Unprofessional Conduct, Discipline and the Recovery Fund
SDCL 36-21A-71 lists forty separate acts of unprofessional conduct, and SDCL 36-21A-68 supplies the sanctions. Behind both sits the real estate recovery fund, which pays consumers holding judgments a licensee has not satisfied.
What counts as unprofessional conduct
SDCL 36-21A-71 runs to forty subdivisions. Among the most heavily tested: substantial and willful misrepresentation injurious to a party; failing to account for or remit money, commingling the funds of others, or failing to keep them in an escrow or trust account with a federally insured institution; taking a secret or undisclosed amount of compensation; refusing on demand to produce documents in a commission investigation; offering property for sale or lease without the owner's prior written consent; any violation of federal or state fair housing requirements; paying compensation to an unlicensed person; using two or more contracts of sale one of which is hidden from the lender; failing to promptly give the purchaser a copy of the offer or the seller every written offer; giving a title opinion on merchantability in a transaction the licensee participated in; preparing legal documents or giving legal advice, except agency agreements and extensions, offers to purchase, offers to lease, acceptances and closing statements; taking a net listing; failing to protect and promote the client's interests; failing to deal fairly with all parties; and issuing an insufficient funds check.
Sanctions
SDCL 36-21A-68 permits revocation on proof of unprofessional conduct and allows the commission to impose instead or in addition a suspension, a reprimand, or a monetary penalty of not more than $2,500; money collected goes into the commission's fund. The same section preserves the licensee's right to set minimum fees and provides that unprofessional conduct is not itself a basis for criminal prosecution unless otherwise declared unlawful. SDCL 36-21A-50 lets the commission require restitution of money or property, periodic reports, or fines and costs before issuing or reinstating a license after revocation or suspension. SDCL 36-21A-69.1 requires a disciplined responsible broker to return the licenses of associate licensees, and SDCL 36-21A-70 lets action against a responsible broker reach the firm's license, in which case each licensee must terminate the relationship with the disciplined firm. SDCL 36-21A-87 makes a violation of the chapter a Class 1 misdemeanor unless punishable under Title 22, and SDCL 36-21A-88 bars an unlicensed person from suing for compensation for acts requiring a license.
The real estate recovery fund
SDCL 36-21A-101 requires the commission to maintain $100,000 in a real estate recovery fund to pay unsatisfied judgments obtained by persons aggrieved by a licensee's acts, and SDCL 36-21A-102 requires a separate fee from every registrant if the balance falls short at the end of a calendar year. SDCL 36-21A-104 lets a person holding a final judgment for fraudulent, deceptive or dishonest practices, or for conversion of trust funds, apply to the circuit court in Hughes county for payment of actual and direct loss up to $15,000, after exhausting review, appeal, execution and levy. SDCL 36-21A-112 caps the fund's total liability for one licensee's acts at $15,000 in the aggregate. SDCL 36-21A-114 automatically suspends the license when a payment is authorized and bars reinstatement until the licensee repays the fund in full with interest at the Category A rate; a bankruptcy discharge does not relieve the licensee of that obligation. SDCL 36-21A-115 subrogates the fund to the rights under the judgment it paid.
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State-specific details
State exam facts
- Exam vendor
- PSI
- Prelicensing education
- 116 classroom hours
- Passing score
- 75%
- Scored questions
- 142
- Time limit
- 270 minutes
Who regulates real estate brokers in South Dakota?
The South Dakota Real Estate Commission licenses real estate professionals in the state. SDCL 36-21A-13 makes it five members appointed by the Governor — three active brokers and two members of the public, who may not all be of one political party — and SDCL 36-21A-16 continues it within the Department of Labor and Regulation. The Commission has contracted with PSI Services LLC to deliver the examination; the bulletin lists sites in Sioux Falls, Rapid City and Madison, plus Fargo, North Dakota, and you may test at any PSI center in the United States.
Is the broker associate license really South Dakota's entry-level license?
Yes. The Commission's license types table lists Broker Associate with no experience requirement, and there is no salesperson row: South Dakota issues no new salesperson licenses, which is why PSI's bulletin is titled the Real Estate Broker Associate Examination. The tier has not been abolished on paper — SDCL 36-21A-12 still defines a real estate salesperson and ARSD 20:69:03:14 still sets a salesperson renewal fee — but the only way in now is the broker associate license, and an existing salesperson upgrades to it under SDCL 36-21A-34.1 by taking 40 hours of prescribed education and filing a broker associate application.
What education and experience do I need before the South Dakota broker exam?
None by way of experience. SDCL 36-21A-30.1 requires 116 class hours in a Commission-approved course of study, and ARSD 20:69:03:04 bars you from sitting the exam until that education is complete and you have registered. SDCL 36-21A-30 adds that you must be at least eighteen and either a United States citizen or a South Dakota resident. Experience matters only at the next tier: SDCL 36-21A-31 requires a responsible broker applicant to have served actively for two years as a licensed salesperson or broker associate and to complete 24 additional class hours beyond the broker associate level, which ARSD 20:69:04:04 makes a 24-hour responsible broker course carrying its own final examination.
How is the South Dakota broker exam structured?
The broker associate examination has a national portion of 90 items worth 100 points with 150 minutes allowed, and a South Dakota state portion of 52 items worth 52 points with 120 minutes allowed — 142 scored items and 270 minutes in total. ARSD 20:69:03:07 sets the passing score at 75, and each portion is passed separately, so a candidate who fails one retakes only that portion. The national portion includes scenario-based questions with more than four options where you pick the single BEST answer, and those options are weighted zero, one or two points; the South Dakota portion is scored one point per item.
What has to happen after I pass the South Dakota exam?
Two things people miss. SDCL 36-21A-36.1 gives you sixty days from the date of the notice that you passed to file the license application with all required documents; miss it and your registration and all rights deriving from the passing score are canceled, so you would have to sit the exam again. SDCL 36-21A-151 also requires a state and federal criminal background investigation by fingerprint checks through the Division of Criminal Investigation and the FBI, obtained before licensure and paid for by you. SDCL 36-21A-33 lists the eight grounds on which the Commission may refuse the application, including an insufficient funds check, a felony or a misdemeanor involving moral turpitude, and a current unpaid judgment.
Sources: https://dlr.sd.gov/realestate/license_types_requirements.aspx, https://dlr.sd.gov/realestate/exam_information.aspx, https://proctor2.psionline.com/programs/Instructions/SDRE.pdf, https://sdlegislature.gov/Statutes/36-21A, https://sdlegislature.gov/Rules/Administrative/20:69
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