South Dakota Broker Associate Exam — All Questions

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.