South Dakota Real Estate Broker Associate Exam — All Questions

In South Dakota, the seller of most residential real property must generally provide the buyer with:

• a.A professional home inspection report
• b.A title insurance policy
• c.A completed property condition disclosure statement✓
• d.A written guarantee that the property has no defects

South Dakota law requires the seller of most residential real property to give the buyer a completed property condition disclosure statement describing the known condition of the property before the buyer is obligated. The seller need not inspect the property but must answer honestly about known conditions.

Earnest money a South Dakota broker associate receives from a buyer must be:

• a.Delivered promptly to the responsible broker for deposit in the brokerage trust account✓
• b.Given directly to the seller when the offer is made
• c.Held by the associate in a personal account until closing
• d.Sent to the Real Estate Commission for safekeeping

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

A South Dakota responsible broker authorized by written contract to hold the buyer's money until settlement must deposit it in a special trust account:

• a.Within five business days after the contract is accepted
• b.Within ten calendar days after the contract is accepted
• c.At any time before the scheduled closing date
• d.On the first legal banking day after acceptance✓

A responsible broker must remit money belonging to the principal immediately unless a written employment contract authorizes retention until final settlement; in that event the money goes into a special trust account in a federally insured financial institution on the first legal banking day after acceptance of the contract. Cite: SDCL 36-21A-80.

An accepted South Dakota purchase agreement fails to close. The broker may disburse the trust funds:

• a.To the buyer, after waiting thirty days for a claim
• b.On the listing broker's own determination of who was at fault
• c.Only on written instruction of all parties or a court order✓
• d.To the seller, because the buyer defaulted first

If an accepted offer and agreement to purchase does not close, a broker may not disburse any funds held in trust except pursuant to written instruction of all parties to the transaction or pursuant to a court order. Cite: SDCL 36-21A-81.

A South Dakota licensee must preserve listings, offers to purchase, closing statements and other transaction records for:

• a.Four years✓
• b.Seven years from the closing
• c.One year from the closing
• d.Two years from the closing

A licensee must preserve for four years all listings, offers to purchase, closing statements and other records relating to any real estate transaction. Cite: SDCL 36-21A-74.

A South Dakota seller refuses to close through no fault of the purchaser. The earnest money:

• a.Is applied to the broker's earned commission
• b.Is split between the broker and the seller
• c.Is returned to the purchaser at once✓
• d.Is held until the seller signs a release

If the seller fails, refuses, neglects or is unable to consummate the transaction and the purchaser is not at fault, the broker has no right to any portion of the deposit even though the commission is earned, and the deposit must be returned to the purchaser at once. Cite: SDCL 36-21A-77.

A South Dakota responsible broker becomes entitled to keep part of the money paid in a transaction as compensation:

• a.Only after the transaction is consummated or terminated✓
• b.When the buyer's loan commitment is issued
• c.When the listing agreement is signed by the seller and broker
• d.When the purchase agreement is signed by both parties

No responsible broker is entitled to any part of the money paid in a transaction as part of the broker's compensation until the transaction has been consummated or terminated, although the Commission may make reasonable exceptions by rule. Cite: SDCL 36-21A-84.

In a South Dakota sale, closing statements are furnished as follows:

• a.The closing agent alone must furnish both statements
• b.Only the buyer is entitled to a closing statement
• c.Listing broker to the seller, selling broker to the buyer✓
• d.The listing broker gives a single statement to both parties

The listing broker shall furnish a closing statement to the seller, and the selling broker shall furnish a closing statement to the buyer. Cite: SDCL 36-21A-75.

A South Dakota agency agreement between a broker and a buyer or seller:

• a.Need not state an expiration date
• b.May be oral if compensation is later confirmed
• c.May renew automatically at expiration
• d.May not include an automatic renewal provision✓

An agency agreement between a broker and a buyer, seller or lessee may not include a provision for automatic renewal at expiration. A property management agreement may renew automatically if it provides for written cancellation on terms agreeable to all parties. Cite: SDCL 36-21A-130.

A South Dakota team leader who adds or removes a licensed team member must give the updated list to the responsible broker within:

• a.Twenty-four hours
• b.Seventy-two hours✓
• c.Ten days
• d.Thirty days

A team leader must provide a current list of all licensed team members, and any changes to it, to the responsible broker within 72 hours of making the change, and the responsible broker keeps a current record available to Commission staff on request. Cite: ARSD 20:69:18:01.

In a South Dakota advertisement, a real estate team:

• a.Must obtain written Commission approval before advertising
• b.May not be identified by a team name in any advertisement
• c.May advertise under its own name without naming the brokerage
• d.Must name the brokerage and may not appear independent of it✓

Each advertisement of a real estate team must clearly state the name of the brokerage company the team is affiliated with, must clearly identify any nonlicensed individuals shown, and may not contain language leading the public to believe the team offers brokerage services independent of the broker. Cite: SDCL 36-21A-72.

The seller of most South Dakota residential real property must furnish the completed property condition disclosure statement:

• a.Before the buyer makes a written offer✓
• b.Within three days after the offer is accepted
• c.At the closing, with the settlement statement
• d.Only if the buyer asks for it in writing

The seller must furnish a completed copy of the disclosure statement to the buyer before the buyer makes a written offer, and must furnish a written amendment if a change of material fact arises before closing or possession. Cite: SDCL 43-4-38.

A South Dakota buyer receives the property condition disclosure statement after already making a written offer. The buyer may terminate the offer within:

• a.Five days if delivered in person, or fourteen days if mailed
• b.Three days if delivered in person, or six days if mailed✓
• c.Three days however the statement was actually delivered
• d.Ten days however the statement was actually delivered

If the disclosure statement or a material amendment reaches the buyer after the buyer has made a written offer, the buyer may terminate by delivering written notice of termination within three days after personal delivery, or within six days after delivery by deposit in the mail. Cite: SDCL 43-4-39.

The South Dakota property condition disclosure requirement does not apply to a transfer:

• a.Of a home the seller personally lived in for twenty years
• b.Of newly constructed property that has never been occupied✓
• c.In which the buyer expressly waives the inspection contingency
• d.Of a home sold without any real estate licensee involved

The exempt transfers include court-ordered transfers, foreclosure-related transfers, fiduciary transfers, transfers between co-owners, transfers to a spouse, child, parent, sibling, grandchild or grandparent, and transfers of newly constructed residential real property that has never been occupied. Cite: SDCL 43-4-43.