MN Real Estate Brokerage Law Flashcards
A Minnesota broker must disclose whom he represents before negotiations begin
True
A real estate broker’s trust account must pay the highest current passbook savings account rate of interest.
True - Interest is paid to the Minnesota Housing Trust Fund
Rents and security deposits held by a property manager would NOT be considered trust funds
False - Rents and security deposits must be deposited in the trust account unless directed otherwise by the property owner.
A tenant’s damage deposit must start to accrue interest no later than the second month after receipt by the landlord.
False - The landlord must pay interest from the first month
An auctioneer who has been employed to auction real estate is required to hold a real estate license.
True - This is true, unless under the direction of an attorney or broker
The Agency Relationships in Real Estate Transactions form must be provided to consumers prior to accepting an offer.
False - At the first substantive contact
A person who is in the business of constructing commercial buildings for the purpose of resale is required to have a real estate license if more than five such transactions occur in any 12-month period.
False - license is required if more than 25 transactions occur
A real estate broker may share a commission with a friend for referring a prospective purchaser as long as the friend is a limited broker
False - Only parties to the transaction may share a commission
A promissory note taken as earnest money must be delivered to an escrow agent who, along with the offeror, must sign an escrow agreement.
True
If the licensee represents a potential buyer, this must be disclosed to a potential seller before discussing anything which could affect the seller’s bargaining position.
True
A salesperson who represents a prospective buyer must reveal her relationship to the seller or the listing broker prior to showing the property.
True
The Commissioner is authorized to examine records of a broker’s trust account.
True
The Commissioner will hear and settle disputes between licensees over commissions.
False - The Commissioner does not settle disputes between licensees
The Commissioner may make a public investigation and bring action against a licensee who is in violation of the license law
True
Real estate licensees fall under the Commissioner’s purview.
True
The Commissioner hears ethics complaints from the public.
False - Ethics complaints are generally handled by the Associations
Prior to closing, a broker may withdraw money from his trust account if the broker has the consent of the seller.
False - Prior to closing, a broker may withdraw money from his trust account if the broker has the con- sent of both parties to the transaction—the buyer and the seller
A broker may transfer her commission from her trust account to her private account prior to closing of a real estate transaction.
False - Commissions are paid after the closing, not prior to closing
A broker must place earnest money deposits entrusted to her into a secured business account.
False - She must place earnest money in a trust account
Earnest money deposits must be in the form of cash.
False - seller may choose to accept a non-depositable item in lieu of cash
The broker may be authorized to hold earnest money until the offer is accepted or rejected
True
A licensee could have his license suspended or revoked for including an expiration date on a listing agreement.
False - An expiration date is required on all listing agreements
A licensee could have her license suspended or revoked for failing to give the purchaser a copy of the offer to purchase.
True
The amount or method for computing compensation must be included in a listing agreement.
True
Changing a home address does NOT require notifying the commissioner.
False - Any change of information of the license application requires notification of the Commissioner within 10 days.
A licensee may NOT pay money to an unlicensed person for assistance in the procurement of a listing
True
If a broker terminates a salesperson, the broker must notify the Board of Realtors®.
False - The broker must notify the Commissioner of commerce
A salesperson must inform the seller that she has obtained an offer to purchase the property from a prospective buyer within 72 hours.
False - Offers must be presented promptly
If the individual broker’s license of an officer of a corporation is suspended or revoked, the individual licenses of all salespersons acting on behalf of the corporation are automatically ineffective.
False - This only applies if the corporate license is suspended or revoked.
A salesperson may utilize the automatic transfer provision to transfer his license from one broker to another.
True
Before a corporation can enter the real estate business, a broker’s license must be issued to the corporation itself.
True
The broker must include the property owner’s name in all advertising.
False - The broker must include the broker’s name
There must be a written listing agreement with the owner before advertising a property in print.
True
If a broker changes her place of business, she is required to telephone the Commissioner immediately to advise of the change.
False - She must notify in writing within 10 days
A licensee charged with a felony need only notify the Com- missioner if the charge involves fraud, misrepresentation, or conversion.
False - Any felony charge requires notification of the Commissioner
A listing agreement may contain an automatic extension clause.
False - Automatic extension (holdover) is illegal
A dual agency disclosure must appear in each listing agreement.
True
If a broker wishes to enforce the override clause, he must furnish a seller with a protective list of all the persons to whom he showed the property within 72 hours of expiration of the listing
True
The listing broker may allow his salesperson to place the first bid on a listed property without informing the seller of the identity of the prospective purchaser.
False - Brokers must disclose any family or business relationships
The closing agent is legally responsible for paying the salesperson’s commission directly to the salesperson
False - Commissions are paid to the broker. The broker is the only one who can pay commissions to the salesperson
To represent both the buyer and seller, an agent must have the written consent of all parties to the transaction
True
Loan brokers must deposit funds received into an escrow account no later than the next business day after receipt.
False - The funds must be deposited within 48 hours after receipt
Clients have a 4-day right to rescind a contract with a loan broker.
False - Clients have 3 business days
A real estate licensee must complete at least 30 hours of continuing education every year.
False - 30 hours per license period must be completed, which is every two years
In a corporation licensed as a broker, all officers licensed individually as brokers are considered primary or principal brokers.
True
The deadline for timely renewal of a real estate license is June 30.
False - The deadline is June 15 of renewal year
salesperson who has been convicted of a felony must notify her broker within 10 days of being charged.
False - She must notify the Commissioner within 10 days
A licensee who has been issued a speeding ticket must notify the Commissioner within 10 days.
False - This is not a felony and not a gross misdemeanor related to fraud, misrepresentation, and so on.
It is a prohibited act for the broker to write a check from the trust account for an amount greater than the balance of the account.
True - Brokers cannot write NSF checks
A closing agent may collect a fee for conducting a real property settlement.
True - This is true as long as the closing agent discloses at least 1 business day before closing
As long as the buyer agrees to purchase a property “as is”, the agent is NOT required to disclose negative facts about the property.
False - Licensees must always disclose material facts
Earnest money must be deposited into the listing broker’s trust account within 24 hours after offer acceptance.
False - It must be deposited by the third business day after receipt by the listing broker
The broker may hold earnest money after the offer is accepted with the approval of both parties.
True
Commission payments received from clients must be deposited in the broker’s trust account.
False - Commissions are not trust funds, belong to the broker, and would be deposited into the broker’s own account.
If a broker wishes to close his trust account, he must give the Commissioner 10 days’ prior written notice.
True
A broker may keep his own money in his trust account as long as it is identified as funds to maintain the account; pay checking fees, minimum balance, and so forth.
True
The Commissioner must provide a 10-day notice prior to inspecting a broker’s trust account.
False - The Commissioner may inspect at any time.
A broker who deposits a commission check in her trust account may be charged with conversion.
False - She may be charged with commingling—mixing personal funds with trust funds. Conversion involves using trust funds for personal use
The Commissioner may inspect a broker’s trust account and records at any time without notice
True
A commercial property manager must deposit security deposits and rents collected from tenants into her broker’s trust account.
True
When money damages are paid out of the real estate education, research, and recovery fund on behalf of a licensee, the maximum per transaction is $10,000.
False - The maximum is $150,000 per transaction with a maximum od $250,000 per salesperson
Funds can be disbursed from a trust account when there is written agreement between the seller and the listing agent.
False - The written agreement must be between the seller and buyer
When a sales contract is cancelled through no fault of the buyer, the earnest money is returned to the buyer.
True - The earnest money should be returned immediately
Before a salesperson license is issued, the applicant must pass a Bureau of Criminal Affairs (BCA) background check.
True
An individual licensed as a limited broker may purchase more than five properties in a year.
True
The minimum age to hold a Minnesota real estate license is 18 years old.
True
In order to obtain a broker’s license, the applicant must have experience as a licensed salesperson for at LEAST 2 of the past 5 years
False - The applicant must have experience for 3 of the last 5 years
In order for a corporation to obtain a broker’s license, only one officer must be licensed as a broker.
True
Real estate licenses expire on December 31.
False - They expire on June 30th
Every real estate license expires 2 years after issuance
False - They expire June 30 at the end of the licensee’s license period
salesperson must apply for a license within 6 months of passing the license exam.
False - They must apply within 1 year
If the primary broker dies or becomes incapacitated, the Commissioner may issue a 120-day temporary permit to a qualified salesperson.
False - A 45-day temporary permit may be issued
The personnel director/officer of a large corporation who refers a client may be compensated by a Minnesota broker.
False - Brokers may not compensate unlicensed individuals
An attorney representing a client in selling a residence must have a real estate license
False - A licensed practicing attorney is exempt
licensed Minnesota broker may share his commission with a licensed broker from another state who referred the client.
True
A seller wishing to reimburse a salesperson for out-of-pocket expenses must pay the salesperson’s broker
False - Clients may reimburse sales- people directly for out-of-pocket expenses.
Negotiating a mortgage loan for a non-residential property requires a real estate broker’s license.
True
An employee of an apartment building owner negotiating leases in the building must be licensed
False - Employees leasing space in an employer’s residential property are exempt
real estate license allows an individual to collect a fee for helping another sell a business.
True
An auctioneer who is selling property under direction of an attorney must hold a real estate license.
False - Auctioneers are exempt when supervised by an attorney of a real estate broker.
court appointed executor who is selling the property of a deceased person under a court order must hold a real estate license.
False - Court appointed individuals are exempt from licensing requirements
The dual agency disclosure in the purchase agreement must be signed by the licensee
False - It must be signed by the buyer and seller
A licensee providing services but NOT representation to a buyer is an executor.
False - A Facilitator
When a facilitator shows a property listed by the facilitator’s broker, the facilitator is considered a dual agent.
False - The facilitator is considered a Seller’s Broker
A salesperson working with a buyer for the first time must give the buyer a form describing dual agency
True
A listing broker must verbally disclose agency relationships at the first substantive contact with a buyer.
False - Disclosure must be in writing
All parties—salesperson, seller, and buyer—must sign the dual agency disclosure and consent in the purchase agreement.
False - Only the seller and buyer must sign
The listing broker must deposit earnest money into the trust account within 48 hours of receipt.
False - Earnest money must be deposited within 3 business days
Regardless of the number of claims against a licensee, the Real Estate Education Research and Recovery Fund may not be obligated to pay out more than $250,000 for any one licensee
True - But not more than $150,000 per claim
A listing agreement may contain an override (broker protection) clause of up to 2 years in length when used in conjunction with the purchase or sale of residential properties.
False - This only applies to the sale of a business
When one broker lists and sells a property, a dual agency necessarily exists.
False - It only exists if the broker also represents the buyer
Each broker must retain copies of listings, deposit receipts, canceled checks, and trust account records for 7 years.
False - Each broker must retain copies for 6 years
If offering a guaranteed sale program, the broker must disclose the terms and disposition of any resale profit prior to the execution of a purchase agreement.
False - The disclosure must happen prior to execution of a listing agreement
The maximum civil fine levied by the Commissioner may NOT exceed $10,000
True
Residential mortgage loan originators must have a real estate license.
False - They must have a mortgage license
In a 2-year licensing period, a real estate salesperson must complete continuing education that includes 2 hours of agency
False - The requirement is 1 hour of agency and 1 hour of fair housing
If a broker dies or becomes incapacitated, a qualified salesperson may be issued a 180-day temporary broker’s permit.
False - A 45-day permit may be issued
Errors and omissions insurance would cover the broker if he had a car accident while driving a buyer to view property.
False - Errors and omissions insurance covers errors and omissions in documents.
A broker who uses earnest money given to him as part of a property purchase to pay a portion of his business rent is guilty of conversion.
True
Placing money belonging to a client in a broker’s personal account is redlining
False - This is comingling
Earnest money that has been deposited in a trust account and held by a broker should be delivered to the seller upon final acceptance of the offer to purchase.
It should be delivered at the time of closing and settlement
The purpose of the Real Estate Education Research and Recovery fund is to reimburse persons who suffer monetary damages by reason of the improper business dealings of a licensee.
True
When money damages are paid out of the real estate education, research, and recovery fund on behalf of a licensee, the license of the licensee involved is automatically suspended
True
Applications for recovery from the real estate education, research, and recovery fund must be placed within 6 months after the judgment become final.
False - Applications must be placed within 1 year
A limited broker may hold the license of salespeople
False - Limited brokers may not represent others
A limited broker may represent himself as principal in an unlimited number of real estate transactions.
True
If the primary broker’s license is revoked, the salespersons’ licenses she holds are ineffective.
True
A salesperson with an ineffective license must reapply, take the examination, and obtain a new license.
False - A salesperson must transfer her license to a new primary broker
If a licensee’s license is revoked, he may not reapply for at LEAST 24 months.
True
A licensee could have his license suspended or revoked for placing a For Sale sign on a property without the seller’s permission
True
A listing salesperson may ALWAYS state the seller will accept a promissory note as an earnest money deposit.
False - The listing salesperson must have seller’s approval to accept a promissory note.
A real estate broker must retain copies of all documents pertaining to a transaction for a minimum period of 3 years.
False - The minimum retention time is 6 years
The broker’s property management fee is considered to be trust funds and must be placed in a trust account.
False - Commissions belong to the broker and this would be considered commingling.
An unlicensed receptionist in a real estate office, without authorization of the broker, is allowed to give the general public the price, terms, taxes, and so on about a listed property.
False - This is only allowable if authorized by the broker
A person must hold a real estate license to sell three of his own properties in a 12-month period.
False - A person must hold a real estate license to complete five or more transactions in a 12-month period
A salesperson may receive compensation for her services from the seller.
False - She may only receive compensation from the broker
All real estate licenses expire on December 31.
False - They expire June 30 at the end of the license period
A salesperson must apply for a license within 180 days of successfully passing the real estate exam.
False - A salesperson must apply within 1 year
A broker must disclose any material facts pertaining to the property of which he is aware
True
A listing agreement must contain a negotiable commission clause.
True
A trustee selling property for a private trust for a fee must be licensed or hire a licensee.
True - Only court-appointed trustees are exempt
An individual who lists, sells, or exchanges mobile homes without land must hold a real estate license.
False - A mobile home is considered personal property until it is affixed to real estate.
An executor selling a property after probate for a fee is exempt from licensing requirements.
True
Non-licensed people are allowed to give out information about listings if the information has been prepared by a licensee and approved by the broker.
True
Anyone who negotiates, lists, and exchanges real property for another and a fee must hold a real estate license
True
A salesperson may be licensed to a licensed Minnesota broker who resides in another state.
True
Real estate brokers are required to provide errors and omissions insurance for their salespeople.
False - A broker may require their salespeople to buy errors and omissions insurance
If a salesperson loses his license for acting improperly during a real estate transaction, the license of the salesperson’s branch manager may also be subject to revocation.
False - The salesperson’s primary broker is responsible for providing adequate supervision.
The salesperson is paid a commission at closing.
False - The Brokers Commission is paid at closing
The salesperson’s commission is paid from the broker’s trust account.
False - The commission is paid from the broker’s general business (private) account—commissions must never go into the trust account (commingling).
In order to obtain a Minnesota real estate license, the applicant must be at LEAST 18 years old.
True
A licensee must keep it a secret from a buyer that the owner is selling because of water problems in the basement.
False - The licensee must disclose
A licensee may pay a portion of a commission to a party to the transaction.
True
An executor of an estate would need a real estate license to sell property after probate.
False - An executor of an estate is exempt from license law
Copies of all documents pertaining to the sale of a property must be given to all parties to the transaction at closing.
False - Copies should be given when they signed or otherwise become available.
A licensee found in violation of Minnesota Real Estate Law is guilty of a gross misdemeanor.
True
A broker may give compensation or other items of value to an unlicensed property owner who listed and sold the property through the broker.
True - This is true, as long as the owner is a party to the transaction
A broker may pay commissions to a corporation solely owned by a salesperson
True
An on-site property manager must have a license to lease units in the building.
False - An on-site property manager is exempt
In selling her own house, a licensed salesperson must list the house with a broker.
False - She must disclose to buyers that she is licensed
broker showing a property to a prospective buyer notices new water stains even though the seller said the problem was fixed. The Broker must disclose the issue to the buyer.
True
A salesperson must disclose her license status only when selling her own property
False - Licensees must disclose their status in all transactions
A licensee is required to disclose her company’s name in every transaction.
True
Minnesota trust account requirements allow commingling of trust and business funds
False - Exception is funds used to maintain accounts
In order to advertise a property, a broker must identify himself as a licensed real estate broker in the advertisement.
True
In order to obtain a real estate license, the applicant must have a high school diploma.
False - No diploma is required
In Minnesota, a salesperson must be licensed to act on behalf of a Minnesota broker.
True
A salesperson licensed in Minnesota must be a resident of Minnesota.
False - There is no residency requirement
A broker may kick back a portion of her commission to the buyer of her listing.
True
