Statutory Requirements: Agency and Disclosure
The largest part of the South Dakota state portion covers the statutory requirements governing licensees under SDCL 36-21A. This chapter focuses on agency relationships and the disclosures South Dakota law requires.
Agency Relationships
South Dakota law recognizes ways a licensee may work with consumers, including representing the seller, representing the buyer, and limited or transaction-broker style arrangements. A licensee owes duties to the client under the statute, including honesty, reasonable care, and confidentiality. Licensees must clearly establish and document the relationship so consumers understand who represents them.
Agency Disclosure
South Dakota requires licensees to disclose their agency status to consumers so that a consumer knows whether the licensee represents them before sharing confidential negotiating information. The disclosure is informational and, by itself, does not create representation; separate agreements establish the relationship. Providing the required disclosure at the appropriate time is a frequently tested statutory duty.
Dual Agency and Confidentiality
When a licensee or firm would represent both the buyer and the seller in the same transaction, South Dakota law requires informed written consent from both parties. A licensee acting for both sides cannot fully advocate for either and must not disclose one party's confidential information, such as the highest price a buyer will pay, to the other. These statutory limits protect consumers and are central to the state exam.