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SOUTH DAKOTA REAL ESTATE SALESPERSON &
BROKER PRACTICE EXAM QUESTIONS AND
CORRECT ANSWERS (VERIFIED ANSWERS) PLUS
RATIONALES 2025
- What is the primary purpose of the South Dakota Real Estate Commission? A. To represent real estate agents in legal matters B. To promote housing development C. To protect the public through regulation of licensees D. To set property values The Commission's role is to regulate the real estate industry to protect the public interest, ensuring ethical and competent practices.
- In South Dakota, how often must a real estate license be renewed? A. Every 5 years B. Every year
C. Every 2 years D. Every 6 months Real estate licenses in South Dakota expire annually on December 31 and must be renewed each year.
- Which of the following actions requires a real estate license in South Dakota? A. Selling your own home B. Leasing your property to a tenant C. Representing another person for compensation in a real estate transaction D. Helping a friend move houses A license is required when you perform real estate services for another person for a fee or expectation of compensation.
- What type of agency relationship is created when a broker represents both buyer and seller with written consent? A. Subagency B. Dual agency C. Transaction brokerage D. Exclusive agency Dual agency involves representing both parties in a transaction, which requires written informed consent from both parties.
An open listing is non-exclusive and allows multiple agents; only the one who sells the property earns a commission.
- Which of the following would be considered a material fact that must be disclosed? A. The seller doesn’t like the neighbors B. The home was painted two years ago C. The basement floods every spring D. The owner wants to sell quickly Material facts that affect the value or desirability of the property, like flooding, must be disclosed.
- What must be included in every real estate advertising by a licensee? A. The property owner’s name B. The full property description C. The legal address D. The name of the brokerage All advertisements must clearly include the brokerage's name to ensure transparency and accountability.
- What is the South Dakota requirement for earnest money deposits? A. Must be given directly to the seller B. May be held indefinitely by the agent
C. Must be deposited into a trust account within 48 hours of acceptance D. Must be given to the title company South Dakota law requires earnest money to be placed into a trust account within 48 hours of contract acceptance (excluding weekends/holidays).
- A person who sells real estate without a license in South Dakota is guilty of: A. A civil offense only B. A Class 2 misdemeanor C. A felony D. A tax violation Conducting real estate activity without a license is a Class 2 misdemeanor under South Dakota law.
- How many members make up the South Dakota Real Estate Commission? A. 3 B. 5 C. 6 D. 7 The South Dakota Real Estate Commission consists of 6 members appointed by the Governor.
- A broker must retain all transaction records for how long in South Dakota?
- What is the term for land and everything permanently attached to it? A. Chattel B. Real property C. Personal property D. Trade fixtures Real property includes land, buildings, and anything permanently affixed to the land.
- What is the definition of steering? A. Guiding buyers toward or away from neighborhoods based on protected classes B. Showing only available properties C. Directing clients to financial resources D. Avoiding high-crime areas Steering is illegal and involves directing clients based on race, religion, or other protected characteristics.
- A property management agreement in South Dakota must: A. Be notarized B. Be verbal only C. Be in writing D. Include tenant background checks
All property management agreements must be in writing and outline the responsibilities of the broker and property owner.
- A buyer's agent owes fiduciary duties to: A. The seller B. The buyer C. The mortgage lender D. The escrow company A buyer’s agent represents the buyer and owes them fiduciary duties such as loyalty, disclosure, and confidentiality.
- In South Dakota, what kind of agency relationship does a licensee have by default without a written agreement? A. Single agency B. Transaction broker C. Dual agency D. Subagency By default, South Dakota licensees act as transaction brokers unless a written agreement states otherwise.
- What is the term for the process of taking private land for public use? A. Escheat B. Eminent domain
A. Civil Rights Act of 1968 (Fair Housing Act) B. RESPA C. ADA D. Sherman Act The Fair Housing Act prohibits housing discrimination based on race, color, religion, sex, national origin, familial status, or disability.
- The South Dakota Real Estate Recovery Fund is used to: A. Pay brokers a bonus B. Fund Commission salaries C. Reimburse consumers who suffer financial harm due to licensee misconduct D. Promote real estate marketing The Recovery Fund compensates consumers financially harmed by licensees who commit fraud or misrepresentation.
- Which type of deed offers the greatest protection to the grantee? A. Bargain and sale deed B. Quitclaim deed C. Special warranty deed D. General warranty deed A general warranty deed provides the most protection because it guarantees clear title back through the chain of ownership.
- Which of the following is considered a fixture? A. Area rug B. Built-in dishwasher C. Table lamp D. Curtains A fixture is something permanently affixed to the property, such as a built- in dishwasher.
- What is the purpose of a CMA (Comparative Market Analysis)? A. To determine property taxes B. To evaluate loan risk C. To estimate a property's market value D. To establish the appraisal value A CMA is prepared by a real estate licensee to help determine a property's market value based on comparable sales.
- Which document transfers ownership of real property? A. Lease B. Deed C. Mortgage D. Title insurance policy A deed is the legal document used to transfer ownership of real estate from one party to another.
- What does RESPA regulate? A. Fair housing B. Settlement and closing procedures C. Broker advertising D. Land development permits RESPA (Real Estate Settlement Procedures Act) ensures transparency in real estate closings and prohibits kickbacks.
- Which South Dakota law prohibits false or misleading real estate advertising? A. RESPA B. Truth in Lending Act C. South Dakota Codified Law (SDCL) 36-21A D. Uniform Commercial Code SDCL 36-21A governs licensing and professional conduct, including advertising rules for real estate professionals.
- A client gives specific instructions that a property must not be shown to people of a certain race. What should the licensee do? A. Follow the client's wishes B. Refuse and explain it violates Fair Housing laws C. Show only to preferred clients quietly D. Ignore the issue
Following such instructions would be illegal. The licensee must refuse and educate the client about fair housing laws.
- What does “time is of the essence” mean in a contract? A. The contract is binding immediately B. Deadlines must be strictly adhered to C. The contract must be notarized D. The buyer must pay interest “Time is of the essence” means parties must comply with all timeframes set in the contract.
- Who is legally responsible for the actions of a licensed real estate salesperson? A. The buyer B. The seller C. The supervising broker D. The real estate commission The supervising broker is accountable for the actions and conduct of the salesperson under their license.
- What type of lien takes priority over all others in South Dakota? A. Judgment lien B. Property tax lien C. Mortgage lien D. Mechanics lien
A contract is a legally enforceable agreement involving mutual obligations between parties.
- What is the purpose of title insurance? A. Guarantee market value B. Secure the mortgage loan C. Protect against defects in the title D. Replace homeowners insurance Title insurance protects buyers and lenders against title defects, liens, or encumbrances.
- The act of mixing a client’s funds with a broker’s personal funds is called: A. Conversion B. Commingling C. Interpleading D. Depositing Commingling is the illegal mixing of trust funds with personal or business funds.
- What is the primary difference between a licensee and an unlicensed assistant? A. Licensees work for free B. Licensees can perform real estate services for compensation
C. Assistants can draft contracts D. There is no difference Only licensed individuals can perform real estate services for compensation or negotiate terms.
- In a property sale, which document outlines the final terms and cost details of the transaction? A. Appraisal B. Title report C. Closing Disclosure D. Listing agreement The Closing Disclosure details final loan terms and costs and is provided to the buyer prior to settlement.
- What is the legal age to enter into a real estate contract in South Dakota? A. 17 B. 18 C. 21 D. 16 A person must be at least 18 to legally enter into a contract under South Dakota law.
- What is a latent defect?
A. Tell the inspector only B. Ignore it unless the buyer asks C. Disclose it to the buyer in writing D. Ask the seller to remove it Federal law requires disclosure of known lead-based paint hazards in homes built before 1978.
- If a buyer and seller agree to change the closing date, what document should be used? A. Termination agreement B. Listing addendum C. Contract addendum D. Purchase application An addendum is used to modify terms in the original contract while keeping it valid.
- What is puffing in real estate? A. Illegal misrepresentation B. Negligence C. Exaggerated opinion not meant to deceive D. False advertising Puffing involves opinions or exaggerations (e.g., “best view in town”) that are not legally binding misrepresentations.
- How long must a South Dakota broker retain records after a rejected offer? A. 1 year B. 2 years C. 3 years D. 5 years Even rejected offers must be retained by brokers for five years under South Dakota law.
- A broker fails to return a client’s deposit. This is an example of: A. Commingling B. Conversion C. Puffing D. Negligence Conversion is the illegal act of using client funds for personal purposes.
- Who typically conducts the closing in a South Dakota real estate transaction? A. The seller B. The title company or attorney C. The broker D. The appraiser A neutral third party, usually a title company or attorney, conducts the closing and ensures all paperwork is complete.
