South Dakota Broker Associate Exam — All Questions

How long must a South Dakota broker keep the deposit slip and ledger sheet for a trust account transaction?

• a.At least two years from the closing of the transaction
• b.At least four years from the closing of the transaction✓
• c.At least six years from the closing of the transaction
• d.At least one year from the closing of the transaction

SDCL 36-21A-82 requires the broker to make a deposit slip naming the principal for whom the money is deposited, to maintain an individual ledger sheet showing the amount deposited in trust and any expenditures from it, to make those records available for commission inspection on request, and to keep them "at least four years from the closing of the transaction." The same four-year period runs through the chapter: SDCL 36-21A-74 applies it to listings, offers to purchase and closing statements, and SDCL 36-21A-83 applies it to a broker who remits immediately to the principal without using a trust account at all. Two years and one year would destroy records the commission can still demand under SDCL 36-21A-71(8). Six years is longer than required and is not the statutory figure. The broker must also notify the commission of the financial institution holding the trust account and the name of the account.

When does a South Dakota responsible broker become entitled to compensation from money held in a transaction?

• a.When the buyer's written offer has been accepted by the seller
• b.When the transaction has been consummated or terminated✓
• c.When the buyer's financing contingency has been satisfied
• d.When the listing agreement's stated expiration date has passed

SDCL 36-21A-84 provides that "No responsible broker is entitled to any part of the money paid to the responsible broker in any transaction as part of the responsible broker's compensation until the transaction has been consummated or terminated," and authorizes the commission to make reasonable exceptions by rule. The commission has done so in ARSD 20:69:03:19, which allows compensation for services other than a sale or lease to be collected before closing, and which requires that any compensation a client agrees in writing to pay early "must be placed in the broker's trust account until performance of services has been consummated or terminated by written agreement from both parties." Acceptance of an offer and satisfaction of a contingency are milestones on the way to closing, not the end of the transaction. A listing's expiry ends the engagement without earning anything.

What must every advertisement placed by an individual South Dakota licensee clearly state?

• a.The name of the firm with which the licensee is associated✓
• b.The licensee's own license number and its expiration date
• c.The name of the responsible broker who supervises the licensee
• d.The street address of the office where the licensee is registered

SDCL 36-21A-72(1) requires that "Each advertisement shall clearly state the name of the firm with which an individual licensee is associated." The requirement is the firm name, not the supervising broker's personal name, not a license number and not an address; the point is that a consumer reading the advertisement can tell which licensed brokerage stands behind it. Subdivision (3) adds that any advertisement seeking listings or offering to buy, sell or lease must clearly disclose that the acts or services are being offered by a licensee, and subdivision (4) forbids any announcement giving the impression that a property sold for a price other than the actual selling price. SDCL 36-21A-2 defines advertising broadly enough to cover any publication or broadcast, oral or written.

A South Dakota licensee advertises a property the licensee personally owns. What does SDCL 36-21A-72 require?

• a.The advertisement must disclose that the owner of the property is a licensee✓
• b.The advertisement must be placed in the responsible broker's firm name
• c.The advertisement must be approved in writing by the commission first
• d.The advertisement must omit any reference to the licensee's status

SDCL 36-21A-72 closes with a targeted exception: "Notwithstanding subdivisions (1) to (4), inclusive, of this section, a licensee may advertise in the licensee's individual name an offer to sell or lease property of which the licensee is the owner. The advertisement shall disclose that the owner of the property being sold or leased is a licensee." So the firm-name requirement is lifted, but a new disclosure replaces it, and concealing the licensee's status is the one thing the sentence forbids. No prior commission approval of advertising exists in the chapter. The disclosure fits SDCL 36-21A-27, which provides that a licensee "does not qualify for the exceptions set forth in this chapter including any transaction in which that person has a personal interest": a consumer dealing with a licensee-owner is dealing with a trained professional and is entitled to know it.

What must an advertisement placed by a South Dakota real estate team do?

• a.Name each team member's license number and years of licensed service
• b.Name the affiliated brokerage and identify any nonlicensed individuals shown✓
• c.Name the team leader and state the team's share of the local market
• d.Name the brokerage only where the team's name differs from the firm's

SDCL 36-21A-72(2) requires that each advertisement of a real estate team "shall clearly state the name of the brokerage company the team is affiliated with, shall clearly identify the nonlicensed individuals included in the advertisement, and may not contain language that would lead the public to believe that the team is offering real estate brokerage services independent of the real estate broker." All three obligations apply to every team advertisement, so the conditional version fails. License numbers and years of service are not required, and market-share claims would risk SDCL 36-21A-71(4) on misleading advertisements. SDCL 36-21A-1(21) and (22) define a team and a team leader, and ARSD 20:69:18:01 requires the team leader to keep the responsible broker's list of licensed team members current.

What does SDCL 36-21A-78 require of a South Dakota licensee who is taking a listing?

• a.Obtain a licensed appraisal that supports the agreed listing price
• b.Substantiate that the listing agreement information is accurate✓
• c.Inspect the property personally before the listing may be published
• d.Have the seller's information verified by the responsible broker first

SDCL 36-21A-78 states that "On taking a listing, a licensee shall substantiate that the information taken in the listing agreement is accurate," and then supplies a safe harbor for hidden problems: "As far as latent defects are concerned, it is not a violation of this section if the licensee disclosed to the buyer that the listing information or parts of the listing information are solely the representations of the seller." Substantiating means checking the facts recorded, such as lot size and legal description, not commissioning a valuation or performing an inspection. A licensed appraisal is a separate service under SDCL 36-21A-6(8) and SDCL 36-21A-12.2, which confirms that a broker price opinion or comparative market analysis is not an appraisal. Routing verification to the responsible broker does not discharge the listing licensee's own duty under this section.

Under SDCL 36-21A-75, who furnishes the closing statement to the buyer?

• a.The listing broker
• b.The seller's attorney
• c.The selling broker✓
• d.The title company

SDCL 36-21A-75 is two sentences and allocates one statement to each broker: "The listing broker shall furnish a closing statement to the seller. The selling broker shall furnish a closing statement to the buyer." Each broker therefore serves the side that broker brought to the transaction, and the listing broker's duty runs to the seller rather than to both. Attorneys and title companies commonly prepare settlement documents in practice, but the statutory duty is placed on the licensee and cannot be delegated away. SDCL 36-21A-71(14) makes the point sharply by treating as unprofessional conduct a broker's failure to deliver a complete, detailed closing statement showing all receipts and disbursements, to retain true copies in the broker's files, and to date and sign the statement.

For whose real estate activities is a South Dakota responsible broker accountable?

• a.Only those affiliated licensees who are employees of the brokerage firm
• b.Only those affiliated licensees the responsible broker personally trained
• c.Only those affiliated licensees working out of the registered main office
• d.All affiliated licensees, whether employees or independent contractors✓

SDCL 36-21A-79 is a single sentence with no exceptions: "A responsible broker is responsible for the real estate activities conducted by affiliated licensees, whether as employees or independent contractors." The employment classification set out in SDCL 36-21A-124, under which a licensee is an independent contractor if the broker does not specify time, method and location beyond general policy and compensates without withholding taxes, settles tax and employment questions but does not shift supervisory responsibility. SDCL 36-21A-46.1(3) makes the same point about a licensee who forms a business corporation or limited liability company: the responsible broker "is not relieved of any obligation to supervise." Neither training history nor office location narrows the duty, and SDCL 36-21A-70 lets discipline against a responsible broker reach the firm's license as well.

A South Dakota responsible broker moves the brokerage office. What notice does SDCL 36-21A-52 require?

• a.Written notice to the commission within thirty days after the move is made
• b.A new firm license application filed before the move takes place at all
• c.Written notice to the commission only where the move crosses county lines
• d.Written notice to the commission before or within ten days after the move✓

SDCL 36-21A-52 requires every licensee to register a place of business with the commission, which for a broker associate or salesperson is the responsible broker's place of business and for a responsible broker or restricted broker is the licensee's main place of business. On a move, "the licensee and responsible broker shall give written notice to the commission before the removal or within ten days after removal." The consequence of ignoring it is automatic: "If a licensee fails to register a new place of business, the commission must place the licensee on inactive status," which SDCL 36-21A-9(4) confirms from the definitions side. Thirty days is longer than the statute allows, no new firm application is triggered, and county lines are irrelevant. SDCL 36-21A-53 adds that a branch office must operate under the same name as the parent office.

By what date must a South Dakota license renewal reach the commission, and when does the license expire if it does not?

• a.By December 31, and the license expires on January 31
• b.By November 30, and the license expires on December 31✓
• c.By June 30, and the license expires on July 31
• d.By November 30, and the license expires on June 30

SDCL 36-21A-61 requires every licensee, active or inactive, to register every two years and provides that "The application for renewal of a license shall be made to the commission by November thirtieth of the year the current license expires. Failure of a person or firm to register results in the expiration of the license on December thirty-first." June 30 is a real deadline in this scheme but a different one: SDCL 36-21A-66 allows a late registration application with a late fee of up to twenty dollars for each month or fraction of a month past November 30 and states that "No late application may be accepted by the commission after June thirtieth." That section also warns that a licensee may not perform any act under the chapter before the commission renews the license, so practicing during the late window is itself a violation.

How many hours of approved continuing education must a South Dakota broker associate show for each two-year period?

• a.Not less than twelve hours
• b.Not less than sixteen hours
• c.Not less than twenty-four hours✓
• d.Not less than thirty-six hours

SDCL 36-21A-62 requires a responsible broker, broker associate, salesperson, auctioneer or property manager to provide proof of "not less than twenty-four hours" of approved continuing education in the preceding two-year period. Twelve hours is the figure the same section sets for a residential rental agent, so it is the right number for the wrong licensee. Sixteen and thirty-six hours appear nowhere in the chapter. ARSD 20:69:11:02 adds that at least 12 of the 24 hours must fall in the required subject areas listed in ARSD 20:69:11:01.05. The consequence of falling short is set out in SDCL 36-21A-64: a licensee who submits a renewal application without proof of continuing education "shall be an inactive licensee until proof of such continuing education has been provided." Attorneys licensed in South Dakota and time-share agents are exempt.

What does South Dakota require before it will license a corporation or limited liability company as a real estate firm?

• a.It must be owned entirely by licensed South Dakota real estate brokers
• b.It must designate a responsible broker, who signs the license application✓
• c.It must post a surety bond in an amount the commission sets by rule
• d.It must register each affiliated licensee as an officer of the entity

SDCL 36-21A-38 provides that no license may be granted to a corporation, limited liability company, partnership or association "unless the corporation, limited liability company, partnership, or association designates a responsible broker who will represent" it, and that "The responsible broker shall sign the application for the license." The same section permits a nonlicensed individual to hold an ownership interest in the firm, so full broker ownership is not required, but no nonlicensed individual "may control or supervise the professional real estate activity of any real estate licensee associated with the firm," and none may own any interest in a sole proprietorship engaged in professional real estate activity. There is no bond requirement in the chapter; consumer protection runs instead through the recovery fund of SDCL 36-21A-101 and the errors and omissions coverage of SDCL 36-21A-119. SDCL 36-21A-39 requires notice of dissolution within ten days.

How quickly must a South Dakota team leader report a change in licensed team members to the responsible broker?

• a.Within 24 hours of making the change
• b.Within 10 days of making the change
• c.Within 72 hours of making the change✓
• d.At the brokerage's next scheduled office meeting

ARSD 20:69:18:01 requires that "A team leader shall provide a current list of all licensed team members, and any changes to the list of licensed team members, to the responsible broker within 72 hours of making the change," and that the responsible broker maintain a current record of all team leaders and licensed team members "in a manner that can be made readily available to the commission staff upon request." The rule took effect in 2019 alongside the statutory definitions in SDCL 36-21A-1(21) and (22), which make the team leader responsible for supervising the team's real estate activities "subject to the overall supervision of the responsible broker." Twenty-four hours is stricter than the rule, ten days and the next office meeting are looser, and the whole point of the deadline is that the broker's supervisory duty under SDCL 36-21A-79 cannot be met on a stale roster.

What is the largest monetary penalty the South Dakota Real Estate Commission may impose for unprofessional conduct?

• a.$2,500✓
• b.$1,000
• c.$5,000
• d.$10,000

SDCL 36-21A-68 permits revocation on proof of unprofessional conduct and then adds the alternatives: "The commission may also impose a suspension, reprimand, or a monetary penalty not to exceed two thousand five hundred dollars, or a combination of revocation, suspension, reprimand or monetary penalty." Money collected goes into the commission's fund. The same section carries two limits that are easy to miss: the term unprofessional conduct "does not impair the right of a licensee to set minimum fees chargeable for his services," and unprofessional conduct "is not the basis for criminal prosecution unless otherwise declared unlawful." Discipline runs through the administrative procedure of SDCL chapter 1-26, and SDCL 36-21A-86 provides that no license may be revoked except in compliance with that chapter and that an appeal may be taken under it.

Which listing arrangement does SDCL 36-21A-71 identify as unprofessional conduct in South Dakota?

• a.An exclusive right-to-sell listing paying the licensee a flat fee
• b.A listing that authorizes the licensee to cooperate with other brokers
• c.An open listing on a property also listed with another brokerage
• d.A net listing paying the licensee the sale proceeds above an agreed price✓

SDCL 36-21A-71(26) makes it unprofessional conduct to be "Taking a net listing whereby a licensee agrees to take as compensation the proceeds of a sale over and above the selling price agreed in the listing contract." The vice is the conflict it creates, because the licensee's pay rises the further above the seller's number the property sells, giving the licensee a reason to keep the seller's expectations low. Flat-fee, exclusive and open listings are all lawful compensation structures; SDCL 36-21A-68 expressly preserves a licensee's right to set the fees chargeable for services, and SDCL 36-21A-130 requires only that the listing state the compensation to be paid and whether the broker may cooperate with or compensate other brokers. A related trap is SDCL 36-21A-71(37), which requires the principal's separate written consent before a licensee may buy or lease the listed property and charge a commission on it.

Which document may a South Dakota licensee prepare without violating SDCL 36-21A-71(24)?

• a.A warranty deed
• b.A mortgage satisfaction
• c.An offer to purchase✓
• d.A quiet title petition

SDCL 36-21A-71(24) makes it unprofessional conduct to prepare "any legal document," give "any legal advice," or otherwise engage in the practice of law, then exempts a closed list of five instruments: agency agreements or extensions, offers to purchase, offers to lease, acceptances, and closing statements. An offer to purchase is on that list; a deed, a mortgage satisfaction and a petition to quiet title are not, and each transfers or clears an interest in land, which is why they belong to a lawyer. The neighboring subdivision (23) closes a related gap by making it unprofessional conduct to give "a title opinion upon the merchantability of the title to property in any transaction in which the licensee participated." SDCL 36-21A-149 adds that the chapter does not affect a licensee's duties while engaging in the authorized or unauthorized practice of law as the courts determine it.

How does South Dakota classify a violation of SDCL chapter 36-21A that is not punishable under Title 22?

• a.A Class 2 misdemeanor
• b.A Class 6 felony
• c.A Class 1 misdemeanor✓
• d.A civil infraction carrying no criminal penalty

SDCL 36-21A-87 provides that "Unless punishable under Title 22, a person violating any of the provisions of this chapter is guilty of a Class 1 misdemeanor." Class 1 is the more serious of South Dakota's two misdemeanor classes, and the opening clause defers to the criminal code where conduct such as theft or forgery is separately punishable there. A licensee is not the only person exposed: the section reaches any person, which is how unlicensed practice is reached criminally. Criminal liability sits alongside, not instead of, the other consequences. SDCL 36-21A-91 lets the commission seek an injunction "as an alternate to criminal proceedings" and provides that commencing one proceeding is an election between them, and SDCL 36-21A-88 separately bars an unlicensed person from suing to recover compensation for acts requiring a license.

What is the most the South Dakota real estate recovery fund will pay on account of one licensee's acts?

• a.Fifteen thousand dollars for each separate transaction
• b.Fifteen thousand dollars in the aggregate✓
• c.Fifty thousand dollars in the aggregate
• d.One hundred thousand dollars in the aggregate

SDCL 36-21A-104 lets an aggrieved person with a final, unsatisfied 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 the sum of fifteen thousand dollars," and states that nothing in the chapter obligates the fund for more than that amount for each person. SDCL 36-21A-112 then caps exposure per licensee, terminating the fund's liability for that licensee's acts once orders authorize payments "in an aggregate amount of fifteen thousand dollars on behalf of such licensee." So the ceiling is not per transaction. One hundred thousand dollars is the balance the commission must keep in the fund under SDCL 36-21A-101, restored by a separate fee under SDCL 36-21A-102 if the fund falls short. Under SDCL 36-21A-114 a payment automatically suspends the license until the licensee repays the fund in full with interest.