South Dakota Real Estate Broker Associate Exam — All Questions

Under South Dakota rules, a licensee should disclose the brokerage relationship to a consumer:

• a.Before confidential information is shared, at the outset of the relationship✓
• b.Only after a purchase agreement is signed
• c.Within 15 days after an accepted offer
• d.At the closing

South Dakota requires licensees to disclose the brokerage relationship before confidential information is shared, generally at the outset of the working relationship. The disclosure identifies whether the licensee represents the seller, the buyer, or acts as a limited agent.

In South Dakota, when a brokerage represents both the buyer and the seller in the same transaction, the arrangement is generally treated as:

• a.Subagency that needs no consent
• b.Universal agency
• c.An automatic conflict that voids the sale
• d.Limited (dual) agency requiring the informed written consent of both parties✓

South Dakota treats representation of both the buyer and the seller by one brokerage as limited (dual) agency, which requires the informed written consent of both parties. The limited agent must treat both parties honestly and may not disclose one party's confidential information to the other.

South Dakota limits a licensee performing brokerage services to which set of relationships?

• a.Single agent, limited agent, subagent, transaction broker✓
• b.Seller agent and buyer agent relationships only
• c.Universal agent, special agent, general agent, and trustee
• d.Designated agent and facilitator relationships only

A licensee is limited to the following relationships: single agent as a seller or landlord agent or a buyer or tenant agent; limited agent; subagent; and transaction broker. Cite: SDCL 36-21A-131.

A South Dakota transaction broker owes the customer several duties, but the statute expressly forbids the transaction broker from:

• a.Preparing the purchase agreement for the parties
• b.Accepting compensation from either of the parties
• c.Presenting an offer that is below the asking price
• d.Advising a party to the detriment of another party✓

A transaction broker must perform the written agreement, exercise reasonable skill and care, present all offers timely, account for money and property, comply with fair housing and other law, and disclose all adverse material facts known. No licensee acting as a transaction broker may advise any party to the detriment of another party. Cite: SDCL 36-21A-144.

A South Dakota licensee acting as a transaction broker has no duty to:

• a.Disclose adverse material facts known to the licensee
• b.Present all offers to the parties in a timely manner
• c.Verify the seller's own statements✓
• d.Account for money and property that is received

A transaction broker has no duty to conduct an independent inspection for any party's benefit, to independently verify the accuracy or completeness of statements by the seller, landlord, buyer, tenant or a qualified third-party inspector, or to investigate the buyer's financial condition. Cite: SDCL 36-21A-145.

A South Dakota licensee may act as a limited agent:

• a.Only with the informed written consent of all parties✓
• b.Only when the buyer is paying cash for the property
• c.Only after the purchase agreement has been signed
• d.Whenever the responsible broker's office policy allows it

A licensee may act as a limited agent only with the informed written consent of all parties to the transaction, and the limited agent then owes the listed duties to both the seller and the buyer. Cite: SDCL 36-21A-140.

A South Dakota responsible broker appoints one affiliated licensee to a seller client and another to a buyer client in the same deal. The responsible broker:

• a.Is not a limited agent solely because of the appointment✓
• b.Must refer one of the two clients to another brokerage
• c.Must obtain a written waiver from the Commission first
• d.Automatically becomes a limited agent for both clients

A responsible broker is not a limited agent solely because the broker makes appointments, and each client, the brokerage and any appointed licensee possess only actual knowledge, with no imputation of knowledge by operation of law. A licensee who personally represents both parties is a limited agent. Cite: SDCL 36-21A-141.1.

At first substantive contact with a South Dakota seller or buyer who has no written brokerage agreement, the licensee must:

• a.Refer the consumer to the responsible broker for disclosure
• b.Wait until the consumer asks about representation
• c.Obtain a signed agency agreement before saying anything
• d.Disclose the relationships offered and give the form✓

Every responsible broker must maintain a written office policy, and at first substantive contact the licensee must disclose in writing the types of agency and brokerage relationships the broker offers and provide a written disclosure on the form prescribed by the Commission. Cite: SDCL 36-21A-147.

A South Dakota consumer refuses to sign the brokerage relationship disclosure. The licensee must:

• a.Note the refusal on a copy and retain that copy✓
• b.Report the refusal to the Real Estate Commission
• c.Treat the consumer as a client by operation of law
• d.Stop all work until the consumer signs the form

The disclosure carries a signature block acknowledging receipt, and the acknowledgment is not a contract with the licensee. If the customer fails or refuses to sign, the licensee must note that fact on a copy of the disclosure and retain the copy. Cite: SDCL 36-21A-147.

Under South Dakota law, substantive contact occurs when the licensee and consumer discuss:

• a.The name of a lender the consumer might call
• b.The address and asking price of a listed property, in detail
• c.The consumer's financial qualifications or buying motives✓
• d.The date and time of an upcoming open house

Substantive contact is any performance beyond the listed informative acts, and includes discussion of the buyer's specific financial qualifications or the selling or buying motives and objectives in which confidential information could be divulged. Cite: SDCL 36-21A-129.

Which act by a South Dakota licensee is merely informative and does not by itself create representation?

• a.Preparing a written offer for the consumer to sign
• b.Advising the consumer what to offer for a home
• c.Negotiating price terms on the consumer's behalf
• d.Providing a one-time showing of one property✓

The statute lists informative acts that do not rise to representation, including answering phone inquiries about price or location, hosting an open house and answering questions, setting a showing appointment, making a referral, and providing a one-time showing of one property only. Cite: SDCL 36-21A-128.

In South Dakota, an "adverse material fact" includes:

• a.The seller's reason for moving out of state
• b.A material defect in the title expected to survive closing✓
• c.The number of days the home has been listed
• d.The price the seller paid for the home originally

An adverse material fact is information that negatively affects the property's value or a party's ability to perform, and includes environmental hazards required by law to be disclosed, material defects in the property, material title defects anticipated to survive closing, and material limits on a client's ability to perform. Cite: SDCL 36-21A-125.

A South Dakota buyer's agent is asked by the buyer client whether a registered sex offender lives near the property. The licensee must:

• a.Disclose any actual knowledge the licensee has✓
• b.Decline to answer under any circumstances
• c.Refer the question to the responsible broker
• d.Investigate the registry and report the findings

A licensee representing a buyer or tenant has no duty to investigate or volunteer sex offender information, but upon inquiry by the client the licensee must disclose any actual knowledge the licensee has. A seller's agent has no duty to investigate, volunteer, or disclose. Cite: SDCL 36-21A-138.1.