South Carolina Real Estate Broker Exam — All Questions

A South Carolina broker who holds client earnest money must:

• a.Send it to the Real Estate Commission
• b.Hold it in cash until closing
• c.Deposit it into a designated trust account✓
• d.Keep it in the broker's personal savings account

Money that belongs to a client, earnest money above all, goes into a designated trust account and stays separate from the broker's own funds: Section 40-57-136(A)(1) requires "an active real estate trust account which must be a demand deposit account designated and titled to include the word 'trust' or the word 'escrow'," and Section 40-57-136(B)(3) forbids commingling. Sending the deposit to the licensing agency misreads its role, which is to regulate licensees rather than to hold the parties' funds; Section 40-57-60(B) even bars the commission from resolving money disputes between licensees. Holding the money as cash until closing leaves it untraceable and outside the accounting the trust rules exist to produce. Putting it in the broker's personal savings is the classic commingling violation, since the client's money becomes indistinguishable from the broker's own.

A South Carolina broker who manages long-term residential rentals must handle tenant security deposits by:

• a.Depositing them in the broker's own savings account until the tenancy ends
• b.Holding and accounting for them under the trust-account rules✓
• c.Refusing to return any part of a deposit once a tenant has moved out
• d.Keeping them as additional commission earned on the lease

Security deposits are trust funds. Section 40-57-136(C)(2) requires that deposits "remain in the trust account until the lease or rental transaction expires or is terminated, at which time undisputed trust funds must be disbursed pursuant to the contract" and "a full accounting must be made to the landlord or tenant as appropriate," and the Residential Landlord and Tenant Act governs what may lawfully be withheld. Depositing them in the broker's own savings is the commingling Section 40-57-136(B)(3) forbids and puts client money beyond any separate accounting. Treating them as extra commission is conversion, defined in Section 40-57-30(12) as a breach of trust and a crime. Refusing to return any part of a deposit is equally wrong, because the tenant's claim to the balance is not the broker's to extinguish; only lawful deductions may reduce what goes back.

A South Carolina broker-in-charge moves the office and changes its telephone number. What does Section 40-57-135(A) require?

• a.Notify the commission by mail within ten days of the change✓
• b.Notify the commission by mail within thirty days of the change
• c.Report the change on the next biennial license renewal application
• d.Publish the change in a newspaper of general circulation

The last of the eight duties listed in Section 40-57-135(A) is to "notify the commission by mail within ten days of any change of office name, address, email address, or telephone number." Thirty days is the deadline attached to a different obligation — Section 40-57-310(3) gives a licensee thirty days to update personal contact information on file — and borrowing it here misses the shorter office-level clock. Waiting for the biennial renewal would leave the commission's register wrong for up to two years, which defeats Section 40-57-135(C)(1), the requirement that the office be accessible to the public, investigators and inspectors during reasonable business hours. Newspaper publication is a device used for legal notices in other bodies of law; this chapter asks for notice to the commission, not to the general public.

How long must a South Carolina broker-in-charge keep a copy of each lease, sales contract, listing agreement and property management agreement?

• a.A minimum of seven years
• b.Until the transaction closes
• c.A minimum of five years✓
• d.A minimum of three years

Section 40-57-135(D)(1) requires the broker-in-charge or property manager-in-charge "for a minimum of five years" to maintain and furnish on request a written copy of each lease, contract of sale and addenda, listing contract or buyer agency agreement, transaction broker agreement, option contract, property management agreement and residential property disclosure form; Section 40-57-136(F)(1) sets the same five-year floor for trust account records. Three years is shorter than the statute allows and would destroy records the commission can still demand. Seven years is a tax-records habit rather than a license-law rule, and while keeping documents longer is harmless, it is not what is required. Stopping at closing is the worst answer of the four, because complaints and investigations almost always arrive after the transaction has ended. Section 40-57-135(D)(2) permits electronic storage provided a backup copy is kept in a separate, off-site location.

A seller rejects an offer outright without countering. What must the licensee deliver to the offeror, and how soon?

• a.Nothing in writing, so long as the offer was presented to the seller
• b.A commission-promulgated offer rejection form, within forty-eight hours✓
• c.A written explanation of the seller's reasons, within forty-eight hours
• d.A commission-promulgated offer rejection form, within ten business days

Section 40-57-135(I)(5) provides that if an offer is rejected without counter, "an offer rejection form, promulgated by the commission, signed by the licensee affirming presentation of the offer must be provided to the offeror by the licensee within forty-eight hours of rejection, whether the agent of the buyer, the seller, or if acting as a transaction broker." The form affirms that the offer was presented; it does not report the seller's reasoning, and demanding reasons would cut against the confidentiality a seller's agent owes about motivation. Ten business days is far outside the statute and would leave a buyer guessing for two weeks. Doing nothing in writing is the practice the subsection was enacted to end, and the duty attaches whichever side the licensee is on, including a transaction broker representing neither.

Which residential service agreement running longer than one year is unenforceable and treated as made in bad faith?

• a.An option or right of first refusal to purchase the residential real estate
• b.A maintenance agreement entered into by a homeowners association
• c.One that binds future owners or heirs of the residential real estate✓
• d.A home warranty covering the cost of maintaining a major housing system

Section 40-57-135(I)(9) makes an agreement about residential real estate lasting more than a year unenforceable, and "considered to be done in bad faith," if it purports to run with the land or bind future owners or heirs, to allow assignment of the right to provide service without notice to and consent of the owner, or to create a lien, encumbrance or other security interest or be recorded; a licensee involved in one faces discipline. Section 40-57-135(I)(10) then carves out the other three. A home warranty covering the maintenance of a major housing system such as plumbing or electrical wiring for a fixed period is expressly preserved. So is an option or right of refusal to purchase the property. So is a maintenance or repair agreement entered into by a homeowners association, along with insurance contracts, mortgage commitments, Uniform Commercial Code security agreements and regulated utility services.

A South Carolina property management agreement may contain an automatic renewal clause only if it also lets either party cancel:

• a.For cause only, with sixty days' notice at any time during the term
• b.At will and without notice once the property has been vacant for one full month
• c.Only by mutual written agreement signed by both parties and notarized
• d.For any cause or no cause on thirty days' notice✓

Section 40-57-135(J)(4) requires that a management agreement "may not contain an automatic renewal clause or provision unless the management agreement also contains a clause or provision that allows either party to cancel the management agreement for any cause or no cause with thirty days' notice after the original definite expiration date." Limiting cancellation to cause, on sixty days, would leave an owner locked into a renewed term for exactly the reason the subsection exists. A vacancy-triggered walkaway is not in the statute and would let a manager abandon a property at its least profitable moment. Requiring mutual agreement to escape gives each side a veto and so is no exit at all. Section 40-57-135(J) also fixes the agreement's other minimums: the parties' names and signatures, the property identification, the method of compensation, terms of tenant rental arrangements, and an underlined capitalized first-page clause if future lease-renewal compensation is included.

Which task may an unlicensed assistant working under a South Carolina broker-in-charge lawfully perform?

• a.Explaining the buyer agency agreement to a prospect
• b.Showing a vacant unit in a multifamily building✓
• c.Hosting an open house at one of the firm's listings
• d.Approving a rental application and settling the lease terms

Section 40-57-135(K)(6) bars an unlicensed person from showing "real property for sale other than vacant units in a multifamily building," so vacant multifamily units are the one showing the list leaves open. Hosting an open house is prohibited outright by item (5), which also covers managing an on-site sales or leasing office. Approving applications or leases, or settling or arranging lease terms, is prohibited by item (3), and item (2) separately forbids varying the rental price or terms the owner or licensee has set. Discussing, negotiating or explaining a contract, listing agreement, buyer agency agreement or lease is prohibited by item (1). The rest of the list bars indicating managerial authority, answering questions about listings, title, financing or closing beyond publicly available information, being paid solely on real estate activity, negotiating compensation on a licensee's behalf, and any other activity requiring a license.

Since 15 May 2025, what must a South Carolina licensee's advertisement of another person's property include?

• a.A statement that the commission has approved the wording of the advertisement
• b.The full name of the brokerage firm employing and supervising the licensee✓
• c.The licensee's own license number and the date the license was issued
• d.The seller's name and the price the seller originally paid for the property

Section 40-57-135(E)(2)(a) requires a licensee advertising real estate services or marketing another person's property in any medium clearly to "identify the full name of the real estate brokerage firm with which the licensee is employed and supervised in accordance with regulations"; the editor's note to 2024 Act No. 204 sets that subsection running twelve months after ratification, which is 15 May 2025. For internet or other electronic media, subitem (b) allows the requirement to be met by a link from the advertisement to the brokerage or property management company's homepage, and Section 40-57-135(E)(3) adds that a firm trading under a franchise name must reveal the franchisee's identity. A license number and issue date identify the individual, not the firm, and the subsection is aimed at telling consumers which brokerage stands behind the advertisement. The seller's name and purchase history are confidential transaction details, not advertising disclosures. The commission approves education courses and providers under Article 9, but it does not pre-approve advertising copy.

A South Carolina supervised licensee accepts an earnest money check from a buyer. When must it reach the broker-in-charge?

• a.No later than the following business day✓
• b.No later than the third business day
• c.No later than forty-eight hours, weekends included
• d.By the end of the calendar week

Section 40-57-136(B)(4) requires that trust funds a licensee receives in a transaction he is engaged in for the broker-in-charge or property manager-in-charge "must be delivered to the broker-in-charge or property manager-in-charge no later than the following business day." A third-business-day allowance would leave client money in a licensee's hands for most of a week with no trust-account record. A flat forty-eight-hour clock that counts weekends confuses this handover rule with the separate deposit deadlines in subsections (C) and (D), which do run in forty-eight hours but expressly exclude Saturday, Sunday and bank holidays. Waiting until the end of the calendar week has no basis in the section at all and would make the timing depend on which day the check arrived. Section 40-57-136(H) adds that where trust funds are held outside the firm the licensee still has to see them delivered on time to the agent named in the contract.

A tenant's check for a residential lease and a buyer's check in a sale both reach the broker-in-charge. Each must be deposited within forty-eight hours of what event?

• a.Receipt of the check by the licensee, in the rental and in the sale alike
• b.Written acceptance for the rental, the lease signing for the sale
• c.Move-in in the rental and closing in the sale
• d.Lease signing for the rental, written acceptance for the sale✓

The two clocks are keyed to different events. Section 40-57-136(C)(1)(a)(ii) says rental and lease checks "must be deposited within forty-eight hours after a lease or rental agreement is signed by the parties," while Section 40-57-136(D)(1)(a)(ii) says sales and exchange checks "must be deposited within forty-eight hours after written acceptance of an offer by the parties" — Saturdays, Sundays and bank holidays excluded from both. Receipt is the trigger only for cash or certified funds, which must be deposited within forty-eight hours of receipt under the (a)(i) of each subsection, so applying it to checks conflates the two payment forms. Swapping the two triggers is the classic error and is what the exam is testing. Move-in and closing come far too late: subsection (D)(2) treats closing as an occasion for disbursement, not for deposit, and money is meant to be in trust long before then.

What must a South Carolina broker-in-charge produce each month for a trust account that saw a deposit or disbursement?

• a.A copy of every canceled check, mailed to the commission's office
• b.An independent audit performed by a certified public accountant licensed in the State
• c.A worksheet comparing the bank balance, journal balance and ledger total✓
• d.A signed statement from the depository confirming the account's trust designation

Section 40-57-136(F)(2)(f) requires "a monthly reconciliation of each separate account except when no deposit or disbursement is made during that month," and specifies that "the reconciliation must include a written worksheet comparing the reconciled bank balance with the journal balance and with the ledger total to ensure agreement." A bank letter about the account's title proves only how the account is named, which Section 40-57-136(A)(1) already fixes at the moment the account is opened. Canceled checks are among the records the commission may demand under Section 40-57-136(F)(1), but they are held for five years and furnished on request, not mailed in monthly. An outside audit by a certified public accountant is a good practice that no provision of the chapter requires, and substituting one would still leave the monthly three-way comparison undone.

Buyer and seller dispute who gets the earnest money and the contract does not settle it. Which route does Section 40-57-136(E) NOT authorize?

• a.The broker-in-charge deciding entitlement and disbursing accordingly✓
• b.A written agreement separate from the contract, signed by all
• c.An interpleader action filed in a court of competent jurisdiction
• d.Voluntary mediation between the parties to the dispute

Section 40-57-136(E) says that where entitlement is disputed and reasonable interpretation of the contract does not resolve it, "the deposit must be held in the trust account until the dispute is resolved by" one of four routes: a written agreement directing disposition, signed by all parties claiming an interest and separate from the contract that put the money in trust; an interpleader action; an order of a court of competent jurisdiction; or voluntary mediation. The broker deciding the question personally is the one thing the subsection forecloses, and Section 40-57-136(B)(5) treats disbursing contrary to the contract as a demonstration of incompetence to act as broker-in-charge. The written agreement, the interpleader action and voluntary mediation are each squarely on the statutory list, which is why holding the funds — not choosing a winner — is the broker's job until one of them produces an answer.

South Carolina prohibits wholesaling. Which activity remains permitted?

• a.Offering to assign a contractual right to purchase residential real estate✓
• b.Marketing the underlying real property for sale before taking legal ownership of it
• c.Advertising another owner's property for compensation without a license
• d.Representing a wholesaler who is reselling a house he has contracted to buy

The carve-out is the tested point. Section 40-57-30(44) defines wholesaling as "having a contractual interest in purchasing residential real estate from a property owner, then marketing the property for sale to a different buyer prior to taking legal ownership," and then says wholesaling "does not refer to the assigning or offering to assign a contractual right to purchase residential real estate." Section 40-57-135(E)(1) makes the same distinction operational: marketing a contractual position to acquire property, without implying or purporting to sell the underlying real property, is permissible. Marketing the underlying property before owning it is the prohibited conduct itself. Advertising another owner's property for compensation without a license falls under the definition of broker in the same subsection and requires licensure. Representing or assisting a wholesaler is barred too: Sections 40-57-350(A) and 40-57-350(L)(5) prohibit a firm and its subagents from "engaging in, representing others in, or assisting others in the practice of wholesaling."

Under Section 40-57-725, what is the maximum administrative penalty for a third violation of the same provision within five years?

• a.Five hundred dollars
• b.One thousand dollars
• c.Twenty-five thousand dollars
• d.Ten thousand dollars✓

Section 40-57-725(C) sets a three-step ladder: not more than five hundred dollars for a first violation of a particular provision, not more than one thousand dollars for the second of two violations of the same or substantially similar provision within five years, and "for the third or subsequent violation of the same or substantially similar provision in a five-year period, not more than a ten-thousand-dollar penalty." Five hundred dollars is the first rung and one thousand the second, so both understate a third offense by an order of magnitude. Twenty-five thousand dollars is above any figure in the section. Two further details travel with this rule: subsection (D) gives ten days from receipt of the citation to appeal to the commission and, absent an appeal, thirty days to pay once the citation becomes a final order; and subsection (A) lets the department assess these penalties "against any individual or entity, including unlicensed individuals," so a citation is not limited to licensees.

A South Carolina licensee uses an artificial intelligence tool to draft a listing description that misstates the property's square footage. Who is responsible?

• a.No one, because Chapter 57 does not address automated tools
• b.The multiple listing service that published the description
• c.The licensee, as if the violation were committed directly✓
• d.The software vendor that trained the artificial intelligence model

Section 40-57-820 states that a licensee "is responsible for any and all work product produced by him or with the assistance of artificial intelligence, machine learning, or similar programs," and that a violation committed through such programs "will be treated as if the violation was committed directly by the licensee." The vendor is outside the chapter entirely; Chapter 57 regulates licensees, and the statute deliberately puts the risk on the person who chose to use the tool and published its output. The claim that the chapter is silent was true before 2024 Act No. 204 added Section 40-57-820, and it is the reason the section was written. The listing service distributes what the licensee submits and has no license-law duty to verify the measurements; the misstatement remains the licensee's, alongside the duty under Section 40-57-350(G)(1) to treat all parties honestly and not knowingly give false information about the property.