Free South Dakota Contracts Practice Test — LicenseIQ

Question 1

When must a South Dakota broker deposit earnest money held under a written contract into the trust account?

Accepted Answer

36-21A-80 requires deposit in a special trust account at a federally insured institution by the first legal banking day after acceptance.

Question 2

Adding a new financing contingency to an existing sales contract is done by a(n) ____, while changing the existing closing date is done by a(n) ____.

Accepted Answer

An addendum ADDs new terms; an amendment changes existing terms. Both require agreement of both parties.

Question 3

A buyer offers $300,000. The seller counters at $315,000. The buyer rejects the counter and then tries to accept the original $300,000 offer terms. Is there a contract?

Accepted Answer

A counteroffer is a rejection and a new offer; the original offer cannot be revived by the buyer.

Question 4

Which South Dakota agency agreement may contain an automatic renewal provision?

Accepted Answer

36-21A-130 permits automatic renewal only in property management agreements that include written cancellation on mutually acceptable terms.

Question 5

A property manager authorized to collect rents, sign leases, hire contractors and run the owner's buildings on an ongoing basis is typically a:

Accepted Answer

A general agent handles a range of matters in a continuing relationship (typical of property management). A listing agent is a special (limited) agent for one transaction.

Question 6

How long must South Dakota licensees keep listings, offers and closing statements?

Accepted Answer

36-21A-74 requires four years. Trust deposit slips and ledgers are kept at least four years after closing (36-21A-82).

Question 7

A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

Accepted Answer

RESPA prohibits kickbacks and unearned referral fees between settlement service providers and real estate licensees, even if disclosed.

Question 8

A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?

Accepted Answer

LTV is applied to the LESSER of price or appraised value: $290,000 x 0.75 = $217,500. Using the $300,000 price ($225,000) is the common mistake.

Question 9

Under the statute of frauds, a real estate sales contract must be:

Accepted Answer

The statute of frauds requires real estate sales contracts to be in writing and signed to be enforceable.

Question 10

A contract that is missing an essential element, such as consideration, is:

Accepted Answer

Missing an essential element makes a contract void from the start. A voidable contract appears valid but may be canceled by one party.

Question 11

A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

Accepted Answer

Implied agency arises from conduct; the agent then owes full fiduciary duties. Express agency is created by stated agreement, ideally in writing.

Question 12

A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

Accepted Answer

At 95% LTV the down payment is 5% of price. Price = $18,000 / 0.05 = $360,000; loan = $342,000.

Question 13

In an option to purchase, the seller who grants the option is the ____ and the option holder is the ____.

Accepted Answer

The seller (optionor) gives the option; the buyer (optionee) holds it. Only the optionor is bound during the option period, making it unilateral.

Question 14

A contract signed by a 17-year-old buyer is generally:

Accepted Answer

Contracts with minors are voidable at the minor's option; the adult party remains bound. A contract with someone adjudged insane is void.

Question 15

A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

Accepted Answer

In a unilateral contract only one party is bound (to pay if the act is performed); the other party has no obligation to act. Most real estate contracts are bilateral.

Question 16

After a listing agreement expires, which duties continue under SDCL 36-21A-150?

Accepted Answer

Once an agreement ends, the licensee owes no further duties except accounting for money and property and preserving confidential information.

Question 17

A sales contract provides that if the buyer defaults, the seller keeps the earnest money as the full measure of damages. This is a:

Accepted Answer

Liquidated damages are a sum agreed in advance as compensation for breach - often the earnest money deposit.

Question 18

A seller has already accepted an offer, and another buyer submits a higher offer. The listing agent should:

Accepted Answer

Listing agents must present all offers through closing, but should not give legal advice about the seller's obligations under the existing contract.

Question 19

A property is under contract when a second written offer arrives. The seller's agent must:

Accepted Answer

36-21A-132 requires presenting all written offers promptly, even when the property is subject to a contract. The agent need not seek more offers, but must present those received.

Question 20

A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

Accepted Answer

Specific performance compels the breaching party to perform; it is available because land is unique. The buyer could alternatively seek monetary damages.

Question 21

A buyer receives the disclosure statement in person after making a written offer. The buyer may terminate by written notice within:

Accepted Answer

43-4-39 gives 3 days after delivery in person, or 6 days after mailing.

Question 22

A lender's loan officer tells an appraiser that future assignments depend on the appraisal 'hitting the contract price.' A licensee who joins in that pressure is:

Accepted Answer

36-21A-71(40) prohibits improperly influencing an appraisal through coercion or conditioning future work on a predetermined value. Providing additional property information is a listed exception, but threats are not.

Question 23

South Dakota agency agreements with sellers and buyers must be:

Accepted Answer

36-21A-130 requires agency agreements in writing and signed by all parties.

Question 24

A broker associate drafts two purchase agreements with different prices, giving only the higher one to the lender to obtain a larger loan. This is:

Accepted Answer

36-21A-71(18) prohibits using two or more contracts, with one withheld from the lender, to obtain a larger loan.

Question 25

A limited agent learns the buyer is willing to pay $15,000 more than the current offer. Without the buyer's written authority, the limited agent:

Accepted Answer

36-21A-142 bars a limited agent from disclosing one client's confidential information to the other without express written authority, except where required by law or to avoid misrepresentation.

South Dakota real estate contracts practice test

1. When must a South Dakota broker deposit earnest money held under a written contract into the trust account?

2. Adding a new financing contingency to an existing sales contract is done by a(n) , while changing the existing closing date is done by a(n) .

3. A buyer offers $300,000. The seller counters at $315,000. The buyer rejects the counter and then tries to accept the original $300,000 offer terms. Is there a contract?

4. Which South Dakota agency agreement may contain an automatic renewal provision?

5. A property manager authorized to collect rents, sign leases, hire contractors and run the owner's buildings on an ongoing basis is typically a:

6. How long must South Dakota licensees keep listings, offers and closing statements?

7. A mortgage lender offers a salesperson $200 for every client referred. Under RESPA this is:

8. A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?

9. Under the statute of frauds, a real estate sales contract must be:

10. A contract that is missing an essential element, such as consideration, is:

11. A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

12. A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

13. In an option to purchase, the seller who grants the option is the and the option holder is the .

14. A contract signed by a 17-year-old buyer is generally:

15. A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

16. After a listing agreement expires, which duties continue under SDCL 36-21A-150?

17. A sales contract provides that if the buyer defaults, the seller keeps the earnest money as the full measure of damages. This is a:

18. A seller has already accepted an offer, and another buyer submits a higher offer. The listing agent should:

19. A property is under contract when a second written offer arrives. The seller's agent must:

20. A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

21. A buyer receives the disclosure statement in person after making a written offer. The buyer may terminate by written notice within:

22. A lender's loan officer tells an appraiser that future assignments depend on the appraisal 'hitting the contract price.' A licensee who joins in that pressure is:

23. South Dakota agency agreements with sellers and buyers must be:

24. A broker associate drafts two purchase agreements with different prices, giving only the higher one to the lender to obtain a larger loan. This is:

25. A limited agent learns the buyer is willing to pay $15,000 more than the current offer. Without the buyer's written authority, the limited agent:

Sources