office where the transaction file is kept
• d.The name of the multiple listing service that carries the property

Rule 299 NAC 2-004 puts all advertising under the broker's direct supervision and requires the recorded business name to appear conspicuously and in a way the public can identify, and section 81-885.24(33) makes failing to display it an unfair trade practice. Advertising contrary to rules 004 through 007 counts as misleading or inaccurate advertising under section 81-885.24(2). Team advertising carries an extra layer: under 2-004.07b the supervising broker's recorded name must sit adjacent to the team name and be similar or greater in size. Nebraska requires no license number, MLS name, or office address in the advertisement.

A Nebraska licensee advertising his or her own property for sale must:

• a.Limit the advertising to a post office box number and telephone number
• b.Place the advertising only through the employing broker's franchise network
• c.Obtain the Commission's written approval of the advertising copy beforehand
• d.Disclose in the advertising that he or she is a licensee acting as a principal✓

Rule 299 NAC 2-006 bars a licensee from advertising property under his or her own name unless the licensee owns it, and requires any licensee advertising his or her own property, including property held by an entity in which the licensee has a direct or beneficial interest, to disclose the licensed status. The last option describes a prohibited blind advertisement, not a cure: rule 2-005 forbids advertising that makes the offer look as though it came from a private party outside the business, and forbids any advertisement showing only a post office box, telephone number, or street address. No rule requires franchise placement or prior approval of copy.

In a Nebraska corporation that operates a real estate business, the designated broker is:

• a.The broker given full authority over the firm's real estate activities✓
• b.The corporate officer who holds the largest single block of the firm's stock
• c.Any associate broker the board of directors selects for a one-year term
• d.The affiliated salesperson with the longest continuous service at the firm

Section 81-885.01(6) defines the designated broker as an individual holding a broker's license who has full authority to conduct the real estate activities of the business. In a partnership, limited liability company, or corporation, the partners, members, or board identify that person by filing a statement with the commission subordinating full authority to him or her; in a sole proprietorship it is the owner or the broker the owner names. The same subdivision makes the designated broker responsible for supervising associate brokers and salespersons. Because a broker's license is essential, a salesperson cannot hold the role, and neither stock ownership nor seniority decides it.

What distinguishes a Nebraska associate broker from a salesperson?

• a.An associate broker holds a salesperson's license and awaits the broker exam
• b.An associate broker holds a salesperson's license endorsed for branch offices
• c.An associate broker holds a broker's license confined to property management
• d.An associate broker holds a broker's license while working for another broker✓

Section 81-885.01(1) defines an associate broker as a person who has a broker's license and is employed by another broker to participate in brokerage activity, while section 81-885.01(17) defines a salesperson as someone other than an associate broker employed by a broker for the same work. The practical consequences follow from the broker's license: section 81-885.19(2) lets an associate broker manage a branch office, which a salesperson may not do. Section 81-885.24(24) applies to both, requiring funds to be placed with the employing broker as soon after receipt as practicable.

Under the Commission's rules, a Nebraska designated broker whose salesperson violates the license law:

• a.Is shielded from discipline where the salesperson acted without the broker's knowledge
• b.Is disciplined only after the salesperson's own license has been revoked
• c.May be disciplined for failure to supervise, separately from the salesperson's case✓
• d.Is disciplined only where the broker received a share of the disputed commission

Rule 299 NAC 5-003.21 lists failure by a designated or employing broker to supervise his or her associate brokers and salespersons among the actions demonstrating negligence, incompetency, or unworthiness under section 81-885.24(29), and 5-003.19 extends the duty to unlicensed persons hired to assist. That exposure is the broker's own, so it neither waits on the outcome of the salesperson's case nor depends on the broker sharing in the money. Ignorance is no answer either — supervision is precisely the duty the rule imposes, and section 81-885.01(6) assigns it to the designated broker.

A Nebraska real estate team leader is responsible for:

• a.Reporting the team's transactions to the Commission at each license renewal
• b.Supervising the team's activity, in place of the designated broker's supervision
• c.Supervising the team's activity, subject to the designated broker's supervision✓
• d.Holding a separate brokerage license issued in the registered team name

Section 81-885.56 makes the team leader responsible for supervising the real estate activities of the team, expressly subject to the overall supervision of the designated broker — the leader adds a layer rather than replacing one. Section 81-885.24(31) requires the team leader to give the designated broker a current list of team members, and (32) requires the broker to keep a record of all team leaders and members, preserved five years after the team dissolves under 299 NAC 3-003.05. A team holds no license of its own, and section 81-885.24(34) forbids team advertising suggesting it is an independent brokerage.

A Nebraska salesperson may accept compensation from someone other than the employing broker only if:

• a.The paying party reports the payment to the Commission in writing beforehand
• b.The compensation is a referral fee below the threshold the Commission sets
• c.The employing broker consents in writing within thirty days after the payment
• d.The employing broker consented in writing before the compensation was accepted✓

Section 81-885.24(8) makes accepting compensation from anyone other than the employing broker without that broker's consent an unfair trade practice, and rule 299 NAC 2-010 requires the consent be given in writing in advance, with the employing broker keeping a copy for five years. The same rule governs the consent section 81-885.24(7) requires before a licensee represents another broker. Consent supplied after the fact does not satisfy the rule, notice to the Commission is no substitute for the broker's consent, and Nebraska sets no dollar threshold that exempts the payment.

When may a Nebraska broker keep part of the earnest money as compensation?

• a.Only once the transaction has been consummated or has been terminated✓
• b.Only once the seller has signed and accepted the buyer's written offer
• c.Only once the listing agreement's fixed expiration date has gone by
• d.Only once the buyer's financing contingency has been formally satisfied

Section 81-885.24(35) makes it an unfair trade practice to charge or collect any part of the earnest money as compensation until the transaction has been consummated or terminated. The subsection carves out a payment the broker makes to a third party for goods or services on the client's behalf, provided it carries no profit or payment for the broker's own services and the broker keeps a record of it. Rule 299 NAC 3-005 handles the related accounting point: money that will ultimately be the broker's may sit in the trust account so long as it is separately identified and paid out by trust account check once it is due.

By when must a Nebraska broker deposit earnest money after an offer is accepted in writing?

• a.Within 5 banking days or before the inspection period ends
• b.Within 72 hours or before the end of the next banking day✓
• c.Within 24 hours or before the end of that same banking day
• d.Within 10 days or before the date scheduled for closing

Rule 299 NAC 5-003.14 makes failure to deposit earnest money within 72 hours or before the end of the next banking day after an offer is accepted in writing an action demonstrating negligence, incompetency, or unworthiness under section 81-885.24(29), unless the purchase agreement provides otherwise. The same rule requires that where an offer is not accepted, the deposit be returned forthwith. Rule 299 NAC 3-007 carries the identical deadline into cooperative sales, where the selling broker deposits into his or her own trust account and then transfers the money to the listing broker by check drawn on that account.

A Nebraska salesperson who receives an earnest money check from a buyer must:

• a.Send it to the listing broker identified in the multiple listing service
• b.Deposit it in the salesperson's own account and remit the money later
• c.Keep it until the seller accepts the offer, then pass it to the broker
• d.Place it with the employing broker as soon after receipt as is practicable✓

Section 81-885.24(24) requires an associate broker or salesperson to place any deposit money or other funds entrusted to him or her in the custody of the employing broker as soon after receipt as practicable, and the Nebraska Supreme Court called the provision unambiguous in Weiner v. State ex rel. Real Estate Comm. The duty runs to the licensee's own employing broker and does not wait on acceptance of the offer; the broker then deposits the money under 299 NAC 5-003.14. Section 81-885.21 puts the trust account in the broker's name, so a salesperson never holds trust funds personally.

Which practice is an unfair trade practice under the Nebraska Real Estate License Act?

• a.Offering free lots or running a lottery to influence a prospective purchaser✓
• b.Giving a prospective purchaser a list of competing properties for sale
• c.Giving a prospective purchaser the Commission's brokerage disclosure pamphlet
• d.Giving a prospective purchaser a written estimate of the closing costs

Section 81-885.24(17) reaches soliciting, selling, or offering real estate by offering free lots or conducting lotteries to influence a purchaser or prospective purchaser. The other three are required or expressly permitted. Rule 299 NAC 5-003.11 requires the licensee to identify in writing the categories of closing costs the purchaser will bear and to prepare a written estimate. Section 76-2417(4) lets a seller's agent show alternative properties and list competing ones without breaching any duty. And section 76-2421(1)(a) requires the current commission-approved brokerage disclosure pamphlet be given at the earliest practicable opportunity.

A Nebraska broker who prepares a land contract for use in closing a transaction must:

• a.Have each separate land contract reviewed by the title insurer
• b.Have each separate land contract approved by the Commission
• c.Have each separate land contract approved by an attorney✓
• d.Have each separate land contract recorded before that closing

Rule 299 NAC 5-003.01 makes preparing a land contract or trust deed for use in closing a real estate transaction, without each separate instrument being approved by an attorney, an action demonstrating negligence, incompetency, or unworthiness under section 81-885.24(29). Rule 5-003.16 treats advising against the use of an attorney in any real estate transaction the same way. The Commission does not approve transaction documents at all — section 81-885.38 forbids a licensee even from representing that the commission has inspected or passed upon real estate.

Under the Nebraska Real Estate License Act it is an unfair trade practice for a licensee to:

• a.Offer or enter into an exclusive right-to-sell listing agreement
• b.Offer or enter into a right-to-list home sale agreement✓
• c.Offer or enter into a written buyer's agency agreement
• d.Offer or enter into a subagency contract with another broker

Section 81-885.24(37) forbids offering or entering into a right-to-list home sale agreement. Section 81-885.01(16) defines that term as an agreement giving another person the exclusive right to list residential real estate for sale at a future date for consideration, which either states that it runs with the land or purports to create a lien or other security interest; ordinary home warranties, insurance contracts, options, contracts for deed, mortgages, and utility rights are carved out. The other three are the standard written agreements section 76-2422 contemplates.

Placing a for-sale sign on a Nebraska property is an unfair trade practice unless the licensee holds:

• a.Written consent of the municipality in which the property lies
• b.Written consent of the owner or the owner's authorized agent✓
• c.Verbal consent of the owner or the owner's authorized agent
• d.Written consent of the owners of the adjoining properties

Section 81-885.24(11) makes it an unfair trade practice to place a sign on property offering it for sale or rent without the written consent of the owner or the owner's authorized agent. Rule 299 NAC 2-011 reads the word "placing" to include retaining the sign, so written authorization covers both putting it up and leaving it up, and the sign must come down within a reasonable time after that authorization ends. Verbal permission does not meet the statute, and neither neighbors nor the municipality supply the consent it requires.

Money that will ultimately belong to a Nebraska broker but is held in the firm's trust account:

• a.Is not commingling where it is separately identified and paid out by trust check✓
• b.Is commingling regardless of how the broker's trust records identify the money
• c.Is commingling unless the broker holds a written trust account waiver
• d.Is not commingling where the broker withdraws the money within 72 hours

Rule 299 NAC 3-005 states directly that a trust account will necessarily hold money that will ultimately belong to the broker, that such money must be separately identified in the trust records, and that it is paid to the broker by check drawn on the trust account once due — and that its presence does not constitute commingling as prohibited by section 81-885.24(4). Commingling means mixing the principals' money with the broker's own without that separation. The 72-hour period in 299 NAC 5-003.14 is a deposit deadline, not a withdrawal deadline, and the waiver in 299 NAC 3-001 excuses maintaining the account, not the accounting.

When the parties dispute who is entitled to earnest money a Nebraska broker holds, the broker must:

• a.Divide the deposit between the parties and then close the transaction file
• b.Forward the deposit to the Commission to hold until the parties agree
• c.Pay the deposit to whichever party's claim the broker finds more credible
• d.Keep the deposit in trust pending a written release or a filed civil action✓

Rule 299 NAC 3-008 requires the broker to continue holding a disputed deposit in the trust account until he or she has a written release from all parties consenting to its disposition, or until a civil action is filed to determine disposition, at which point the broker may pay it into court. Two narrow safe harbors follow: 3-008.01 protects a good-faith return to the purchaser where a contingency was not met and no action is pending, and 3-008.02 protects payment to the seller a year after an accepted offer on a good-faith view that the buyer abandoned the claim. The Commission does not hold stakes, and 299 NAC 5-003.15 forbids withholding money from a party rightfully entitled to it.

How long must a Nebraska broker preserve the records of a consummated transaction?

• a.Three years following consummation of that transaction
• b.Seven years following consummation of that transaction
• c.Two years following consummation of that transaction
• d.Five years following consummation of that transaction✓

Rule 299 NAC 3-003.01 sets five years from consummation. The same period runs from termination or expiration for a listing or agency agreement that produced no sale under 3-003.02, for an executed contract that fell through under 3-003.03, for a paid broker's price opinion or comparative market analysis under 3-003.04, and for team records after a team dissolves under 3-003.05. Section 81-885.24(21) adds the substance of what is kept: true copies of the detailed closing statements the broker delivered to the seller and the buyer.

Absent any of the written arrangements the statute lists, a Nebraska licensee working with a buyer is:

• a.The buyer's limited agent, owing the duties set out in section 76-2418✓
• b.A dual agent for both sides, owing the duties set out in section 76-2419
• c.The seller's subagent, owing the duties set out in section 76-2417
• d.A transaction broker, owing no agency duties to either side of the deal

Section 76-2416(2) makes buyer's or tenant's limited agency the default. The licensee is treated as the buyer's or tenant's limited agent unless the designated broker enters a written seller's or landlord's agency agreement, a subagency agreement with another designated broker, a written dual agency agreement, or the expanded written agency agreement allowed by section 76-2422(6). Nebraska recognizes no transaction-broker status: every brokerage relationship under sections 76-2401 to 76-2430 is a limited agency, as the Supreme Court confirmed in Professional Mgmt. Midwest v. Lund Co.

What does a Nebraska seller's agent owe a prospective buyer who is not represented?

• a.Written disclosure of the adverse material facts the agent actually knows✓
• b.Verification that the seller's written statements about the property are accurate
• c.The same loyalty and confidentiality the agent owes the seller as client
• d.An independent inspection of the property made for the buyer's benefit

Section 76-2417(3)(a) says a seller's or landlord's agent owes a buyer no duty or obligation except to disclose in writing all adverse material facts actually known, which may include environmental hazards, the physical condition of the property, material defects in the property or the title, and material limits on the client's ability to perform. Section 76-2403 defines an adverse material fact as one significantly affecting desirability or value that is not reasonably ascertainable or known to that party. Subsection (3)(b) expressly denies any duty to inspect independently or to verify the client's or an inspector's statements. Loyalty runs to the client, not the customer.

How do Nebraska's statutory agency sections relate to the common law of agency?

• a.They supplement the common law, whose duties continue to apply in full
• b.They govern only where the parties have signed no written agreement at all
• c.They govern only residential transactions of one to four dwelling units
• d.They supersede the common law except under an expanded written agreement✓

Section 76-2429 provides that sections 76-2401 to 76-2430 supersede the duties and responsibilities of the parties under the common law, including an agent's fiduciary responsibilities to a principal, with a single exception: subsection (6) of section 76-2422, under which a designated broker contracts to duties exceeding those in sections 76-2417 and 76-2418. Professional Mgmt. Midwest v. Lund Co. held that common-law fiduciary case law is irrelevant unless that subsection is used. The sections are to be construed broadly, apply to commercial work as much as residential, and are not confined to unwritten arrangements.

Nebraska's Seller Property Condition Disclosure Statement must reach the purchaser:

• a.At or before the first showing of the property to that purchaser
• b.Within ten days after the purchaser's inspection period has ended
• c.Within three business days after the contract binds the purchaser
• d.On or before the effective date of the binding contract✓

Section 76-2,120(7) requires the seller or the seller's agent to deliver the statement, and any update, to the purchaser or the purchaser's agent on or before the effective date of any contract binding the purchaser, with the purchaser acknowledging receipt in writing. The statute covers residential real property of no fewer than one and no more than four dwelling units used primarily for residential purposes, and reaches leases with an option to purchase and sales of improvements coupled with a ground lease. Subsection (5) requires the seller to update the statement whenever he or she learns it is no longer accurate, measured against that same effective date.