South Dakota Broker Associate Exam — All Questions

In South Dakota, earnest-money deposits and other client funds must be held:

• a.In the responsible broker's personal account
• b.In a trust account separate from the broker's personal or business funds✓
• c.In cash in the office safe
• d.By the buyer's lender only

A responsible broker must hold client money, such as earnest money, in a trust account separate from the broker's personal or business funds. A broker associate who receives funds must deliver them to the responsible broker promptly. Commingling or converting trust money is prohibited and is one of the most serious violations of South Dakota license law.

When the buyer and seller make conflicting demands for an earnest-money deposit held by a South Dakota responsible broker, the broker should:

• a.Release it to whichever party asks first
• b.Keep it as a commission
• c.Retain the funds until the parties agree in writing or a court resolves the dispute✓
• d.Split it in half without consent

A responsible broker holding a disputed deposit acts as a neutral stakeholder and must not release the funds unilaterally. The prudent course is to keep the money in the trust account until the parties agree in writing or a court resolves the dispute. Releasing disputed funds on one party's demand exposes the broker to liability.

Which of the following is prohibited conduct that can lead to discipline under South Dakota license law?

• a.Commingling client trust funds with the broker's own money✓
• b.Presenting all written offers to the client
• c.Providing the required agency disclosure
• d.Keeping accurate transaction records

South Dakota law lists prohibited conduct including commingling or converting trust funds, misrepresentation, false advertising, and failing to provide required disclosures. Presenting offers, providing disclosures, and keeping records are proper practices. Because the statutory-requirements section is the heaviest-weighted part of the state exam, knowing the prohibited practices is essential.

A South Dakota broker associate who personally receives a buyer's earnest-money check should:

• a.Deposit it into the broker associate's own account
• b.Deliver it promptly to the responsible broker for deposit in the trust account✓
• c.Hold it until the seller accepts the offer
• d.Endorse it over to the seller

A broker associate who receives client funds must deliver them promptly to the responsible broker, who deposits them into the trust account. The broker associate must not hold client money in a personal account or hand it to the seller. Prompt delivery and proper trust handling prevent commingling and conversion, which are serious violations.