South Dakota Broker Associate Exam — All Questions

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.