Free South Dakota State Law Practice Test — LicenseIQ

Question 1

A seller refuses to close through no fault of the buyer. The listing broker had earned a commission under the listing. What happens to the buyer's $10,000 deposit?

Accepted Answer

36-21A-77 says the broker has no right to the purchaser's deposit when the seller fails to perform through no fault of the purchaser, even if the commission is earned; the deposit is returned to the purchaser.

Question 2

The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

Accepted Answer

The Sherman Antitrust Act of 1890 prohibits conspiracies in restraint of trade, including these practices.

Question 3

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 4

An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

Accepted Answer

Conditioning one service on the purchase of another is a tying arrangement prohibited by antitrust law.

Question 5

After passing the exam, how long does a South Dakota candidate have to file the complete license application with the Commission?

Accepted Answer

36-21A-36.1 gives 60 days from the notice date. One year is how long PSI holds an exam fee, not the application window.

Question 6

What is the maximum the South Dakota recovery fund will pay for the acts of any one licensee, in the aggregate?

Accepted Answer

36-21A-112 caps the fund's aggregate liability for one licensee at $15,000. $100,000 is the fund's minimum balance trigger.

Question 7

Two brokerages agree that one will work only on the east side of town and the other only on the west side. This is:

Accepted Answer

Dividing territories or customers among competitors eliminates competition and is illegal market allocation.

Question 8

Under SDCL 43-32-24 as amended in 2026, a residential landlord must return the deposit or give a written statement of reasons for withholding within:

Accepted Answer

SL 2026, ch 179 amended 43-32-24 to 21 days. Forty-five days is the deadline for an itemized accounting on request, and 60 days applies to commercial deposits.

Question 9

A licensee may manage property for an owner for a fee only if there is:

Accepted Answer

Property management agreements must be written and signed; they make the manager a general agent and define duties, authority and fees.

Question 10

A property manager receives a tenant's security deposit and advance rent. These funds must be deposited in the:

Accepted Answer

Money belonging to others goes into a trust account; depositing it in an operating account is commingling.

Question 11

Which licensee is NOT required to carry errors and omissions insurance in South Dakota?

Accepted Answer

36-21A-119 exempts holders of inactive licenses. The Commission requires E&O of all active brokers, broker associates, property managers, auctioneers, residential rental agents and salespersons.

Question 12

The Commission orders a reprimand and a $1,800 penalty against a broker associate for advertising violations. This order is:

Accepted Answer

36-21A-68 allows suspension, reprimand and monetary penalties up to $2,500, alone or in combination.

Question 13

Which sanction may the South Dakota Real Estate Commission NOT impose by itself?

Accepted Answer

The Commission may revoke, suspend, reprimand or fine up to $2,500 (36-21A-68). Jail can result only from criminal prosecution in court; a violation of the chapter is a Class 1 misdemeanor (36-21A-87).

Question 14

Which statement about FHA-insured loans is correct?

Accepted Answer

FHA loans are made by approved lenders and insured by FHA, with down payments as low as 3.5% and mortgage insurance premium (MIP) required on all FHA loans, for 1-4 family homes.

Question 15

Which activity may an unlicensed assistant generally perform?

Accepted Answer

Unlicensed staff may perform clerical tasks like typing licensee-prepared ads, but may not compose ads, negotiate or show property.

Question 16

A licensee representing the seller who learns the buyer will pay more than the offer must:

Accepted Answer

Loyalty and disclosure require the seller's agent to share material information that benefits the client. The agent owes the buyer-customer no confidentiality.

Question 17

Who pays the South Dakota real estate transfer fee?

Accepted Answer

43-4-21 imposes the fee on the grantor.

Question 18

A seller negligently omits a known basement water problem from the disclosure statement. Which is correct?

Accepted Answer

43-4-42 says noncompliance alone does not invalidate the transfer, but a person who intentionally or negligently violates the law is liable for actual damages and repair costs, with possible costs and attorney fees.

Question 19

Two brokers agree not to cooperate with a discount brokerage in order to drive it out of business. This is:

Accepted Answer

Agreeing with competitors to refuse to deal with another business is an illegal group boycott.

Question 20

A salesperson receives an earnest money check from a buyer. The salesperson should:

Accepted Answer

The broker manages the trust account; licensees must promptly deliver trust funds to the broker.

Question 21

A listing where the seller may sell themselves without owing commission, but only the listing broker among agents is protected, is:

Accepted Answer

In an exclusive agency listing, the seller pays no commission on a self-sale, but the listing broker is protected if any broker sells it. (Reclassified to section 6 / CORE.)

Question 22

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 23

Under an open listing, the seller owes a commission to:

Accepted Answer

Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.

Question 24

On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

Accepted Answer

Earnest money and loan proceeds are sources of funds that reduce what the buyer must bring, so they are buyer credits.

Question 25

In a life estate, the person who receives the property when the life tenant dies is the:

Accepted Answer

The life tenant has a present interest; the remainderman holds a future interest. If the property returns to the grantor, it is a reversion.

South Dakota real estate state law practice test

1. A seller refuses to close through no fault of the buyer. The listing broker had earned a commission under the listing. What happens to the buyer's $10,000 deposit?

2. The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

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

4. An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

5. After passing the exam, how long does a South Dakota candidate have to file the complete license application with the Commission?

6. What is the maximum the South Dakota recovery fund will pay for the acts of any one licensee, in the aggregate?

7. Two brokerages agree that one will work only on the east side of town and the other only on the west side. This is:

8. Under SDCL 43-32-24 as amended in 2026, a residential landlord must return the deposit or give a written statement of reasons for withholding within:

9. A licensee may manage property for an owner for a fee only if there is:

10. A property manager receives a tenant's security deposit and advance rent. These funds must be deposited in the:

11. Which licensee is NOT required to carry errors and omissions insurance in South Dakota?

12. The Commission orders a reprimand and a $1,800 penalty against a broker associate for advertising violations. This order is:

13. Which sanction may the South Dakota Real Estate Commission NOT impose by itself?

14. Which statement about FHA-insured loans is correct?

15. Which activity may an unlicensed assistant generally perform?

16. A licensee representing the seller who learns the buyer will pay more than the offer must:

17. Who pays the South Dakota real estate transfer fee?

18. A seller negligently omits a known basement water problem from the disclosure statement. Which is correct?

19. Two brokers agree not to cooperate with a discount brokerage in order to drive it out of business. This is:

20. A salesperson receives an earnest money check from a buyer. The salesperson should:

21. A listing where the seller may sell themselves without owing commission, but only the listing broker among agents is protected, is:

22. 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:

23. Under an open listing, the seller owes a commission to:

24. On the buyer's side of the closing statement, the earnest money deposit and the new mortgage loan are both:

25. In a life estate, the person who receives the property when the life tenant dies is the:

Sources