South Dakota Broker Associate Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

How is the South Dakota Real Estate Commission composed?

• a.Seven members appointed by the Governor, five active brokers and two public members
• b.Five members elected by South Dakota licensees, four brokers and one public member
• c.Nine members appointed by the Legislature, six active brokers and three public members
• d.Five members appointed by the Governor, three active brokers and two public members✓

SDCL 36-21A-13 creates the commission and fixes its makeup in three sentences: "The commission consists of five members appointed by the Governor. The members may not all be of the same political party. Three members shall be active real estate brokers; two shall be members of the public." Nothing in the chapter gives licensees a vote, so an elected body is not how the seats are filled; the appointment power belongs to the Governor alone. The Legislature does not appoint either, and the total is five rather than seven or nine. The two lay seats matter on the exam because they are what keeps the regulator from being a body of brokers judging brokers, and the political-party sentence is a second check on the same risk.

How long is a South Dakota Real Estate Commission member's term, and how many consecutive full terms may one member serve?

• a.A four-year term, and no more than two consecutive full terms
• b.A three-year term, and no more than three consecutive full terms✓
• c.A three-year term, with no limit on the number of consecutive terms
• d.A five-year term, and no more than three consecutive full terms

SDCL 36-21A-14 sets a three-year term for members appointed after July 1, 2005, and states that "No member may serve more than three consecutive full terms." The four-year figure is the historical term the same section preserves only for members appointed before July 1, 2005, so it describes an appointment no sitting member now holds; a five-year term appears nowhere in the chapter. An unlimited number of terms is ruled out by the sentence just quoted. The section also provides that a member appointed to fill a vacancy serves only the unexpired portion of that term and that the partial appointment "is not considered a full term," which is why a member can outlast three calendar cycles without breaking the limit.

What does South Dakota law require before the Real Estate Commission can exercise its duties and powers at a meeting?

• a.A majority of the commission, acting on a majority vote of the members present✓
• b.All five members, acting on a unanimous vote of the full commission
• c.A majority of the commission, acting on a two-thirds vote of the members present
• d.The three broker members, acting on a majority vote of the broker members

SDCL 36-21A-15 supplies both halves of the answer: "A majority of the commission, in meetings duly assembled, may perform and exercise all of the duties and powers of the commission. Actions of the commission shall be taken upon a majority vote of those members present." A unanimity requirement would let one absent or dissenting member stop the regulator, which is the opposite of what a quorum rule is for. The two-thirds figure is borrowed from other bodies and is not in this chapter. Reserving action to the broker members would defeat the two public seats created by SDCL 36-21A-13. ARSD 20:69:02:02 adds that the commission may act by mail ballot or conference telephone call and that either counts as a meeting.

A court grants the South Dakota Real Estate Commission an injunction against a person practicing without a license. What does the court then do?

• a.Award the commission triple the compensation earned in the transaction
• b.Award the commission its attorney fees and investigation costs✓
• c.Order the commission to bear its own costs of investigation and suit
• d.Refer the matter to the attorney general for criminal prosecution

SDCL 36-21A-91 authorizes the commission to bring injunction actions for unprofessional conduct, for violations of the chapter as an alternative to criminal proceedings, and against anyone practicing real estate without a commission license. Its final sentence is the operative one: "In any action where an injunction is granted, the court shall award the commission attorney fees and costs of the investigation and proceedings." The word is shall, so fee-shifting is not discretionary and the commission does not absorb its own costs. Treble compensation is a private remedy the chapter does not create. Automatic referral for prosecution is also wrong, because the same section provides that "The commencement of one proceeding by the commission constitutes an election" between the civil and criminal routes.

How much prelicensing education must an applicant for a South Dakota broker associate license complete?

• a.60 class hours in a course of study approved by the commission
• b.90 class hours in a course of study approved by the commission
• c.116 class hours in a course of study approved by the commission✓
• d.160 class hours in a course of study approved by the commission

SDCL 36-21A-30.1 states that "An applicant for a broker associate license must have completed one hundred sixteen class hours of education in a course of study approved by the commission," and ARSD 20:69:04:02 repeats the figure as "a minimum of 116 instructional hours" while listing the subject areas, beginning with South Dakota license law and rules. Sixty hours is a real South Dakota number but a different one: SDCL 36-21A-30.2 requires 60 additional hours of postlicensing education after initial licensure, split 30 and 30 across the first two active licensing periods. Ninety and 160 hours are other states' figures. ARSD 20:69:04:14 defines a class hour as at least 50 minutes of instruction in each 60-minute segment, and 20:69:04:15 caps a course day at eight hours.

Which personal qualification does SDCL 36-21A-30 impose on every South Dakota real estate license applicant?

• a.Being twenty-one and a South Dakota resident for at least one year
• b.Being eighteen and a registered voter resident in South Dakota
• c.Being eighteen and a United States citizen or South Dakota resident✓
• d.Being nineteen and a United States citizen or a lawful permanent resident

SDCL 36-21A-30 grants a license only to persons "of reputable character who have attained the age of eighteen years" and who are "competent to transact the business of a licensee in a manner as to safeguard the interest of the public," and closes with the citizenship sentence: "No one except a citizen of the United States of America, or resident of South Dakota, is eligible to secure a license as a broker." Because citizenship and residency are alternatives joined by "or," a nonresident United States citizen qualifies and no waiting period applies, which disposes of the one-year residency option. Twenty-one and nineteen are not the statutory ages. Voter registration is not a licensing condition anywhere in the chapter. The same section also bars an applicant whose license was revoked in any state within the previous five years.

How long after written notice of passing the examination does a South Dakota applicant have to file the license application?

• a.Thirty days, after which the registration and the passing score are canceled
• b.Six months, after which the registration and the passing score are canceled
• c.One year, after which the registration and the passing score are canceled
• d.Sixty days, after which the registration and the passing score are canceled✓

SDCL 36-21A-36.1 requires the person to file the application "within sixty days of the notice date" and adds the consequence in the same breath: "If the person fails to file an application and proof of required education within the sixty-day period, the person's registration and all rights deriving from a passing score are canceled." ARSD 20:69:03:01 states the same 60-day window from the rules side, and the PSI candidate information bulletin repeats it in its list of licensing requirements. The shorter 30-day period and the longer six-month and one-year periods appear nowhere in the chapter, and the difference matters because a canceled score cannot be revived by paying a late fee; the applicant has to sit the examination again.

What does SDCL 36-21A-31 require of an applicant for a South Dakota responsible broker's license?

• a.Three years served actively and 24 more class hours
• b.Two years served actively and 60 additional class hours
• c.Two years served actively and 24 more class hours✓
• d.One year served actively and 24 more class hours

SDCL 36-21A-31 requires that the applicant "shall have served actively for two years as a licensed salesperson or broker associate, or a combination thereof," and "shall furnish evidence of completion of twenty-four additional class hours beyond the broker associate level" in an approved course. ARSD 20:69:04:04 describes that course as the responsible broker course, "a minimum of 24 hours long" with a final examination, and 20:69:04:05 requires the broker associate prelicensing or upgrade course to be completed first. SDCL 36-21A-1(17) defines serving actively as holding the license on active status with the commission, so inactive time does not count. The statute lets the commission approve an applicant conditionally with six months to furnish the 24 hours, and exempts anyone licensed as a broker before July 1, 1996.

What criminal background check does South Dakota require of an applicant for a real estate broker license?

• a.A fingerprint check by the Division of Criminal Investigation of this state
• b.A sworn criminal history affidavit given under penalty of perjury
• c.A records check by the sheriff of every county where the applicant has lived
• d.Fingerprint checks by the Division of Criminal Investigation and the FBI✓

SDCL 36-21A-151 requires each applicant for licensure and registration as a real estate broker, property manager or residential rental agent to "submit to a state and federal criminal background investigation by means of fingerprint checks by the Division of Criminal Investigation and the Federal Bureau of Investigation," and provides that "This information shall be obtained prior to licensure of the applicant." A state-only check omits the federal half the statute names. A sworn affidavit is not a substitute; SDCL 36-21A-35 already puts the whole application under oath, and the fingerprint requirement was added on top of it. County sheriff checks appear nowhere in the chapter. The applicant pays the fingerprinting and investigation fees, and failing to submit or cooperate is itself a ground for denial or for revoking a license.

Which of the following is a ground on which the South Dakota Real Estate Commission may deny a license application?

• a.The applicant has a current and unpaid judgment filed against the applicant✓
• b.The applicant has changed employers more than twice in the previous year
• c.The applicant filed for personal bankruptcy within the previous seven years
• d.The applicant does not belong to a recognized real estate trade association

SDCL 36-21A-33 lists eight grounds for denial, the last of which is that "The applicant has a current and unpaid judgment filed against the applicant." The list also covers insufficient funds checks written within the calendar year before application, conviction of a felony or a misdemeanor involving moral turpitude, discipline by another regulator, failure to meet the chapter's requirements, failing the prelicense school examination, unmet education requirements, and deliberate misstatements in the application. A discharged bankruptcy is not on the list and is not the same thing as an outstanding judgment. Job changes are not a ground. Trade association membership cannot be required, because the commission licenses under the statute while an association is a private body. The PSI bulletin reprints this list under "Grounds for Denial of a License."

A written agency agreement in which a South Dakota broker represents a seller must contain which of the following?

• a.The buyer's lender and the loan program the buyer intends to use
• b.The broker's errors and omissions carrier and policy number
• c.The date of authorization and the expiration date of the agreement✓
• d.The seller's estimated net proceeds at three different sale prices

SDCL 36-21A-130 lists what a seller or lessor agency agreement must contain: "the proper legal description, the price and terms, the date of authorization, the expiration date, the type of agency relationship established, compensation to be paid, authorization to cooperate with or compensate other brokers, and the signatures of all parties." The same paragraph requires the licensee who obtains the agreement to give the person signing a copy. The buyer's financing is not a term of a listing at all, since no buyer exists when the listing is signed. The broker's insurance is a condition of licensure under SDCL 36-21A-119, not a contract term. A seller's net sheet is a customary courtesy, not a statutory element. ARSD 20:69:17:01 adds that the agreement must be on a form substantially the same as the commission's prescribed form.

Which South Dakota agreement may include a provision for automatic renewal at expiration?

• a.A seller's listing agreement that allows written cancellation on agreeable terms
• b.A buyer agency agreement that allows written cancellation on agreeable terms
• c.A property management agreement that allows written cancellation on agreeable terms✓
• d.A limited agency agreement that allows written cancellation on agreeable terms

SDCL 36-21A-130 draws the line explicitly: "An agency agreement between a broker and a buyer, seller, or lessee may not include a provision for automatic renewal of the agreement at expiration. A property management agreement may include a provision for automatic renewal at expiration if it contains a provision for written cancellation on terms agreeable to all parties to the agreement." The three wrong options are all agency agreements with a buyer, a seller or a lessee, so the cancellation language cannot save them; the prohibition is absolute for that class of contract. The reason for the split is practical. A listing is a finite marketing engagement with an end date the client should have to renew deliberately, while property management is an ongoing service where a lapse would leave an owner's building unmanaged.

Which act takes a South Dakota licensee past the informative initial acts of SDCL 36-21A-128 and into substantive contact?

• a.Setting an appointment for a consumer to view a property
• b.Answering a walk-in consumer's question about services offered
• c.Discussing a buyer's specific financial qualifications✓
• d.Accompanying a home inspector on a visit to a listed property

SDCL 36-21A-129 defines substantive contact as "any performance beyond initial acts described in section 36-21A-128" and names two examples: discussion of "Any specific financial qualifications of the buyer" or of "The selling or buying motives or objectives of the seller or buyer, in which the consumer may divulge any confidential personal or financial information." Each of the other three options is on the SDCL 36-21A-128 list of nine informative acts that expressly do not rise to representation, along with answering phone inquiries about price or availability, hosting an open house, referring a person to another broker, and giving a one-time showing of a single property. The distinction is not academic: SDCL 36-21A-147 makes first substantive contact the moment the written relationship disclosure comes due.

Which of the following does SDCL 36-21A-127 expressly exclude from the definition of confidential information?

• a.The lowest price the seller has said the seller would accept
• b.The client's reason for needing to move by a particular date
• c.Information the client gave the licensee in confidence
• d.Material facts about the physical condition of the property✓

SDCL 36-21A-127 defines confidential information as anything given to the licensee in confidence or that the licensee knows a reasonable individual would want kept confidential, then closes with a carve-out: "The term, confidential information, does not include material facts about the physical condition of the property." That sentence is what stops a seller from using confidentiality to bury a defect, and it works with SDCL 36-21A-125, which makes material defects in the property adverse material facts that must be disclosed even to a customer. The seller's reservation price and the client's motives are squarely confidential and are separately protected for limited agents by SDCL 36-21A-141. Information given in confidence is the definition's opening clause. The section also releases confidentiality where the client authorizes disclosure in writing, where the law requires it, or where the information has become public knowledge.

Under SDCL 36-21A-143, what does a South Dakota subagent owe the other broker's client?

• a.Only the duty to present offers and to account for money received
• b.The same obligations the client's own broker owes the client✓
• c.Only the duties a transaction broker owes to a customer
• d.No duties at all, since the subagent's agreement is with the other broker

SDCL 36-21A-143 defines subagency as any situation in which a responsible broker or the licensees associated with that broker act for another broker's client "with written permission of the client," and states the consequence in one sentence: "The subagent owes the same obligations and responsibilities to the client as does the client's broker." Subagency therefore carries the full client duties of SDCL 36-21A-132 or 36-21A-136, not the reduced package a transaction broker owes a customer under SDCL 36-21A-144. The idea that no duty is owed because the paperwork runs through the other brokerage is exactly the error the section forecloses. Note also that subagency does not arise by default in South Dakota; the client's written permission is a condition of it existing at all.

Which duties survive after a South Dakota agency or brokerage agreement has ended?

• a.Accounting for money and property, and continuing to market the property
• b.Accounting for money and property, and keeping information confidential✓
• c.Keeping information confidential, and presenting any offers received later
• d.No duty survives, because the agreement has terminated or been performed

SDCL 36-21A-150 provides that after termination, expiration, completion or performance of the agreement, no broker or associated licensee owes any further duty "except for the following duties: (1) Accounting for all moneys and property related to and received during the engagement; and (2) Keeping confidential all information received during the course of the engagement." The confidentiality duty is why a licensee cannot tell a new buyer what the previous seller would have taken. Marketing and offer presentation are affirmative services tied to a live engagement and stop with it. The blanket answer that nothing survives ignores the two carve-outs. The section opens with "Unless otherwise provided in the agreement or by law," so parties may agree to more, but never to less than the two listed duties.

A South Dakota seller's agent already has an accepted contract on the listing when another written offer arrives. What does SDCL 36-21A-132 require?

• a.Hold it until the pending contract closes or the parties terminate it
• b.Present it to the client in a timely manner despite the pending contract✓
• c.Present it only if the pending contract still has open contingencies
• d.Return it to the offering licensee, since the property is under contract

SDCL 36-21A-132(3)(b) requires the seller's or landlord's agent to be "Presenting all written offers to and from the client in a timely manner regardless of whether the property is subject to a contract for sale or lease or a letter of intent to lease." The phrase "regardless of whether" settles the case, so holding, screening by contingency status, or returning the offer are each a breach. What the statute does not require is the opposite duty: subdivision (3)(a) says the licensee "is not obligated to seek additional offers to purchase the property while the property is subject to a contract for sale." Presenting what arrives and soliciting more are different acts, and only the first is mandatory. SDCL 36-21A-71(20) makes failing to promptly give the seller every written offer unprofessional conduct on its own.

A material matter in a transaction falls outside a South Dakota licensee's expertise. What does the statute require the licensee to do for the client?

• a.Advise the client to obtain expert advice on the matter✓
• b.Research the matter and give the client the licensee's own opinion
• c.Withdraw from the agency agreement and refer the client elsewhere
• d.Disclose the gap to the other side's agent and let that agent advise

Both SDCL 36-21A-132(3)(d) and SDCL 36-21A-136(3)(d) impose the same duty in identical words: "Advising the client to obtain expert advice as to material matters about which the licensee knows but the specifics of which are beyond the expertise of the licensee." The duty is to refer the client outward, not to improvise. Giving an opinion outside one's competence risks SDCL 36-21A-71(32), which makes incompetency unprofessional conduct, and where the subject is legal it risks SDCL 36-21A-71(24) as well. Withdrawing from the engagement is a far heavier step than the statute asks and would abandon the client mid-transaction. Handing the problem to the opposing agent puts the client's interests in the hands of someone who does not represent the client at all.

What does a South Dakota seller's agent owe a buyer who is a customer rather than a client?

• a.The same fiduciary duties owed to the seller, other than the duty of loyalty
• b.An independent inspection of the property and a written condition report
• c.Nothing, because the buyer has no agreement with the licensee
• d.Disclosure of known adverse material facts, but no fiduciary duty✓

SDCL 36-21A-134 states both halves: "No licensee acting as a seller's or landlord's agent owes any fiduciary duty or obligation to a customer. A licensee shall provide disclosure of all adverse material facts known by the licensee to any customer." It adds that no seller's agent owes any duty to conduct an independent inspection of the property, which removes the inspection option. So the answer is neither everything nor nothing: the fiduciary package is reserved for the client, while the adverse material fact disclosure runs to everybody. SDCL 36-21A-138 sets up the mirror image for a buyer's agent facing a seller as customer, adding that the agent need not independently investigate the client's finances. SDCL 36-21A-125 defines what counts as an adverse material fact.

Which of the following is an adverse material fact as SDCL 36-21A-125 defines it?

• a.A material title defect anticipated to survive the closing✓
• b.The seller's stated reason for wanting to sell the property quickly
• c.The commission split the listing broker offers cooperating brokers
• d.The number of days the property has been on the market so far

SDCL 36-21A-125 defines an adverse material fact as information that negatively affects the value of the property or a party's ability to perform, and lists four categories: environmental hazards required by law to be disclosed, material defects in the property, "Any material defects in the title to the property which are anticipated to survive the closing," and any material limitation on the client's ability to perform under the contract. A title defect that will be cleared at closing is therefore outside the definition, which is why the statute's qualifier matters. The seller's motive is confidential information under SDCL 36-21A-127 and is protected rather than disclosed. Compensation arrangements between brokers and market-time statistics are commercial facts about the listing, not conditions that impair value or performance.

A South Dakota buyer's agent knows a registered sex offender lives near the property, and the client asks about it. What does the statute require?

• a.Disclose the licensee's actual knowledge to the client upon that inquiry✓
• b.Decline to answer and direct the client to the state sex offender registry
• c.Volunteer the information to every client before showing the property
• d.Say nothing, because the statute forbids discussing the subject at all

SDCL 36-21A-138.1 sets up a duty that is triggered rather than automatic: "No licensee representing a buyer or tenant has a duty to investigate or volunteer information regarding a registered sex offender residing on or near the property. However, upon inquiry by the licensee's client, the licensee representing a buyer or tenant shall disclose to the client any actual knowledge that the licensee may have." So there is no duty to research and none to raise the subject, but once the client asks, actual knowledge must be shared. Deflecting to the registry does not satisfy a shall. Volunteering to everyone goes beyond the statute. A flat prohibition is the opposite of what the section says. The seller's side is different: SDCL 36-21A-134.1 gives a seller's or landlord's agent no duty to investigate, volunteer or disclose.

When may a South Dakota licensee act as a limited agent?

• a.Only with the informed written consent of the seller and the seller's lender
• b.Whenever the responsible broker approves the arrangement in writing
• c.Whenever both parties happen to be represented by the same firm
• d.Only with the informed written consent of all parties to the transaction✓

SDCL 36-21A-140 opens with the condition: "A licensee may act as a limited agent only with the informed written consent of all parties to the transaction." South Dakota calls this relationship limited agency rather than dual agency, and SDCL 36-21A-1(13) defines the limited agent as a licensee with a written agency relationship with both the seller and the buyer in the same in-company transaction. Consent belongs to the parties, so a broker's internal approval cannot supply it, and the lender is not a party to the agency question. Two licensees of one firm working opposite sides does not by itself create limited agency; SDCL 36-21A-141.1 makes that explicit, providing that a responsible broker "is not a limited agent solely because the broker makes an appointment" of agents under that section.

Which fact may a South Dakota limited agent NOT disclose without the informed written consent of the client it concerns?

• a.That the roof leaks, a defect the seller has already reported
• b.That another buyer has submitted a written offer on the property
• c.That the seller has now accepted an offer on the property
• d.That the buyer is willing to pay more than the asking price✓

SDCL 36-21A-141 lists four items a limited agent may not disclose without informed written consent: that a buyer will pay more than the asking price or lease rate, that a seller will take less, "What the motivating factors are for any client, buying, selling, or leasing the property," and that a client will agree to financing terms other than those offered. A known roof leak runs the other way. SDCL 36-21A-127 excludes material facts about the physical condition of the property from confidential information, and SDCL 36-21A-125 makes a material defect an adverse material fact the licensee must disclose. The existence of a competing offer and the fact of acceptance are transaction events the parties need in order to act, not protected negotiating positions.

Which statement correctly describes a South Dakota transaction broker's obligations?

• a.Must disclose known adverse material facts and favor neither party✓
• b.Must advocate for whichever party first signed a written agreement with the broker
• c.Must independently verify every statement the seller makes about the property
• d.Owes no duty to present offers, since no agency exists

SDCL 36-21A-144 gives the transaction broker six duties, including presenting all offers in a timely manner, accounting in a timely manner for money and property, and "To disclose to the customer all adverse material facts known by the licensee," then adds the limit: "No licensee acting as a transaction broker may advise any party to a transaction to the detriment of another party." That closing sentence is what makes advocacy for one side impossible, whatever the signing order. SDCL 36-21A-145 removes the verification duty outright, providing that a transaction broker has no duty to inspect the property independently, to verify statements by the seller, buyer or a qualified third-party inspector, or to investigate the buyer's finances. The duty to present offers is item (3) on the list, so it survives the absence of agency.

May a South Dakota buyer's agent show the same property to two clients who would be competing for it?

• a.No, the agent must withdraw from representing one of the two clients
• b.Yes, and the agent may assist both in attempting to purchase it✓
• c.Yes, but only after both clients sign a limited agency agreement
• d.No, unless the listing broker consents to the arrangement in writing

SDCL 36-21A-139 answers the question twice over: "A buyer's or tenant's agent may show properties in which the client is interested to other prospective buyers or tenants without breaching any duty or obligation to the client. This section does not prohibit a buyer's or tenant's agent from showing competing clients the same property and from assisting competing clients in attempting to purchase or lease a particular property." No withdrawal is required and no consent is needed, because competing buyers are not opposing parties to each other's contracts. Limited agency is a different situation entirely; SDCL 36-21A-1(13) ties it to representing both the seller and the buyer in one transaction. SDCL 36-21A-135 gives the seller's side the same freedom to list and show competing properties. What does not change is SDCL 36-21A-141's confidentiality protection for each client's negotiating position.

When must a South Dakota licensee deliver the written relationship disclosure required by SDCL 36-21A-147?

• a.At the time the purchase agreement is signed by both of the parties
• b.Within three business days after the first showing of any property
• c.At the closing, together with the closing statement for the deal
• d.At the first substantive contact with an unrepresented consumer✓

SDCL 36-21A-147 fixes the moment: "At the first substantive contact with a seller or buyer who has not entered into a written agreement with a broker," the licensee must disclose in writing the types of agency and brokerage relationships the broker offers and provide a written copy of a disclosure on a form prescribed by the commission. SDCL 36-21A-129 defines that trigger as any performance beyond the informative initial acts listed in SDCL 36-21A-128, such as discussing the buyer's financial qualifications or the parties' motives. Waiting for the purchase agreement or the closing defeats the purpose, which is to tell a consumer whom the licensee works for before the consumer reveals a negotiating position. The three-day showing rule belongs to other states. The statute also provides that once a consumer has a written agreement with a broker, no other licensee must repeat the disclosure.

What is the legal effect of a South Dakota customer signing the relationship disclosure form?

• a.It acknowledges receipt only and does not create a contract with the licensee✓
• b.It creates a limited agency relationship with the licensee's brokerage
• c.It obligates the customer to work exclusively with that one licensee
• d.It waives the customer's right to be told of adverse material facts

SDCL 36-21A-147 requires the written disclosure to contain "a signature block for the client or customer to acknowledge receipt of the disclosure" and then states the point directly: "The customer's acknowledgment of disclosure does not constitute a contract with the licensee." Representation in South Dakota comes from an agency agreement meeting the requirements of SDCL 36-21A-130, not from a receipt. That is why the form cannot create limited agency, which SDCL 36-21A-140 permits only on the informed written consent of all parties, and cannot lock a consumer to one licensee. Nor can it waive anything: the duty to disclose adverse material facts runs to customers under SDCL 36-21A-134 and SDCL 36-21A-138 regardless of what the consumer signs. ARSD 20:69:16:01 requires the form to be substantially the same as the commission's prescribed relationships disclosure form.

A South Dakota consumer refuses to sign the relationship disclosure. What must the licensee do?

• a.Note the refusal on a copy of the disclosure and keep that copy on file✓
• b.Stop working with the consumer until the disclosure has been signed
• c.Send the unsigned disclosure to the commission within ten days
• d.Have a second licensee sign the disclosure as a witness instead

SDCL 36-21A-147 anticipates the refusal and gives one instruction: "If the customer fails or refuses to sign the disclosure, the licensee shall note that fact on a copy of the disclosure and retain the copy." The obligation the statute imposes is to deliver the disclosure, not to obtain a signature, so a refusal does not stop the licensee from continuing to work with the consumer. Nothing in the chapter requires filing anything with the commission at that point, although SDCL 36-21A-71(8) means the retained copy must be produced on demand in an investigation. A witness signature is not a substitute for the annotated copy. The retained, annotated copy is the licensee's own proof that the required disclosure was in fact made.

What written document does SDCL 36-21A-147 require every South Dakota responsible broker to develop and maintain?

• a.A published schedule of the commission rates the brokerage charges clients
• b.A list of every consumer who received a disclosure in the previous two years
• c.An office policy setting out the relationships the broker may establish✓
• d.An agreement with each cooperating broker in the market area

SDCL 36-21A-147 opens with the requirement: "Every responsible broker shall develop and maintain a written office policy that specifically sets forth agency and brokerage relationships that the broker may establish." The policy is what makes the individual disclosure meaningful, because the licensee then discloses to the consumer which of those relationships the brokerage is offering. A published rate schedule is not required and would sit uneasily with SDCL 36-21A-68, which preserves each licensee's right to set the fees chargeable for services. No consumer log is required, though SDCL 36-21A-74 requires transaction records to be preserved for four years. Cooperating broker agreements are negotiated deal by deal, and SDCL 36-21A-130 simply requires the listing to say whether the broker is authorized to cooperate with or compensate other brokers.

When a South Dakota brokerage appoints agents for a client, what knowledge is attributed to the brokerage and to the appointed licensee?

• a.Only actual knowledge, with no imputation by operation of law✓
• b.All knowledge held by any licensee affiliated with the brokerage
• c.All knowledge the responsible broker held before the appointment
• d.Only the knowledge recorded in the brokerage's transaction file

SDCL 36-21A-141.1 states that when an agent is appointed under that section, "each client, the real estate brokerage, and any appointed licensee is considered to possess only actual knowledge and information. There is no imputation of knowledge or information by operation of law among or between the client, the real estate brokerage, and the appointed agent." SDCL 36-21A-148 repeats the same rule for agency and brokerage relationships generally. Without it, appointed agency would collapse, because everything one appointed agent learned would be treated as known by the agent on the other side of an in-company transaction. Automatic firm-wide imputation is precisely what the statute abolishes, and the responsible broker's prior knowledge is not transferred either. Limiting attribution to the written file states no rule the statute contains; the test is actual knowledge, however acquired.

Under ARSD 20:69:16:03, when must a South Dakota licensee tell a client about the brokerage's appointed agent policy?

• a.In writing, within ten days after the agency agreement is signed
• b.Orally, at the first substantive contact with that consumer
• c.In writing, only if the client asks how the brokerage is organized
• d.In writing, before entering into the listing or agency agreement✓

ARSD 20:69:16:03 requires that "Prior to entering into a listing or agency agreement, a real estate licensee shall notify a client in writing of the real estate brokerage's appointed agent policy and those affiliated licensees within the real estate brokerage that will act as appointed agents of that client to the exclusion of all other affiliated licensees." Both the timing and the form are fixed, so notice afterwards or by word of mouth will not do, and the duty does not wait for the client to ask. The rule adds two protections: a brokerage may not appoint an agent in a transaction governed by an exclusive single agency or limited agency agreement that predates the appointed agent policy without the client's written consent, and if that consent cannot be obtained the broker must refer the appointed agent's client to another broker for that property.

A written employment contract lets a South Dakota responsible broker hold the principal's money until settlement. When must the money be deposited?

• a.In a special trust account on the first legal banking day after acceptance✓
• b.In a special trust account within three business days after the contract is accepted
• c.In the brokerage's operating account on the first banking day after acceptance
• d.In a special trust account within ten days after acceptance

SDCL 36-21A-80 sets a default and an exception. The default is that the responsible broker "shall remit immediately" to the principal all money belonging to the principal. The exception applies when a written employment contract authorizes the broker to keep the money until final settlement, and then "the responsible broker shall deposit the money in a federally insured financial institution in a special trust account on the first legal banking day after the acceptance of the contract." The account must be reconciled to the bank statements, trust ledger and check register at least monthly, and the money "may not be used by the responsible broker except in connection with the transaction as authorized by the principal." A three-day or ten-day window is longer than the statute allows, and the operating account is commingling, which SDCL 36-21A-71(5) makes unprofessional conduct.

An accepted South Dakota purchase agreement fails to close. How may the broker disburse the funds held in trust?

• a.Only after the commission issues a written release of the funds
• b.To whichever party the purchase agreement names as default payee
• c.Only on written instruction of all parties or on a court order✓
• d.By splitting the funds equally between the buyer and the seller

SDCL 36-21A-81 leaves the broker exactly two routes: "If an accepted offer and agreement to purchase does not close, a broker may not disburse any funds held in trust, relative to such real estate transaction, except pursuant to a written instruction of all parties to the transaction or pursuant to a court order." The commission is not a party to the transaction and issues no releases, so waiting on the regulator is not an option. A default-payee clause cannot override the statute, because "all parties" means their agreement at the time of the dispute rather than a term agreed in advance. Splitting the money looks even-handed but is still a unilateral disbursement without written instruction. This section governs a failed closing generally; SDCL 36-21A-77 covers the narrower case where the seller is at fault.

A South Dakota seller is unable to consummate the sale through no fault of the buyer. What happens to the buyer's deposit?

• a.It is applied to the broker's earned commission before any refund is made
• b.It is held in trust until the seller and the broker agree on its division
• c.It is forfeited to the seller as liquidated damages under the sale contract
• d.It must go back to the purchaser at once, though the commission is earned✓

SDCL 36-21A-77 addresses the case where the seller "fails, refuses, neglects or is unable to consummate the transaction as provided in the purchase contract, and through no fault or neglect of the purchaser." The consequence is stated flatly: "the broker has no right to any portion of the deposit money which was deposited by the purchaser, even though the commission is earned. This deposit shall be returned to the purchaser at once." So the broker's claim for a commission, however good, is a claim against the seller and not against the buyer's money. Holding the funds pending a broker-seller negotiation ignores the words "at once," and forfeiting them to the defaulting seller inverts the section. Compare SDCL 36-21A-84, under which no responsible broker is entitled to any part of the money paid until the transaction is consummated or terminated.