South Dakota Broker Associate Exam — All Questions

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.