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MN Real Estate Exam - State Portion > MN Real Estate Brokerage Law > Flashcards

MN Real Estate Brokerage Law Flashcards

1
Q

A Minnesota broker must disclose whom he represents before negotiations begin

A

True

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2
Q

A real estate broker’s trust account must pay the highest current passbook savings account rate of interest.

A

True - Interest is paid to the Minnesota Housing Trust Fund

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3
Q

Rents and security deposits held by a property manager would NOT be considered trust funds

A

False - Rents and security deposits must be deposited in the trust account unless directed otherwise by the property owner.

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4
Q

A tenant’s damage deposit must start to accrue interest no later than the second month after receipt by the landlord.

A

False - The landlord must pay interest from the first month

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5
Q

An auctioneer who has been employed to auction real estate is required to hold a real estate license.

A

True - This is true, unless under the direction of an attorney or broker

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6
Q

The Agency Relationships in Real Estate Transactions form must be provided to consumers prior to accepting an offer.

A

False - At the first substantive contact

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7
Q

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.

A

False - license is required if more than 25 transactions occur

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8
Q

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

A

False - Only parties to the transaction may share a commission

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9
Q

A promissory note taken as earnest money must be delivered to an escrow agent who, along with the offeror, must sign an escrow agreement.

A

True

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10
Q

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.

A

True

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11
Q

A salesperson who represents a prospective buyer must reveal her relationship to the seller or the listing broker prior to showing the property.

A

True

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12
Q

The Commissioner is authorized to examine records of a broker’s trust account.

A

True

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13
Q

The Commissioner will hear and settle disputes between licensees over commissions.

A

False - The Commissioner does not settle disputes between licensees

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14
Q

The Commissioner may make a public investigation and bring action against a licensee who is in violation of the license law

A

True

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15
Q

Real estate licensees fall under the Commissioner’s purview.

A

True

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16
Q

The Commissioner hears ethics complaints from the public.

A

False - Ethics complaints are generally handled by the Associations

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17
Q

Prior to closing, a broker may withdraw money from his trust account if the broker has the consent of the seller.

A

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

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18
Q

A broker may transfer her commission from her trust account to her private account prior to closing of a real estate transaction.

A

False - Commissions are paid after the closing, not prior to closing

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19
Q

A broker must place earnest money deposits entrusted to her into a secured business account.

A

False - She must place earnest money in a trust account

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20
Q

Earnest money deposits must be in the form of cash.

A

False - seller may choose to accept a non-depositable item in lieu of cash

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21
Q

The broker may be authorized to hold earnest money until the offer is accepted or rejected

A

True

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22
Q

A licensee could have his license suspended or revoked for including an expiration date on a listing agreement.

A

False - An expiration date is required on all listing agreements

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23
Q

A licensee could have her license suspended or revoked for failing to give the purchaser a copy of the offer to purchase.

A

True

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24
Q

The amount or method for computing compensation must be included in a listing agreement.

A

True

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25
Q

Changing a home address does NOT require notifying the commissioner.

A

False - Any change of information of the license application requires notification of the Commissioner within 10 days.

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26
Q

A licensee may NOT pay money to an unlicensed person for assistance in the procurement of a listing

A

True

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27
Q

If a broker terminates a salesperson, the broker must notify the Board of Realtors®.

A

False - The broker must notify the Commissioner of commerce

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28
Q

A salesperson must inform the seller that she has obtained an offer to purchase the property from a prospective buyer within 72 hours.

A

False - Offers must be presented promptly

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29
Q

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.

A

False - This only applies if the corporate license is suspended or revoked.

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30
Q

A salesperson may utilize the automatic transfer provision to transfer his license from one broker to another.

A

True

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31
Q

Before a corporation can enter the real estate business, a broker’s license must be issued to the corporation itself.

A

True

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32
Q

The broker must include the property owner’s name in all advertising.

A

False - The broker must include the broker’s name

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33
Q

There must be a written listing agreement with the owner before advertising a property in print.

A

True

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34
Q

If a broker changes her place of business, she is required to telephone the Commissioner immediately to advise of the change.

A

False - She must notify in writing within 10 days

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35
Q

A licensee charged with a felony need only notify the Com- missioner if the charge involves fraud, misrepresentation, or conversion.

A

False - Any felony charge requires notification of the Commissioner

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36
Q

A listing agreement may contain an automatic extension clause.

A

False - Automatic extension (holdover) is illegal

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37
Q

A dual agency disclosure must appear in each listing agreement.

A

True

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38
Q

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

A

True

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39
Q

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.

A

False - Brokers must disclose any family or business relationships

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40
Q

The closing agent is legally responsible for paying the salesperson’s commission directly to the salesperson

A

False - Commissions are paid to the broker. The broker is the only one who can pay commissions to the salesperson

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41
Q

To represent both the buyer and seller, an agent must have the written consent of all parties to the transaction

A

True

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42
Q

Loan brokers must deposit funds received into an escrow account no later than the next business day after receipt.

A

False - The funds must be deposited within 48 hours after receipt

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43
Q

Clients have a 4-day right to rescind a contract with a loan broker.

A

False - Clients have 3 business days

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44
Q

A real estate licensee must complete at least 30 hours of continuing education every year.

A

False - 30 hours per license period must be completed, which is every two years

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45
Q

In a corporation licensed as a broker, all officers licensed individually as brokers are considered primary or principal brokers.

A

True

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46
Q

The deadline for timely renewal of a real estate license is June 30.

A

False - The deadline is June 15 of renewal year

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47
Q

salesperson who has been convicted of a felony must notify her broker within 10 days of being charged.

A

False - She must notify the Commissioner within 10 days

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48
Q

A licensee who has been issued a speeding ticket must notify the Commissioner within 10 days.

A

False - This is not a felony and not a gross misdemeanor related to fraud, misrepresentation, and so on.

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49
Q

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.

A

True - Brokers cannot write NSF checks

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50
Q

A closing agent may collect a fee for conducting a real property settlement.

A

True - This is true as long as the closing agent discloses at least 1 business day before closing

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51
Q

As long as the buyer agrees to purchase a property “as is”, the agent is NOT required to disclose negative facts about the property.

A

False - Licensees must always disclose material facts

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52
Q

Earnest money must be deposited into the listing broker’s trust account within 24 hours after offer acceptance.

A

False - It must be deposited by the third business day after receipt by the listing broker

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53
Q

The broker may hold earnest money after the offer is accepted with the approval of both parties.

A

True

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54
Q

Commission payments received from clients must be deposited in the broker’s trust account.

A

False - Commissions are not trust funds, belong to the broker, and would be deposited into the broker’s own account.

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55
Q

If a broker wishes to close his trust account, he must give the Commissioner 10 days’ prior written notice.

A

True

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56
Q

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.

A

True

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57
Q

The Commissioner must provide a 10-day notice prior to inspecting a broker’s trust account.

A

False - The Commissioner may inspect at any time.

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58
Q

A broker who deposits a commission check in her trust account may be charged with conversion.

A

False - She may be charged with commingling—mixing personal funds with trust funds. Conversion involves using trust funds for personal use

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59
Q

The Commissioner may inspect a broker’s trust account and records at any time without notice

A

True

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60
Q

A commercial property manager must deposit security deposits and rents collected from tenants into her broker’s trust account.

A

True

61
Q

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.

A

False - The maximum is $150,000 per transaction with a maximum od $250,000 per salesperson

62
Q

Funds can be disbursed from a trust account when there is written agreement between the seller and the listing agent.

A

False - The written agreement must be between the seller and buyer

63
Q

When a sales contract is cancelled through no fault of the buyer, the earnest money is returned to the buyer.

A

True - The earnest money should be returned immediately

64
Q

Before a salesperson license is issued, the applicant must pass a Bureau of Criminal Affairs (BCA) background check.

A

True

65
Q

An individual licensed as a limited broker may purchase more than five properties in a year.

A

True

66
Q

The minimum age to hold a Minnesota real estate license is 18 years old.

A

True

67
Q

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

A

False - The applicant must have experience for 3 of the last 5 years

68
Q

In order for a corporation to obtain a broker’s license, only one officer must be licensed as a broker.

A

True

69
Q

Real estate licenses expire on December 31.

A

False - They expire on June 30th

70
Q

Every real estate license expires 2 years after issuance

A

False - They expire June 30 at the end of the licensee’s license period

71
Q

salesperson must apply for a license within 6 months of passing the license exam.

A

False - They must apply within 1 year

72
Q

If the primary broker dies or becomes incapacitated, the Commissioner may issue a 120-day temporary permit to a qualified salesperson.

A

False - A 45-day temporary permit may be issued

73
Q

The personnel director/officer of a large corporation who refers a client may be compensated by a Minnesota broker.

A

False - Brokers may not compensate unlicensed individuals

74
Q

An attorney representing a client in selling a residence must have a real estate license

A

False - A licensed practicing attorney is exempt

75
Q

licensed Minnesota broker may share his commission with a licensed broker from another state who referred the client.

A

True

76
Q

A seller wishing to reimburse a salesperson for out-of-pocket expenses must pay the salesperson’s broker

A

False - Clients may reimburse sales- people directly for out-of-pocket expenses.

77
Q

Negotiating a mortgage loan for a non-residential property requires a real estate broker’s license.

A

True

78
Q

An employee of an apartment building owner negotiating leases in the building must be licensed

A

False - Employees leasing space in an employer’s residential property are exempt

79
Q

real estate license allows an individual to collect a fee for helping another sell a business.

A

True

80
Q

An auctioneer who is selling property under direction of an attorney must hold a real estate license.

A

False - Auctioneers are exempt when supervised by an attorney of a real estate broker.

81
Q

court appointed executor who is selling the property of a deceased person under a court order must hold a real estate license.

A

False - Court appointed individuals are exempt from licensing requirements

82
Q

The dual agency disclosure in the purchase agreement must be signed by the licensee

A

False - It must be signed by the buyer and seller

83
Q

A licensee providing services but NOT representation to a buyer is an executor.

A

False - A Facilitator

84
Q

When a facilitator shows a property listed by the facilitator’s broker, the facilitator is considered a dual agent.

A

False - The facilitator is considered a Seller’s Broker

85
Q

A salesperson working with a buyer for the first time must give the buyer a form describing dual agency

A

True

86
Q

A listing broker must verbally disclose agency relationships at the first substantive contact with a buyer.

A

False - Disclosure must be in writing

87
Q

All parties—salesperson, seller, and buyer—must sign the dual agency disclosure and consent in the purchase agreement.

A

False - Only the seller and buyer must sign

88
Q

The listing broker must deposit earnest money into the trust account within 48 hours of receipt.

A

False - Earnest money must be deposited within 3 business days

89
Q

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

A

True - But not more than $150,000 per claim

90
Q

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.

A

False - This only applies to the sale of a business

91
Q

When one broker lists and sells a property, a dual agency necessarily exists.

A

False - It only exists if the broker also represents the buyer

92
Q

Each broker must retain copies of listings, deposit receipts, canceled checks, and trust account records for 7 years.

A

False - Each broker must retain copies for 6 years

93
Q

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.

A

False - The disclosure must happen prior to execution of a listing agreement

94
Q

The maximum civil fine levied by the Commissioner may NOT exceed $10,000

A

True

95
Q

Residential mortgage loan originators must have a real estate license.

A

False - They must have a mortgage license

96
Q

In a 2-year licensing period, a real estate salesperson must complete continuing education that includes 2 hours of agency

A

False - The requirement is 1 hour of agency and 1 hour of fair housing

97
Q

If a broker dies or becomes incapacitated, a qualified salesperson may be issued a 180-day temporary broker’s permit.

A

False - A 45-day permit may be issued

98
Q

Errors and omissions insurance would cover the broker if he had a car accident while driving a buyer to view property.

A

False - Errors and omissions insurance covers errors and omissions in documents.

99
Q

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.

A

True

100
Q

Placing money belonging to a client in a broker’s personal account is redlining

A

False - This is comingling

101
Q

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.

A

It should be delivered at the time of closing and settlement

102
Q

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.

A

True

103
Q

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

A

True

104
Q

Applications for recovery from the real estate education, research, and recovery fund must be placed within 6 months after the judgment become final.

A

False - Applications must be placed within 1 year

105
Q

A limited broker may hold the license of salespeople

A

False - Limited brokers may not represent others

106
Q

A limited broker may represent himself as principal in an unlimited number of real estate transactions.

A

True

107
Q

If the primary broker’s license is revoked, the salespersons’ licenses she holds are ineffective.

A

True

108
Q

A salesperson with an ineffective license must reapply, take the examination, and obtain a new license.

A

False - A salesperson must transfer her license to a new primary broker

109
Q

If a licensee’s license is revoked, he may not reapply for at LEAST 24 months.

A

True

110
Q

A licensee could have his license suspended or revoked for placing a For Sale sign on a property without the seller’s permission

A

True

111
Q

A listing salesperson may ALWAYS state the seller will accept a promissory note as an earnest money deposit.

A

False - The listing salesperson must have seller’s approval to accept a promissory note.

112
Q

A real estate broker must retain copies of all documents pertaining to a transaction for a minimum period of 3 years.

A

False - The minimum retention time is 6 years

113
Q

The broker’s property management fee is considered to be trust funds and must be placed in a trust account.

A

False - Commissions belong to the broker and this would be considered commingling.

114
Q

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.

A

False - This is only allowable if authorized by the broker

115
Q

A person must hold a real estate license to sell three of his own properties in a 12-month period.

A

False - A person must hold a real estate license to complete five or more transactions in a 12-month period

116
Q

A salesperson may receive compensation for her services from the seller.

A

False - She may only receive compensation from the broker

117
Q

All real estate licenses expire on December 31.

A

False - They expire June 30 at the end of the license period

118
Q

A salesperson must apply for a license within 180 days of successfully passing the real estate exam.

A

False - A salesperson must apply within 1 year

119
Q

A broker must disclose any material facts pertaining to the property of which he is aware

A

True

120
Q

A listing agreement must contain a negotiable commission clause.

A

True

121
Q

A trustee selling property for a private trust for a fee must be licensed or hire a licensee.

A

True - Only court-appointed trustees are exempt

122
Q

An individual who lists, sells, or exchanges mobile homes without land must hold a real estate license.

A

False - A mobile home is considered personal property until it is affixed to real estate.

123
Q

An executor selling a property after probate for a fee is exempt from licensing requirements.

A

True

124
Q

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.

A

True

125
Q

Anyone who negotiates, lists, and exchanges real property for another and a fee must hold a real estate license

A

True

126
Q

A salesperson may be licensed to a licensed Minnesota broker who resides in another state.

A

True

127
Q

Real estate brokers are required to provide errors and omissions insurance for their salespeople.

A

False - A broker may require their salespeople to buy errors and omissions insurance

128
Q

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.

A

False - The salesperson’s primary broker is responsible for providing adequate supervision.

129
Q

The salesperson is paid a commission at closing.

A

False - The Brokers Commission is paid at closing

130
Q

The salesperson’s commission is paid from the broker’s trust account.

A

False - The commission is paid from the broker’s general business (private) account—commissions must never go into the trust account (commingling).

131
Q

In order to obtain a Minnesota real estate license, the applicant must be at LEAST 18 years old.

A

True

132
Q

A licensee must keep it a secret from a buyer that the owner is selling because of water problems in the basement.

A

False - The licensee must disclose

133
Q

A licensee may pay a portion of a commission to a party to the transaction.

A

True

134
Q

An executor of an estate would need a real estate license to sell property after probate.

A

False - An executor of an estate is exempt from license law

135
Q

Copies of all documents pertaining to the sale of a property must be given to all parties to the transaction at closing.

A

False - Copies should be given when they signed or otherwise become available.

136
Q

A licensee found in violation of Minnesota Real Estate Law is guilty of a gross misdemeanor.

A

True

137
Q

A broker may give compensation or other items of value to an unlicensed property owner who listed and sold the property through the broker.

A

True - This is true, as long as the owner is a party to the transaction

138
Q

A broker may pay commissions to a corporation solely owned by a salesperson

A

True

139
Q

An on-site property manager must have a license to lease units in the building.

A

False - An on-site property manager is exempt

140
Q

In selling her own house, a licensed salesperson must list the house with a broker.

A

False - She must disclose to buyers that she is licensed

141
Q

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.

A

True

142
Q

A salesperson must disclose her license status only when selling her own property

A

False - Licensees must disclose their status in all transactions

143
Q

A licensee is required to disclose her company’s name in every transaction.

A

True

144
Q

Minnesota trust account requirements allow commingling of trust and business funds

A

False - Exception is funds used to maintain accounts

145
Q

In order to advertise a property, a broker must identify himself as a licensed real estate broker in the advertisement.

A

True

146
Q

In order to obtain a real estate license, the applicant must have a high school diploma.

A

False - No diploma is required

147
Q

In Minnesota, a salesperson must be licensed to act on behalf of a Minnesota broker.

A

True

148
Q

A salesperson licensed in Minnesota must be a resident of Minnesota.

A

False - There is no residency requirement

149
Q

A broker may kick back a portion of her commission to the buyer of her listing.

A

True

MN Real Estate Exam - State Portion (4 decks)

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