North Dakota Real Estate Salesperson Exam — All Questions

In North Dakota, a licensee may represent both the buyer and the seller as a dual agent in the same transaction only when:

• a.The employing broker approves verbally
• b.Both parties give informed written consent✓
• c.The purchase price exceeds a set amount
• d.The property is newly built

North Dakota permits a licensee to act as a dual agent representing both parties in the same transaction only with the informed written consent of both the buyer and the seller. A dual agent must treat both fairly and may not disclose one party's confidential information to the other.

North Dakota requires a licensee to disclose the licensee's agency relationship to a consumer:

• a.Only if the consumer requests it in writing
• b.Early in the relationship, before the consumer shares confidential information✓
• c.Only at the closing table
• d.Only after a purchase agreement is signed

North Dakota licensees must disclose their agency relationship, identifying whom they represent, early in the relationship and before the consumer shares confidential information. Early disclosure helps the consumer understand whether the licensee represents the buyer, the seller, or both.

Under North Dakota law, dual agency does not exist unless:

• a.Both parties have written agency agreements with the same firm✓
• b.A subagency arrangement has been offered through the listing service
• c.The transaction involves more than one parcel of property
• d.The two parties are represented by two different firms

Dual agency arises only when one licensee represents both parties, or when two licensees of the same broker each represent a party, and it does not exist unless both the buyer and the seller have written agency agreements with the same brokerage firm. A subagency arrangement is not a written agency agreement. Cite: N.D.C.C. 43-23-06.1(6).

A North Dakota brokerage firm appoints one licensee to represent the seller and another to represent the buyer in the same transaction. The firm and its licensees are:

• a.Dual agents as to both clients by operation of law
• b.Not dual agents, and knowledge is not imputed among them✓
• c.Required to withdraw from one side of the transaction
• d.Permitted to continue only with a court order

When a designated broker appoints agents for clients who are or may be parties to the same transaction, the firm and its licensees are not dual agents as to those clients, and there is no imputation of knowledge or information among the clients, the firm, and the appointed agents. Cite: N.D.C.C. 43-23-12.3(2).

Toward a customer who is not represented in the transaction, a North Dakota licensee is a nonagent who must:

• a.Obtain the customer's consent before speaking to the client
• b.Owe the customer the full fiduciary duties of a client
• c.Say nothing at all about the property's condition
• d.Disclose adverse material facts the licensee knows✓

As to a customer the firm and its licensees are nonagents owing limited duties: to perform customary acts with honesty and good faith, and to disclose any adverse material facts actually known that pertain to the title, the physical condition, and defects in the property. Those duties are subordinate to duties owed a client. Cite: N.D.C.C. 43-23-12.1(2).

Unless the parties agree otherwise in writing, a North Dakota brokerage firm and its licensees are:

• a.Required to inspect the property for hidden defects
• b.Required to verify ownership before any showing
• c.Not obligated to discover defects in the property✓
• d.Liable for any error made by the seller's attorney

Unless otherwise agreed in writing, the firm and its licensees are not obligated to discover defects in the property, to verify ownership, or to independently verify the accuracy of statements made by anyone other than themselves. Cite: N.D.C.C. 43-23-12.1(3).

In a North Dakota transaction involving a one- to four-family home, the licensee's written agency disclosure must be made:

• a.At the first substantive contact with the party✓
• b.Within ten days after an offer is accepted
• c.At the closing, with the settlement statement
• d.Only when the consumer asks who is represented

The licensee must make an affirmative written disclosure identifying whom the licensee represents at the time of first substantive contact, on a separate written document offered to the party for signature, with a true copy kept in the broker's file. Cite: N.D.A.C. 70-02-03-15.1(2).

Without the informed written consent of the party represented, a North Dakota licensee may not disclose that:

• a.The seller will accept less than the asking price✓
• b.A building permit was never obtained for the deck
• c.The septic system has failed an inspection
• d.The property has a leaking basement wall

The confidentiality rule specifically protects four things: that the party will pay more than the price offered, that the party will accept less than the price asked, the party's motivating factors, and that the party will agree to other financing terms. Cite: N.D.A.C. 70-02-03-15.1(3).

A North Dakota seller tells the listing agent to keep quiet about a cracked foundation. The duty of confidentiality:

• a.Requires the agent to conceal the defect from buyers
• b.Applies until the purchase agreement is signed
• c.Does not cover known material defects in the property✓
• d.Can be waived only by the Real Estate Commission

The confidentiality provisions do not permit or require a licensee to keep confidential any material defect in the property of which the licensee is aware, or anything that would be fraudulent misrepresentation unless disclosed. Cite: N.D.A.C. 70-02-03-15.1(6).

In a North Dakota transaction involving agricultural land, commercial property, or a residential building with five or more units, the licensee:

• a.Is the seller's agent unless all parties agree otherwise✓
• b.Is always the agent of whichever party pays the commission
• c.Owes no agency duty to anyone in the transaction
• d.Must act as a dual agent for both sides of the deal

For agricultural and commercial property, residential property of five or more dwelling units, and commercial leaseholds, the rule provides that the licensee is the agent of the seller unless all parties otherwise agree in writing, and the relationship must be disclosed in writing before a written contract is signed. Cite: N.D.A.C. 70-02-03-15.

A North Dakota licensee who never made the required written agency disclosure sues the seller for the commission. The licensee:

• a.Recovers half the fee as a matter of equity
• b.May not maintain the action to recover the compensation✓
• c.Recovers only if the buyer completed the purchase
• d.Recovers the full fee, since the listing was signed

No person required to be licensed may maintain an action to recover any commission, fee, or other compensation unless the agency relationship was disclosed to the parties as the rule requires. Cite: N.D.A.C. 70-02-03-15.1(8).

One North Dakota licensee represents two buyer clients who both want to offer on the same home. That licensee must:

• a.Disclose the terms of each buyer's offer to the other
• b.Refer both buyers to a different brokerage firm
• c.Withdraw from representing one of the two buyers
• d.Tell both clients a competing written offer exists✓

A firm does not breach a duty by assisting competing buyer clients, but if one individual licensee holds written agency agreements with two or more buyers who want the same property, the licensee must disclose to those clients that a competing written offer has been submitted by another buyer client of that licensee. Cite: N.D.C.C. 43-23-12.1(5).

Before a North Dakota licensee performs any service for an unrepresented customer, the licensee must:

• a.Record an affidavit of nonagency with the county
• b.Obtain the customer's signature on a nonagency disclosure✓
• c.Notify the Real Estate Commission of the nonagency arrangement
• d.Ask the customer to sign a buyer's broker agreement

The licensee must disclose the nonagency relationship in writing to the customer, and the document must be signed by the customer before the licensee performs any services. A copy is kept in the broker's file. Cite: N.D.A.C. 70-02-03-15.2.