Real Estate Brokerage License Law Flashcards
- The Commissioner will hear and settle disputes between licensees over commissions.
False
The Commissioner does not settle disputes between licensees.
- The Commissioner is authorized to examine records of a broker’s trust account.
True
- 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 consent 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
A 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
- 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.
12.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 the a licensee, the maximum per transaction is $10,000.
False
The maximum is $150,000 per transaction.
- 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 broker holding a limited broker’s license may solicit listings from property owners.
False
Limited brokers may not represent others.
- A limited broker may represent himself as a 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 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 fro 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
- 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.
- A 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 salespeople 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.
- A 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.
- A 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.
- 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 form 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 commission is paid from the broker’s general business (private) account - commissions must never go into a trust account (commingling).
- 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 Commissioner 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 agreement.
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.
- To represent both the buyer and seller, an agent must have the written consent of all parties to the transaction.
True
- 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.
- A 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 selline her own property.
False
Licensees must disclose their status in all transactions.
- A licensees 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
- 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 period is 6 years.
- The broker’s property management fee is considered to be trust funds and must be placed in a trust account.
False
Comissions belong to the broker (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 with in 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
- 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
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.
- 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
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 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
A 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 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
The licensee is 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
- 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.
- 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.
- 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
June 15
- A 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 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
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.
- Each broker must retain copies of listings, deposit receipts, canceled checks, and trust account records for 7 years.
False
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
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
Commingling
- 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.
False
It should be delivered at the time of closing and settlement.
- 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
It is 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 4 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
June 30
- Every real estate license expires 2 years after issuance.
False
They expire June 30 at the end of the licensee’s license period.
- A salesperson must apply for a license within 6 months of passing the license exam.
False
They must apply within 1 year
- When a salesperson terminates activity on behalf of a broker, the salesperson’s broker must return the license to the salesperson.
False
The salesperson must return the license to the Commissioner within 10 days.
- When a broker terminates the license of a salesperson, the salesperson’s license is ineffective immediately.
True
- A licensee must give notice in writing to the Commissioner within 10 days of receipt of the licensee’s first commission.
False
A licensee must give notice in writing to the Commissioner within 10 days of a change of information on the license application.
- Licensees must give notice to the commissioner within 10 days of revocation of a Wisconsin real estate license.
True
- The commissioner has the power to make laws and arbitrate disputes between licensees.
False
The Commissioner may administer and enforce license law; censure, suspend, or revoke license; and charge civil fines up to $10,000.
- An agent must have the seller’s approval prior to accepting an offer with a promissory note taken as earnest money.
True
- A licensee may maintain personal funds in a trust account if the personal funds are specifically identified and used to pay service charges or satisfy minimum balance requirements.
True
- Funds received by a broker, salesperson, or closing agent in a fiduciary capacity pending the consummation or termination of a transaction are damage deposits.
False
Trust funds
- Trust funds must be deposited into the listing broker’s trust account no later than the third business day after receipt by the listing broker.
True
- Placing money belonging to a client in the licensee’s personal checking account is conversion of funds.
False
This is commingling.
- An earnest money check received by a licensee as part of a transaction must be kept in brokerage business account until closing.
False
It must be deposited in the listing broker’s trust account within 3 days after receipt by the listing broker.
- A salesperson may NOT be reimbursed for out-of-pocket expenses by a seller; the seller must pay the broker who will pay the salesperson.
False
A salesperson may be directly reimbursed.
- A real estate closing agent may NOT charge a fee for closing services to a borrower unless the fee was previously disclosed in writing a minimum of 1 business day before closing.
True
- A licensee who receives a referral from an unlicensed friend may compensate the friend up to a maximum of $50.
False
The licensee may not give any compensation, because the unlicensed friend is not a party to the transaction.
- A licensee may share commissions with unrelated third parties.
False
Commissions may only be shared with parties to the transaction.
- A broker who treats a salesperson as an employee must provide free sales training.
False
They must withhold state and federal income tax; withhold Social Security tax; and comply with state and federal employment laws.
- It is legal for a licensee to give any buyer part of the licensee’s commission if they purchase a property through the licensee, because commissions may be shared with parties to the transaction.
True
- Money from the REERRF may be expended to pay attorneys’ fees incurred to defend licensees.
False
Money may be expended to provide relief to the public for financial damages cause by the actions of real estate licensees.
- If money is paid out of the REERRF, the licensee on whose behalf the money is paid is required to pay triple the damages.
False
Double plus 12% interest
- A licensee and his sister have formed a corporation to invest in real estate. The licensee must disclose the fact that he is licensed.
True
- An agent advertising the sale of her own property that is NOT listed with the broker must disclose in the ad the agent’s license number.
False
The agent must disclose the owner’s licensed status.
- An override clause in a listing agreement will NOT be effective unless the licensee supplies the seller with a protective list within 48 hours.
False
The licensee must supply the seller with a protective list within 72 hours.
- A licensee may bring an action in the courts for the collection of a commission if the licensee had a signed listing agreement and was licensed at the time the cause of action arose.
True
- The broker is responsible for renewing the salesperson’s license.
True
- A licensed real estate broker must retain copies of listings, purchase agreements, and trust account records for a minimum of 4 years.
False
The minimum is 6 years.
- A Minnesota real estate salesperson may be licensed to no more than two Minnesota real estate brokers at the same time.
False
The salesperson may be licensed to only on Minnesota real estate broker at a time.
- Sunshine Realty has moved to another location across town. The principal broker must notify the Minnesota Department of Commerce of the address change within 20 days.
False
10 days
- Sunshine REalty has added closing services to its list of professional services and thus has changed its name to Sunshine Realty and Title Company. The primary broker at Sunshine Realty and Title Company must notify the Minnesota Department of Commerce within 10 days about its name change.
True
- A son helping his mother sell her home must hold a real estate license.
False
As long as he doesn’t collect a fee, he does not need to hold a license.
- An attorney selling a home for a client must hold a real estate license.
False
Licensed practicing attorneys are exempt.
- A trustee selling a property for a family trust must hold a real estate license.
True
- An executor selling a property after probate is exempt from the real estate licensing requirement.
True
- Real estate sales license renewals are the responsibility of the broker.
True
- A person seeking a Minnesota real estate sales license passed the real estate exam on May 1, 2009. In order to avoid retaking the real estate exam, this candidate should apply for a license with a Minnesota broker before May 1, 2010.
True
Real estate exams results are valid for no more than 12 months.
- A salesperson licensed to Sunshine Realty has been conducting business in violation of the law and the primary broker of the firm is aware of this, but does nothing to stop the salesperson’s practices. The broker would be guilty of the same crime as the sales person.
False
The broker would be guilty of failure to supervise.
- The principal or primary broker is responsible for supervising the trust account.
True
- The principal or primary broker is responsible for the actions of employees and sales people licensed to the broker.
True
- The Minnesota Commissioner of Commerce is elected in even numbered years by the residents of the state of Minnesota.
False
The Minnesota Commissioner of Commerce is appointed by the governor.
