New Hampshire Real Estate Broker Exam — All Questions

A New Hampshire salesperson places an online advertisement that shows her personal cell phone number. RSA 331-A:16, IV(b) requires that the advertisement also carry:

• a.The name and telephone number of the principal broker or the brokerage firm✓
• b.The salesperson's license number and the date the license was first issued
• c.The listing's MLS number and the seller's daytime contact telephone number
• d.A statement that the property is offered subject to prior sale or withdrawal

RSA 331-A:16, IV(b) provides that any advertising containing a home telephone number, cell-phone number, beeper or pager number, home fax number, direct office number, electronic mail address "or any other means of contacting directly an individual salesperson or broker, or a team of such licensees, shall also include the name and telephone number of the individual principal broker or brokerage firm through which the advertising licensees operate," with language clearly identifying each number. Rea 404.05(b) says the same thing from the rule side. The point is that a consumer who dials the number must be able to see whose brokerage stands behind the advertisement. A license number, an MLS number or a subject-to-prior-sale line would not supply that, and none of the three appears in the statute. RSA 331-A:16, IV(c) supplies the one relief valve: on limited electronic media such as a thumbnail or a text message, a link to an internet display carrying the required information satisfies the rule.

Under RSA 331-A:26, XI, a New Hampshire licensee may accept something other than cash or its equivalent as earnest money only if:

• a.The item is converted into cash before the offer is presented to the owner
• b.The principal broker records approval of the arrangement in the office file
• c.The buyer signs a promissory note for the amount payable at the closing
• d.The fact is put in writing to the owner before the owner accepts the offer✓

RSA 331-A:26, XI makes it prohibited conduct to accept "other than cash or its equivalent as earnest money, unless that fact is communicated in writing to the owner prior to the owner's acceptance of the offer to purchase, and such fact is shown in the earnest money receipt and acknowledged in writing by the owner." There are three linked requirements - written notice before acceptance, the fact shown on the receipt, and the owner's written acknowledgment - and the timing is what makes them work, because a seller who has already accepted has lost the ability to price the risk. Converting the item to cash first is a different transaction and does not address the disclosure the paragraph demands. Internal approval by the principal broker is not a substitute for telling the owner. A promissory note is precisely the sort of non-cash deposit the paragraph regulates rather than a way around it.

RSA 331-A:26, XXIV forbids paying valuable consideration to a person not licensed under the chapter. Which payment does the paragraph expressly allow?

• a.A referral fee paid to a past client who introduced the buyer
• b.A finder's fee paid to the unlicensed assistant who located the property
• c.A bonus paid to the loan officer who steered the buyer to the brokerage
• d.A commission share with a licensed broker of another jurisdiction✓

RSA 331-A:26, XXIV bars paying or offering valuable consideration to any person not licensed under the chapter, "except that valuable consideration may be shared with a licensed broker of another jurisdiction who is doing business regularly and legally within that broker's own jurisdiction, or shared in accordance with RSA 331-A:16-b." The out-of-state broker is the exception the paragraph names. The paragraph also closes the obvious workaround: no licensee may knowingly pay a licensed person knowing that the money will be passed on to someone unlicensed, which disposes of the past-client referral fee and the unlicensed assistant alike. Paying a lender's loan officer for steered business is worse still, because RSA 331-A:26, XXI separately prohibits directing a transaction to a lending institution, escrow company or title company in a manner prohibited under RESPA. Rea 101.01(i) fixes the threshold: valuable consideration is anything worth more than $100.

Rea 701.03 requires a New Hampshire licensee listing a one-to-four family dwelling served by a private water supply to ask the seller for specified information. That information must reach the buyer:

• a.Orally, at the first showing of the property to that prospective buyer
• b.In writing, within ten days after the seller accepts the buyer's offer
• c.At the closing, as a line item on the settlement statement for the sale
• d.In writing, prior to or during the preparation of an offer on the property✓

Rea 701.03(a) makes the licensee ask the seller for at least the type of system, its location, malfunctions, the date of installation, the date of the most recent water test, and whether the seller has had a problem such as an unsatisfactory test or a test with notations. Rea 701.03(b) then requires that this "and any other information pertinent to the private water supply shall be conveyed, in writing, to a buyer prior to or during the preparation of an offer," and - the part candidates miss - that the absence of the information "shall also be conveyed, in writing, when such is the case." Writing is required, so an oral account at a showing does not discharge it. Timing is the whole design: a buyer told after acceptance or at closing has already committed. Rea 701.04 and Rea 701.05 impose the same before-or-during-the-offer written rule for insulation and for private sewage disposal systems.

Rea 701.04 requires a New Hampshire licensee listing a one-to-four family dwelling to ask the seller about the insulation. The two items the rule names are:

• a.The type of insulation and the location of the insulation✓
• b.The R-value of the insulation and its installation date
• c.The insulation manufacturer and the installing contractor
• d.The cost of the insulation and its remaining warranty term

Rea 701.04(a) is short and closed: the licensee "shall ask the seller for at least the following information: (1) Type of insulation; and (2) Location of insulation." R-value, installation date, manufacturer, contractor, cost and warranty are all sensible things to know and none of them is what the rule requires. The obligation is to ask and then to pass on: Rea 701.04(b) requires the answers and any other pertinent insulation information to be conveyed in writing to a buyer prior to or during the preparation of an offer, and requires the licensee to state in writing when the information is not available. Note the scope limit shared by Rea 701.03 through 701.05 - these three disclosure rules apply to property used or proposed to be used as a one-to-four family dwelling, which is the same line RSA 331-A:2, IV-a draws between residential property and commercial real estate.

Under Rea 701.05, a licensee listing a New Hampshire home served by a private sewage disposal system must ask the seller for the location of the system, any malfunctions, the name of the person who services it, and:

• a.The date of the most recent servicing of the system✓
• b.The original construction cost of the installed system
• c.The name of the town official who approved the system
• d.The number of bedrooms the system was designed for

Rea 701.05(a) lists four items and only four: "(1) Location of system; (2) Malfunctions; (3) Date of most recent servicing; and (4) Name of contractor or person who services the system." The date of the most recent servicing is the missing one. Cost, the approving official and the design capacity are not in the rule, however useful the last of these is in practice. Rea 701.05(b) then requires the answers to be conveyed in writing to the buyer prior to or during the preparation of an offer, and requires a written statement when the information is unavailable - so a listing agent who simply cannot find out when the tank was last pumped still has a written duty rather than a silence. Do not confuse this rule with RSA 485-A:38, the separate subdivision-approval regime that the state administers for septic system design and construction.

RSA 331-A:26, XVIII and XIX require a New Hampshire principal broker to keep escrow and trust account records, and records relating to a real estate transaction, for a period of:

• a.One year
• b.Two years
• c.Three years✓
• d.Seven years

RSA 331-A:26, XVIII makes it prohibited conduct to fail "to keep for a period of 3 years, records of escrow and trust accounts pertaining to funds entrusted with the principal broker relating to a real estate transaction showing date deposited, date of withdrawal, to whom paid, and such other pertinent information as the commission may require," and to fail to produce them to the commission on demand. RSA 331-A:26, XIX imposes the same three years on a principal broker for "records relating to any real estate transaction," running from consummation. Three years is the recurring New Hampshire retention period: RSA 331-A:16-b, I(d) uses it for records of commissions paid to unlicensed business entities, Rea 701.01(f) uses it for a brokerage relationship disclosure form a consumer declined to sign, and RSA 331-A:20, IV(n) uses it for an accredited course provider's attendance records. One footnote on the source list: the PSI outline cites "Recordkeeping-NH RSA 331-A:26 XVII and XVIII", but paragraph XVII is the antidiscrimination provision; the retention pair is XVIII and XIX.

Rea 404.02 requires a New Hampshire licensee to report a change of residential address, legal name or trade name to the commission. The rule's deadline for doing so is:

• a.No later than 5 days after the change
• b.No later than 10 days after the change✓
• c.No later than 30 days after the change
• d.At the licensee's next license renewal

Rea 404.02(a) requires every licensee and firm to keep the commission informed at all times of the current resident address, mailing address, email address, contact telephone numbers, work location address, legal name and any trade names. Rea 404.02(b) then requires that "any such changes in the information listed in (a) above shall be reported, in writing or electronically, to the commission no later than 10 days after the change." A separate and shorter clock governs affiliation: under Rea 404.02(c), when a salesperson, associate broker or managing broker changes affiliation from one principal broker to another or ceases to represent one, the principal broker must notify the commission in writing no later than 5 business days after the change. Waiting for renewal is never an option; the license record is what tells a consumer and the commission which principal broker is answerable for the licensee's conduct.

In a New Hampshire brokerage firm, who is accountable to the Commission for the firm's trust accounts and the supervision of its affiliated licensees?

• a.Each individual salesperson, for that salesperson's own transactions
• b.The local board of Realtors to which the firm belongs
• c.The principal broker of the firm✓
• d.The closing attorney handling the transaction

New Hampshire concentrates the accountability in one person. RSA 331-A:2, VIII defines the principal broker as the individual broker "whom the New Hampshire real estate commission holds responsible for the actions of licensees who are assigned to such individual broker." RSA 331-A:13, I puts the escrow account in the principal broker's hands, and RSA 331-A:13, V makes the principal broker sign a permit letting the commission audit it. RSA 331-A:16, II requires all licensees and employees associated with an office to be reasonably supervised by the principal broker or managing broker, and RSA 331-A:26, XXVII makes failure to exercise reasonable supervision over licensees and unlicensed staff prohibited conduct for a principal broker or branch manager. Making each salesperson answerable only for their own files would leave the trust account with no responsible custodian; Rea 702.02 in fact requires a salesperson or associate broker to deliver all money received immediately to the managing or principal broker. A Realtor board is a private association with no statutory authority, and the closing attorney handles the settlement rather than the firm's license obligations.

A New Hampshire firm operates two offices. The licensee designated to supervise the day-to-day activity of a branch office on the principal broker's behalf is best described as the:

• a.Transaction coordinator for that office
• b.Managing broker of that branch✓
• c.Designated seller's agent of the firm
• d.Independent salesperson in charge

RSA 331-A:2, VI defines a managing broker as "a broker who manages a branch office," and RSA 331-A:16, I requires that every real estate office and branch office be directed, supervised and managed by a licensed real estate broker, that the principal broker file a branch office application before opening one, and that the principal broker "designate a managing broker for each branch office the principal broker opens." Ultimate responsibility for the firm still rests with the principal broker, who under RSA 331-A:2, VIII is the person the commission holds answerable for assigned licensees. A transaction coordinator performs administrative work on files and supervises nobody. A designated seller's agent under RSA 331-A:25-e is a licensee appointed to represent one party in one transaction, which is a client relationship rather than an office role. And there is no such thing as an independent salesperson here: RSA 331-A:2, X defines a salesperson as an individual licensed under a broker. Note that the managing broker, like the principal broker, must file the $25,000 surety bond required by RSA 331-A:14.

A New Hampshire principal broker receives an earnest money deposit on a fully executed contract. To comply with RSA 331-A:13, the broker must:

• a.Deposit it into the firm's general operating account and track it on a separate client ledger
• b.Keep it in the broker's personal savings account until the closing date
• c.Endorse it directly to the seller before any contingency has been met
• d.Deposit it promptly in a separate escrow account at an insured New Hampshire institution✓

RSA 331-A:13, I requires the principal broker to "maintain an escrow account or accounts, separate and apart from the individual or office account, in which all deposits on fully executed contracts shall be promptly deposited," and requires that the account be "maintained in an insured financial institution within the state of New Hampshire." Rea 702.01(a) and (b) say the same from the rule side. Careful bookkeeping is not a substitute for separation, so an operating account with a client ledger fails the plain words of the section, and a personal savings account is worse. Endorsing the deposit to the seller before performance runs into RSA 331-A:13, IV, which bars withdrawal until the contract has been terminated by performance, by contemporaneous written agreement of all parties, or by court order. Two narrow allowances exist: under RSA 331-A:13, VII the broker may put in personal or business funds to cover bank service charges or a required minimum balance, and under III no check may be drawn against uncollected deposits.