New Mexico Real Estate Broker Exam — All Questions

Under the broker-duties framework, a New Mexico broker must disclose to the parties:

• a.The broker's personal income
• b.Adverse material facts the broker actually knows about the property or transaction✓
• c.The names of all other clients the broker serves
• d.A guarantee that the property has no defects

A New Mexico broker must disclose any adverse material facts the broker actually knows about the property or the transaction, such as a known material defect. The broker need not independently inspect the property but may not conceal known problems or misrepresent the property.

Earnest money that a New Mexico associate broker receives from a buyer must be:

• a.Sent to the Real Estate Commission for safekeeping
• b.Delivered to the qualifying broker so it is handled through the brokerage's trust account✓
• c.Paid directly to the seller when the offer is made
• d.Deposited in the associate broker's personal account until closing

Client money such as earnest money must be handled through the brokerage's trust (escrow) account, which the qualifying broker maintains, and kept separate from personal funds. An associate broker who receives the money must deliver it to the qualifying broker. Commingling or converting trust money is a serious violation.

Before accepting an offer to purchase a New Mexico home, the seller or the seller's broker must request an estimated property tax levy from the county assessor. The value specified in the request must be:

• a.The county's current assessed value
• b.The listed price of the property✓
• c.The price stated in the buyer's offer
• d.The seller's estimate of market value

The seller or seller's broker must ask the county assessor for the estimated property tax levy and must specify the listed price as the value to be used, then give the assessor's written response to the prospective buyer or the buyer's broker. Cite: NMSA 1978 Section 47-13-4(B).

A New Mexico buyer wants to write an offer today, but the assessor's estimated property tax levy is not available. The buyer may:

• a.Proceed, because the disclosure is owed only at closing
• b.Proceed only if the listing broker signs an indemnity
• c.Proceed only after the commission grants a waiver
• d.Waive the disclosure by signing a written waiver before the offer is made✓

A prospective buyer may waive the estimated property tax levy disclosure by signing a written document, before the offer to purchase is made, acknowledging that the estimate is not readily available. Cite: NMSA 1978 Section 47-13-4(F).

A New Mexico listing broker asks the county assessor for an estimated property tax levy on Monday morning. The assessor must comply:

• a.By the close of business on Tuesday✓
• b.Within five business days
• c.Within 30 days
• d.Only if the request is made in person

The assessor must furnish the written estimate by the close of business of the business day following the day the request is received. A county may satisfy the duty through an internet site or other automated format the requester can print. Cite: NMSA 1978 Section 47-13-4(D).

A New Mexico seller knows that a previous owner died of natural causes in the house. Under the Real Estate Disclosure Act the seller and the broker:

• a.Must disclose the death in writing before accepting any offer
• b.Must disclose it only if the buyer is financing the purchase
• c.Have no duty to disclose it under state law✓
• d.Must disclose it only in counties of more than 100,000 residents

New Mexico removes liability and any duty to disclose that property is or was the site of a natural death, a homicide, suicide, assault, sexual assault or other felony, or was occupied by a person with HIV or AIDS. The silence is also not grounds to terminate or rescind the sale. Cite: NMSA 1978 Sections 47-13-2 and 47-13-3.

A New Mexico qualifying broker runs both a sales business and a property management business. The trust accounting must be arranged so that:

• a.Property management funds are never placed in the brokerage trust account✓
• b.One trust account holds both sales and management money
• c.Management money is held in the qualifying broker's operating account
• d.Each managed owner holds the funds personally

The brokerage trust account is for money of others related to a real estate sales transaction, and the rule states that property management funds may not be placed in it. A separate property management trust account holds money received in managing property for others. Cite: 16.61.23.9(A) and (B) NMAC.

How often must a New Mexico trust account be reconciled, and who must verify it?

• a.Quarterly, verified by the brokerage's accountant
• b.Monthly, verified by the qualifying broker✓
• c.Annually, verified by the commission
• d.At the close of each transaction, verified by the associate broker

Trust account reconciliation must be performed monthly and verified by the qualifying broker. A broker who offers property management must also keep monthly three-way reconciliations among the account, the bank statement, and the property ledger. Cite: 16.61.23.8(D) NMAC; 16.61.23.12(B)(3) NMAC.

A New Mexico sales transaction closes in June. The qualifying broker must keep the trust and custodial account records for that transaction:

• a.One year
• b.Three years
• c.Six years✓
• d.Ten years

All trust and custodial account records are retained for six years after the completion of a transaction. For property management the records are kept for the full term of the agreement and then six years from termination. Cite: 16.61.23.10(B) and (C) NMAC.

Which disbursement from a New Mexico trust account is expressly treated as commingling?

• a.Paying an inspection fee agreed to in writing by the parties
• b.Transferring funds to another properly designated trust account in the same brokerage
• c.Paying a fee due the broker once the basis for it can be calculated
• d.Paying a commission split to anyone other than the qualifying broker✓

Wrongful disbursements that constitute commingling include disbursing commission or commission splits from a trust or custodial account to any entity other than the qualifying broker, paying personal expenses, and paying gross receipts tax directly from the account. Cite: 16.61.23.11(B)(4) NMAC.

A New Mexico bank requires a $500 minimum balance to avoid service charges on the brokerage trust account. The qualifying broker may:

• a.Place non-trust funds in the account up to that minimum balance✓
• b.Take the $500 from the largest property ledger
• c.Do nothing; any of the broker's own money in the account is commingling
• d.Place up to $5,000 of the broker's money in the account

The rule's exceptions to commingling allow non-trust funds in an amount not exceeding the financial institution's required minimum balance to maintain the account and avoid charges, and also allow funds to cover credit card and bank fees. Cite: 16.61.23.11(D)(1) and (D)(2) NMAC.

A New Mexico associate broker's name appears in 30-point type on a listing flyer. The brokerage trade name registered with the commission must appear in type that is at least:

• a.The same size as the associate broker's name
• b.At least one-third the size of that name✓
• c.At least half the size of the associate broker's name
• d.Eight-point type, whatever the broker's name measures

Since January 1, 2017, the brokerage trade name and telephone number must be prominently displayed in a type size not less than thirty-three percent of the type size of the associate broker's name, or of the team name where a team is advertising. Cite: 16.61.32.8(C) NMAC.

A New Mexico broker owns a duplex and advertises it for rent. The broker's license status:

• a.Must appear in the advertisement and on any sign
• b.Need not be disclosed anywhere, because the broker owns the property
• c.Must be disclosed in the rental or lease agreement, though not in the advertising or signs✓
• d.Must be disclosed only to the commission

A broker advertising to sell or exchange property the broker owns must say so in the advertising and signs and in the listing, purchase or exchange agreement. For a rental or lease the advertising disclosure is not required, but the disclosure must appear in the rental or lease agreement. Cite: 16.61.32.8(D) NMAC.

A New Mexico qualifying broker asks an unlicensed assistant to help fill the pipeline. Which task is prohibited?

• a.Placing and removing signs on listed property as directed
• b.Typing a listing agreement the broker prepared
• c.Ordering repairs as directed by the responsible person
• d.Cold-calling homeowners to set listing appointments✓

Unlicensed assistants may place signs, order repairs, type documents the responsible person prepared, and deposit funds under supervision. Telephone solicitation of any kind designed to procure buyers, sellers, listings or listing appointments is expressly prohibited. Cite: 16.61.21.8 and 16.61.21.9(H) NMAC.