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Real Estate Exam Review (MN and
National) Rated A
Attorney's Opinion of Title
a written opinion by an attorney who will investigate to make sure that the seller of the property is indeed the owner, and whether there are any "clouds" on the title such as encumbrances, claims, or questionable interests. To render this opinion, the attorney will review a search of public records and examine the abstract of title, which is a written history showing transfers of ownership.
exists in great part because of a comparative deficiency in the U.S. land records. Many years ago, legal descriptions were based on landmarks such as a prominent rock or tree, or a corner fence post. This form of title description, known as metes and bounds, was not very reliable because the landmarks could be moved or destroyed.
Land registration systems
title ownership and encumbrances on the title are based on the registration of the documents that affect or transfer the title. Except in the U.S., and a few other countries, a government's determination of ownership is conclusive.
Why title insurance?
most popular method of assuring clear title to a property.
Title Insurance Policy Types
- Lenders' policy - required by mortgagee if there is a mortgage involved
- Owner's policy - protects the owner
Quiet Title Suit
lawsuit to remove the cloud on title. Examples would include boundary disputes, or surveying mistakes.
Lis Pendens
Latin for "suit pending." It means notice has been given that a lawsuit will be filed which may affect title to the subject property.
Who needs an appraisal license in Minnesota?
Anyone who is doing appraisals needs an appraiser license; an appraisal cannot legally be done without it.
Appraisal license exam results cannot be more than two years (24 months) old at the time of application.
Trainee Real Property Appraiser
When a net income capitalization analysis is not required by the uniform standards of professional appraisal practice, a trainee real property appraiser may appraise residential real property or agricultural property
75 hours of education, including the 15 hour national USPAP Course.
Licensed Residential Real Property Appraiser
300 hours of education, including the 15 hour National USPAP Course and a bachelor's degree, or higher.
Temporary Practice
The commissioner shall issue a license for temporary practice or to a person certified or licensed by another state if:
- The property to be appraised is part of a federally related transaction
- The appraiser's business is of a temporary nature and
- The appraiser registers with the commissioner
The only time an appraiser license is not required is...
when an officer or employee of a corporation, partnership, or other business entity has an interest in the real estate that is the subject of the appraisal as owners, lenders, investors, or insurers.
all 1 to 4 family residential property appraisals that are federally related, require...
a state certified or licensed appraiser if the transaction is $250,000 or more.
Those 4 exempt from appraisal licensure in Minnesota:
Market analysis. The appraisal license statute does not apply to a licensed real estate salesperson or broker who, in the ordinary course of the licensee's business, gives a market analysis of the price of real estate, if the market analysis is not referred to or construed as an appraisal. You will learn the difference between the two in this section.
Assessors. The appraisal license statute does not apply to persons employed and acting in their capacity as assessors for political subdivisions (i.e., cities and counties) of the state. Assessed
value is different than appraised value. Assessed value is what property taxes are paid from and have little or nothing to do with market value or appraised value.
Geologists or engineers. The appraisal license statute does not apply to an appraisal, analysis, opinion, or conclusion as to the value of oil, gas, coal, and other mineral resources performed by an engineer.
Department of revenue. The appraisal license statute does not require persons employed by, or under contract to, the department of revenue to be licensed in order to perform, conduct, or assist in, an appraisal done within the scope of their employment duties.
What statute regulates the real estate industry in this MN
Chapter 82 of Minnesota Statutes
If a broker wishes to do business as a business entity; i.e., on her own or with a new group who is forming a company, what must she do first?
she must first submit a company application.
Requirements for becoming a broker (years of experience as a REA and within how many years.
Application deadline?
Applicants must have three years of licensed Minnesota salesperson experience within the five years prior to the date of application for a broker license in Minnesota or another state with comparable requirements. The broker applicant must also take a 30 hour course and pass the PSI Uniform and State Exams.
state or the United States
- public officers while performing their official duties
- any person who acts as an auctioneer
- any person who is licensed as a securities broker-dealer
- any person who offers to sell or sells franchise
- any person who contracts to provide continuing care in a facility, when acting solely as incident to the contract
If a valid automatic transfer is not filed...
the salesperson's license will automatically terminate
requirements for transfer broker
The transfer license application completed
The salesperson's educational requirements cannot be past due
The former primary broker is required to indicate the date and time, and then sign before the by the new primary broker.
The new broker must sign the transfer application form no more than five days after the former primary broker s (The salesperson is unlicensed for the period of time between the times and dates of both signatures).
An automatic transfer is effective as of the date and time that the new broker signs and dates the
transfer application form, provided that the transfer application and fee are received in the commerce department within 72 hours after the date and time of the new broker's signature, either by certified mail or personal delivery. ESIGN is okay and postmark is the only important part for the 72 hours
Temporary Broker's Permit
In the event of death or incapacity commissioner may issue a 45-day temporary permit to an individual who has had a minimum of three years actual experience as a licensed real estate salesperson
can be renewed once by the commissioner if the applicant demonstrates that he or she has made a good faith effort to obtain a broker's license
Termination of License
The broker will go on to the Minnesota Department of Commerce Pulse Portal website and fill out a form. Once that is completed, the cancellation is effective immediately. actual license must physically be returned, by the broker, to the Minnesota Commissioner of Commerce within ten days of termination.
Nolo contendere
to accept conviction through a guilty plea, but not to admit guilt.
Retention. A licensed real estate broker shall retain for six years copies of all...
If the offer is rejected, the check shall be returned to the potential buyer not later than the next business day after rejection
A broker or closing agent shall not close an existing trust account without giving...
ten days' written notice to the commissioner.
A broker may only share part of commissions with:
One of his/her own salespeople Any licensed real estate broker whether in Minnesota or another state A corporation owned by his/her salespeople A party involved in the real estate transaction (not a past client)
Nonperformance of party
Salespeople must disclose, immediately to all parties, if they have learned that one of the parties is going to back out of an agreement.
Submit a protective list:
consists of names of buyers who the listing agent has introduced the property to, or properties that the buyer's agent has introduced to the buyer. The agent in either case is claiming the right to a commission - must submit the protective list within 72 hours of expiration of a listing agreement or buyer representation agreement An important caveat: if the Andersons re-listed their home with another brokerage, then Sue's protective list, regardless of the time frame given for it, would be void, and not enforceable.
"Blue Sky" law
Licensees Must NOT
speculate about, or guarantee the future profits of real estate.
Sherman Anti-Trust Act
It is illegal for competing real estate brokers to "price-fix" by agreeing to charge a particular percentage of commission. If the topic ever comes up in a meeting, remove yourself from the discussion.
If a licensee violates any provision of Chapter 82,...
, that person "shall be guilty of a misdemeanor."
Errors and omissions (E&O) insurance protects
real estate licensees against lawsuits E&O coverage might have a large deductible (i.e., $2,500), but the potential personal loss is limited to that amount.
Real Estate Education, Research and Recovery Fund
set up by the Commissioner of Commerce. compensate any person who has lost money due to a licensed real estate broker, salesperson, or closing agent's deceptive or dishonest practices, The maximum claim for a single real estate transaction is $150, The maximum claim per real estate salesperson is $250, (This is a lifetime maximum for claims against an individual)
If the commissioner pays a judgment against a licensee, the license is automatically suspended
requirements of chapter 83, concerning subdivided land
promotes the sale of real estate by advertising it in a publication issued primarily for this purpose, if the person: negotiates on behalf of any party to a transaction; disseminates any information regarding the property to any party or potential party to a transaction subsequent to the publication of the advertisement, except that in response to an initial inquiry from a potential purchaser, the person may forward additional written information regarding the property which has been prepared prior to the publication by the seller or broker or a representative of either; counsels, advises, or offers suggestions to the seller or a representative of the seller with regard to the marketing, offer, sale, or lease of the real estate, whether prior to or subsequent to the publication of the advertisement; counsels, advises, or offers suggestions to a potential buyer or a representative of the seller with regard to the purchase or rental of any advertised real estate; or engages in any other activity otherwise subject to licensure
A person shall be presumed to be engaged in the business of selling real estate if the person engages as ...
principal in five or more transactions during any 12-month period, unless the person is represented by a licensed real estate broker or salesperson.
A Broker is not...
any person who acquires real estate for the purpose of engaging in and does engage in, or who is engaged in the business of constructing residential, commercial or industrial buildings for the purpose of resale if no more than 25 such transactions occur in any 12-month period
auctioneer
employee of the owner or manager of a residential building who leases residential units
who offers to sell or sells an interest or estate in real estate which is a security
who offers to sell or sells a business opportunity which is a franchise, when acting solely to sell the franchise
Brokers and salespeople have to do
either a 3.75 or 7.5 hour module training course every license year
the PSI Uniform and State Exams that you are preparing for in Course 1 will NEVER have to be retaken, as long as you keep your license active and in good standing. If a license lapses, a person has up to two years to reinstate it without having to retake the PSI Exams.
For an automatic transfer from one broker to another, you must
complete a Salesperson Automatic Transfer Application:
license of a salesperson will be immediately transferred without a lapse in licensure
department within 72 hours of the new broker's signature.)
The transfer is not effective as an automatic transfer if the application is not completed in its entirety, or the fee and application are not timely received in the commerce department.
Temporary Broker's Permit
n the event of death or incapacity of a broker, the commissioner may issue a 45-day temporary permit to an individual who has had a minimum of three years actual experience as a licensed real estate salesperson
Terminating a sales license
The salesperson's actual license must physically be returned, by the broker, to the Minnesota Commissioner of Commerce within ten days of termination.
Confidential information includes
Price - the price the client is willing to accept or pay Terms - the type of financing that will be accepted or can be offered Motivation - the needed time frame and reason(s) for buying or selling
Agency law has been in effect in Minnesota since...
October 1, 1993
Minnesota there are four options for agency relationships:
Seller buyer
Dual Facilitator
Procuring cause is a phrase that means
the commission was earned by the agent who procured a customer for a transaction (i.e., the agent who first introduced the customer to a particular property or held the open house that the buyer first visited.)
REAs six fiduciary duties are:
- Disclosure
- Reasonable Care: advise and guide
- Confidentiality
- Obedience
- Loyalty
- Accounting
Dr. Cola
The first time that price, terms, or motivation is discussed is considered..
.first substantive contact.
A listing agreement should include all of the following terms:
- A beginning date and a termination date
- The list price at which the property will be offered for sale 3The amount of compensation offered to the broker, whether it is in the form of a flat fee or
Are there any duties owed to customers with a facilitator agreement? The confidentiality and common courtesy that you would extend to any customer.
Definition of Subdivided Lands
"Any offering in Minnesota of more than ten parcels of real estate located outside of a Minnesota municipality.
Registration Requirements for subdivided land
Reg stuff +... If no stop order is in effect, no proceeding is pending, and no order has been issued, a registration statement automatically becomes effective at 5:00 in the afternoon on the 20th full business day after the filing of the registration statement or the last amendment, or at such earlier time as the commissioner by order determines.
If the developer wants to go back and add more subdivided land to the registration, the additional lots may be consolidated if they are contiguous (connected) to the previously registered land.
Securities Act.
Don't advertise property as an investment
MN Home Warranty Law
One- faulty workmanship and defective materials due to noncompliance with building standards
Two- plumbing, electrical, heating, and cooling systems due to noncompliance with building standards
Ten-major construction defects due to noncompliance with building standards
Home warranty coverage term The date of the buyer's first occupancy of the dwelling, or The date on which the buyer takes legal title to the dwelling
An order of specific performance from a court requires a
party to perform a specific act, usually what is stated in a contract.
Exclusions for the MN Home Warranty Law
6mos or more
Fair housing laws are based upon
the Civil Rights Act of 1866
In 1968 in Jones vs. Mayer, the US Supreme Court held that
the 1866 Act prohibits ALL forms of racial discrimination in real estate, whether committed by government or private parties.
Title VIII was amended in 1988 (effective March 12, 1989) by the Fair Housing Amendments Act, which: Expanded the coverage of the Fair Housing Act to prohibit discrimination based on
disability or on familial status
