US South Dakota Broker License Exam Set Two

The correct conclusion is that the title is marketable. The South Dakota Marketable Record Title Act, found in SDCL 43-30, is the controlling authority in this situation. The purpose of this Act is to simplify and stabilize land title transactions by allowing individuals to rely on a record chain of title for a specific period, while extinguishing older, unpreserved claims. Under SDCL 43-30-1, a “root of title” is defined as a title transaction, such as a deed, that has been of record for at least twenty-two years, and which purports to create the interest being claimed. In the scenario, the 1995 warranty deed has been of record for well over twenty-two years and serves as the root of title. According to SDCL 43-30-2, any person with a marketable record title holds it free and clear of all claims and interests whose existence depends upon any act, transaction, event, or omission that occurred prior to the effective date of the root of title. The 1955 mortgage is an interest that occurred prior to the 1995 root of title. Unless the holder of the mortgage interest took steps to preserve their claim by filing a notice as prescribed by the Act, the claim is extinguished. Therefore, the 1955 mortgage no longer constitutes a valid encumbrance or a cloud on the title, and the title is considered marketable.

The core issue is the ethical obligation of a South Dakota real estate licensee when they are a principal in a transaction. The analysis proceeds as follows: 1. Identify the licensee’s status: Mateo is a licensed broker associate in South Dakota. 2. Identify the licensee’s role in the transaction: Mateo is a principal (a buyer) because he is a member of the purchasing entity, Prairie Sun Development, LLC. 3. Identify the governing regulation: Administrative Rule of South Dakota (ARSD) 20:69:04:02 explicitly covers licensees with a personal interest in a transaction. 4. Determine the specific requirement of the rule: The rule mandates that the licensee must disclose this personal interest in writing to all parties involved in the transaction. A verbal disclosure is insufficient. 5. Determine the timing of the disclosure: The written disclosure must be made at the earliest practical opportunity and before any party signs an offer to purchase or sell. 6. Conclusion: Mateo’s primary ethical and legal obligation under South Dakota law is to provide a formal written disclosure of his ownership stake in Prairie Sun Development, LLC to the seller before the LLC submits its offer. This action ensures transparency and allows the seller to make a fully informed decision, aware of the potential conflict of interest. Under South Dakota Real Estate Commission rules, a licensee has a heightened duty of disclosure when they have a personal interest in a transaction. This obligation is detailed in ARSD 20:69:04:02. The rule is designed to prevent undisclosed self-dealing and ensure transparency for all parties. The personal interest is not limited to direct ownership; it includes any interest held by the licensee, their immediate family, or any business entity in which the licensee has an ownership stake, such as an LLC. The disclosure must be explicit, in writing, and provided to all parties. The timing is critical; it must occur before an offer is made or accepted. This preemptive disclosure prevents any party from being bound to a contract without full knowledge of the licensee’s dual role as both a licensed professional and a principal in the deal. This duty applies regardless of whether the licensee is acting as an agent in the specific transaction. Mateo’s status as a licensee imposes this ethical standard on all his real estate dealings to uphold the integrity of the profession and protect the public. Simply informing his own broker is not sufficient to meet the legal requirement of notifying all parties to the transaction.

The fundamental distinction lies in the operational model and the type of assets each entity handles. Ginnie Mae (GNMA) is a government corporation that does not buy, sell, or issue loans. Its primary function is to guarantee the timely payment of principal and interest on mortgage-backed securities (MBS) that are issued by private institutions and backed by pools of federally insured or guaranteed loans, such as those from the FHA, VA, or USDA. This guarantee is backed by the full faith and credit of the U.S. government. In contrast, Fannie Mae (FNMA) and Freddie Mac (FHLMC) are government-sponsored enterprises (GSEs) that actively participate in the secondary market by purchasing mortgages from lenders. They then pool these loans, primarily conventional conforming loans, and issue their own mortgage-backed securities, which they also guarantee. While Fannie and Freddie can purchase government-backed loans, their core business revolves around conventional loans, and they are the issuers of the securities they sell. Ginnie Mae, on the other hand, acts as a guarantor for securities issued by others, and only for those securities collateralized by government-backed mortgages. This structure ensures a liquid secondary market for government loans, encouraging primary lenders to make these types of loans available to consumers.

The calculation for the South Dakota Real Estate Transfer Fee is based on the property’s sale price of $425,750. According to South Dakota Codified Law 43-4-21, the fee is $0.50 for each $500 of value or any fraction thereof. First, the number of taxable units is determined by dividing the sale price by $500. \[ \frac{\$425,750}{\$500} = 851.5 \] Since the law applies to each $500 or fraction thereof, the result must be rounded up to the next whole number, which is 852. Next, this number is multiplied by the rate of $0.50 to determine the total fee. \[ 852 \times \$0.50 = \$426.00 \] This fee is a state-mandated excise tax imposed on the grantor (the seller) for the privilege of transferring real property. It must be paid to the county register of deeds before the deed can be recorded. While many closing costs are negotiable or related to services from private entities like lenders or title companies, the transfer fee is a statutory obligation. For example, an owner’s title insurance policy, while often paid by the seller, is a contract with a title company to protect the buyer’s title, not a state tax. Similarly, loan origination fees are charged by the buyer’s lender to process the loan and are a buyer’s expense. Prorated property taxes are an adjustment for taxes already assessed but not yet due, ensuring the buyer and seller each pay their share for the time they owned the property during the tax year, rather than being a tax on the transfer itself. Understanding the nature and statutory basis of each closing cost is critical.

1. Identify the primary legal and ethical obligations in the scenario. Broker Associate Kenji has a fiduciary duty to his client, the seller. However, under South Dakota law, he also has a fundamental duty to treat all parties to the transaction, including the unrepresented buyer, with honesty and fairness. 2. Analyze the specific conflict. The seller’s instruction to state the foundation has “no current issues” is a misleading half-truth. While there may be no *current* water intrusion, the fact that significant, costly repairs were recently completed is an adverse material fact. An adverse material fact is information that could significantly impact a party’s decision to enter into a contract or the terms of that contract. 3. Reference South Dakota Administrative Rule 20:69:05:04, which requires licensees to treat all parties honestly and prohibits them from knowingly giving false or misleading information. It also mandates the disclosure of all known adverse material facts. 4. Evaluate the licensee’s options against this legal standard. Following the seller’s instruction would constitute a misrepresentation by omission, as it conceals a crucial part of the property’s history that a reasonable buyer would want to know. The duty to disclose known adverse material facts and to act honestly supersedes a client’s instruction to conceal or mislead. 5. Conclude the proper course of action. Kenji must disclose the existence of the past foundation problem and the subsequent repairs. This fulfills his duty of honesty to the buyer and his obligation to disclose adverse material facts, while still representing his client. He should also advise his seller that such disclosure is required by law. South Dakota law places a high value on transparency and fair dealing in real estate transactions. A licensee’s duty to a client does not extend to participating in misrepresentation or concealing known adverse material facts from other parties. An adverse material fact is any information that could negatively affect the value of the property, its structural integrity, or a party’s decision to proceed with the transaction. In this case, the history of a significant foundation problem and the extensive repairs clearly fall into this category. Even if the problem is currently fixed, the fact that it occurred is material. A licensee, like Kenji, is legally and ethically bound by South Dakota Codified Law and Administrative Rules to be truthful. He must inform the unrepresented buyer about the previous foundation issues and the repairs that were made. Refusing to follow a seller’s instruction to mislead is not a breach of fiduciary duty; rather, it is a required adherence to state law and professional ethics that protect all parties and the integrity of the transaction. The licensee should also counsel the seller on the legal requirement for this disclosure.

The logical path to the correct answer involves synthesizing a broker’s duties under two distinct areas of South Dakota law: the real estate commission’s regulations and the state’s general data breach notification statutes. First, the incident described is a data breach involving “personal or protected information” as defined under SDCL 22-40-19. This information includes a name combined with a driver’s license number or a financial account number. Therefore, the provisions of South Dakota’s data breach notification law are triggered. This law (SDCL 22-40-20) requires the brokerage to notify the affected South Dakota residents “in the most expedient time possible and without unreasonable delay.” If the breach affects more than two hundred fifty residents, the Attorney General must also be notified. Second, under SDCL 36-21A, the responsible broker has a fundamental duty of supervision. This incident reveals a failure in internal controls, specifically in the employee off-boarding process (not deactivating credentials). A core part of the broker’s response must be to rectify this internal policy failure to prevent future occurrences. Third, the former agent’s unauthorized access and downloading of confidential client information is a serious violation of their past duty of confidentiality and likely constitutes dishonest or fraudulent conduct. The responsible broker has an ethical and professional obligation to report such misconduct to the South Dakota Real Estate Commission for investigation. A comprehensive and legally compliant response must therefore address the immediate notification requirements, the internal policy failures, and the professional misconduct of the other party. In South Dakota, a responsible broker’s obligations following a cybersecurity incident are multifaceted, extending beyond the immediate technical fix. The primary legal framework governing the response to a breach of client data is the state’s data breach notification law, found in SDCL 22-40-19 through 22-40-23. This statute is triggered when unencrypted “personal or protected information,” such as names linked with driver’s license or financial account numbers, is acquired by an unauthorized person. The law mandates that the affected individuals be notified without unreasonable delay. This duty to notify clients is a direct responsibility of the brokerage. Furthermore, if the breach impacts more than 250 South Dakota residents, the brokerage must also provide notice to the state’s Attorney General. Parallel to these statutory requirements are the broker’s duties under the South Dakota Real Estate Commission. A responsible broker’s duty of supervision includes implementing and enforcing robust data security policies and procedures, which encompasses a formal process for terminating system access for departing licensees. The failure to do so represents a significant supervisory lapse. Reporting the former licensee’s actions to the Commission is also a critical step, as it addresses the professional misconduct and helps the Commission uphold its mandate to protect the public. Therefore, a proper response integrates legal compliance with the data breach law, fulfillment of supervisory duties, and adherence to professional ethics.

In South Dakota, the process for acquiring title to a property through a tax certificate sale is strictly governed by state law, specifically regarding the redemption period. When a property owner becomes delinquent on their property taxes, the county treasurer can sell a tax certificate for that property. This sale typically occurs on the third Monday of December. The purchaser of the certificate does not immediately gain ownership but holds a lien on the property. The original property owner has a right of redemption, meaning they can pay the delinquent taxes, interest, and costs to reclaim their property free of the tax lien. The length of this redemption period is critical. According to South Dakota Codified Law (SDCL) 10-25-8, for a property that is classified as a homestead, the redemption period is four years from the date of the tax certificate sale. For non-homestead properties, the period is three years. The holder of the tax certificate cannot initiate the proceedings to obtain a tax deed, which is the instrument that conveys actual ownership, until this redemption period has fully expired. Therefore, the earliest point at which the certificate holder can apply to the county treasurer for a tax deed is the day after the four-year anniversary of the sale for a homestead property.

The legal owner of the farm is Finn. The determinative legal instrument in this scenario is the Transfer on Death Deed (TODD), governed by South Dakota Codified Law 29A-6-401 through 29A-6-435. A TODD is a non-testamentary instrument, which means it is not a will and its function is separate from the probate process. When Elara executed and recorded the TODD, she created a mechanism for the property to transfer automatically to the named beneficiary, Finn, immediately upon her death. This transfer happens by operation of law and bypasses the probate estate. Consequently, at the moment of Elara’s death, the farm was no longer an asset she owned that could be passed through her will. A will can only dispose of property that constitutes the decedent’s probate estate. Since the farm’s ownership transferred to Finn outside of probate, the provision in Elara’s subsequent will attempting to devise the same property to Maeve is legally ineffective. To change the beneficiary or cancel the transfer, Elara would have needed to revoke the TODD by executing and recording either an instrument of revocation or a new TODD naming a different beneficiary, as prescribed by state law. Simply creating a conflicting will does not constitute a legal revocation of a properly recorded Transfer on Death Deed in South Dakota.

Logical Deduction: 1. Initial Agency Status: Black Hills Realty has a single agency relationship with the seller, Diane (via the responsible broker), and a separate single agency relationship with the buyer, Ben (via the broker associate). 2. Conflict Identification: When Ben (the buyer client) wishes to view the property of Diane (the seller client), a potential for dual agency is created, as the same brokerage firm would represent both parties in the same transaction. 3. Governing Law: South Dakota Codified Law (SDCL) 36-21A-136 explicitly governs dual agency. It states that a licensee may act as a dual agent only with the prior written consent of both the buyer and the seller. 4. Mandatory Prerequisite: The term “prior” in the statute is critical. It means the consent must be obtained before the licensee performs any actions that would constitute dual agency. Arranging a showing where the firm represents both parties is a substantive action falling under this scope. 5. Conclusion: Therefore, the mandatory first step is not to simply disclose, but to obtain formal, written consent from both the buyer (Ben) and the seller (Diane) to modify their respective agency relationships to dual agency for the specific transaction involving Diane’s property. In South Dakota real estate practice, agency relationships are clearly defined and regulated to protect consumers. Initially, the brokerage holds a fiduciary duty to the seller, Diane, as a seller’s agent, and a separate fiduciary duty to the buyer, Ben, as a buyer’s agent. These are distinct single agency relationships. When a client of the brokerage becomes interested in a property listed by the same brokerage, a conflict of interest arises. South Dakota law addresses this by permitting dual agency, but only under strict conditions to ensure all parties are fully informed. According to SDCL 36-21A-136, a licensee cannot act as a dual agent without first obtaining the informed, written consent of both the buyer and the seller. This consent is not a mere formality to be handled later in the process; it must be secured prior to the licensee engaging in any dual agent activities. This ensures that both clients understand that the level of representation is changing. In a dual agency role, the licensee’s duties of loyalty and disclosure are limited, as they cannot advocate for one party over the other or reveal confidential pricing information. Obtaining this written consent is the foundational step to legally and ethically proceed with the transaction.

Step 1: Identify the relevant South Dakota Administrative Rules (ARSD) governing real estate advertising. The key regulations are ARSD 20:69:09:01 (General Advertising), 20:69:09:01.01 (Advertising by licensee), and 20:69:09:04 (Team Advertising). Step 2: Analyze the scenario against ARSD 20:69:09:04. This rule permits the use of a team name in advertising only if the name of the real estate firm is displayed conspicuously and is more prominent than the team name. In the described advertisement, the team name “The Falls Landmark Collective” is featured in a large, stylized font, while the brokerage name “Crosstown Brokerage” is in a small, standard font at the bottom. This is a direct violation of the prominence requirement. Step 3: Analyze the scenario against other potential violations. The omission of the city and state of the brokerage in the post’s caption is a violation of ARSD 20:69:09:01.02 for internet advertising. However, the core purpose of advertising regulations is to prevent the public from being misled. Step 4: Determine the most significant violation. The rule regarding the prominence of the brokerage name over the team name is fundamental. Its purpose is to prevent the public from mistakenly believing that the team is an independent, licensed real estate company. This misrepresentation is considered a more serious issue than the omission of location data, as it goes to the heart of the brokerage-agent relationship and public accountability. Therefore, the failure to make the brokerage name more prominent than the team name is the most significant violation. In South Dakota, all real estate advertising is strictly regulated to ensure clarity and prevent public confusion. A foundational principle, as outlined in the Administrative Rules of the South Dakota Real Estate Commission, is that all advertising must be conducted under the direct supervision of a responsible broker and must clearly identify the licensed real estate firm. When a licensee or a group of licensees operates as a team, specific rules apply to their advertising. Under ARSD 20:69:09:04, a team may use a registered team name, but it is imperative that the name of the brokerage firm under which the team operates is displayed more conspicuously and prominently than the team name. The primary objective of this regulation is to ensure that consumers are always aware that they are dealing with a licensed brokerage and not an independent entity that may not be subject to the same level of regulatory oversight. An advertisement that subordinates the firm’s identity to that of the team creates a misleading impression and undermines the structure of accountability established by licensing laws. While other details, such as including the brokerage’s location in internet ads, are also required, the rule on the prominence of the firm’s name is central to preventing misrepresentation about who is ultimately responsible for the real estate services being offered.

The governing statute in this situation is South Dakota Codified Law 43-32-24. This law mandates a specific procedure for landlords handling tenant security deposits upon the termination of a tenancy. The landlord has a period of two weeks, or fourteen days, from the date the tenancy is terminated and the landlord receives the tenant’s forwarding address to return the full security deposit. If the landlord intends to withhold any portion of the deposit to cover unpaid rent or damages beyond ordinary wear and tear, they must provide the tenant with a written, itemized statement detailing the specific reasons for the withholding within that same fourteen-day timeframe. In the described scenario, the landlord, Beatrice, failed on two counts. First, she exceeded the fourteen-day statutory deadline by sending the partial refund and note on the twentieth day. Second, her note stating the deduction was “for cleaning and minor repairs” does not meet the legal standard of an itemized statement. An itemized statement must list each specific deduction and its cost. Because Beatrice did not adhere to the strict requirements of the law, she has violated the tenant’s rights. The law further states that if a landlord’s retention of the deposit is found to be in bad faith, the tenant may be entitled to recover damages in an amount equal to twice the amount of the deposit that was wrongfully withheld, in addition to reasonable attorney’s fees.

The core concept being tested is the distinction between the economic and physical characteristics of land. The primary reason for the value difference between the two parcels is situs, also known as area preference or location. Situs is an economic characteristic, not a physical one, and refers to the value derived from a property’s position relative to external factors. In this scenario, Parcel X’s proximity to a major new amenity, the Custer State Park extension, and its superior access via paved roads, creates a strong preference for that location over Parcel Y. This preference translates directly into higher economic value. While the land itself has not been physically altered by an on-site improvement, its location has become significantly more desirable. This is the essence of situs. It is important to distinguish this from other characteristics. Improvements are man-made additions to the land itself, such as a building or a well; the adjacent park and roads are external influences. Scarcity is a broader principle; while land next to the park is scarce, situs is the specific economic factor that explains why that scarcity translates into high value. Uniqueness, or non-homogeneity, is a physical characteristic stating that no two parcels are identical, but it does not, by itself, explain the economic value derived from that unique location; situs does. Therefore, the economic advantage is overwhelmingly due to situs.

This is a conceptual question with no mathematical calculation. Under South Dakota law, a responsible broker has an absolute duty to supervise the activities of all licensees affiliated with their brokerage. This duty is outlined in the South Dakota Codified Laws and the Administrative Rules of South Dakota. Specifically, ARSD 20:69:10:01 mandates that all money belonging to others, such as earnest money, must be promptly deposited into the brokerage’s trust account. Holding a check, even at the verbal request of a party, without proper written authorization from all parties to the transaction, constitutes a violation. When a responsible broker discovers such a violation by an affiliated licensee, their primary obligation is to the regulatory body that grants their license, the South Dakota Real Estate Commission (SDREC). While internal disciplinary action and corrective training are essential components of good brokerage management, they are secondary to the legal requirement of reporting the violation. The failure of a broker associate to handle trust funds properly is a direct reflection of the responsible broker’s supervisory duties under SDCL 36-21A-79. Therefore, the broker’s foremost legal responsibility upon discovering a clear violation of trust fund handling rules is to notify the SDREC. This ensures transparency and allows the commission to take appropriate action, upholding the integrity of the profession and protecting the public.

The borrower’s financial profile is analyzed by calculating two key debt-to-income (DTI) ratios. The first is the housing expense ratio, also known as the front-end ratio. This is calculated by dividing the proposed total monthly housing payment (Principal, Interest, Taxes, and Insurance or PITI) by the gross monthly income. In this case, the calculation is \(\frac{\$1,980}{\$6,600}\), which equals \(0.30\) or \(30\%\). The second is the total debt obligation ratio, or back-end ratio. This is calculated by dividing the sum of the PITI and all other recurring monthly debts by the gross monthly income. The calculation is \(\frac{(\$1,980 + \$1,020)}{\$6,600} = \frac{\$3,000}{\$6,600}\), which equals approximately \(0.4545\) or \(45.5\%\). For conventional loans conforming to Fannie Mae and Freddie Mac standards, lenders use these ratios as a primary measure of a borrower’s ability to repay the loan. While historical guidelines often cited a front-end ratio of \(28\%\) and a back-end ratio of \(36\%\), modern automated underwriting systems (AUS) frequently allow for higher ratios. A back-end ratio up to \(45\%\) is often acceptable, and in some cases, with strong compensating factors, it can go as high as \(50\%\). Compensating factors include a high credit score, significant cash reserves remaining after closing, a large down payment (low loan-to-value ratio), and a stable, long-term employment history. A back-end ratio of \(45.5\%\) places the application just above the standard maximum threshold for many AUS approvals. This does not result in an automatic denial. Instead, it typically flags the file for manual underwriting, where a human underwriter must carefully review the entire loan package to determine if sufficient compensating factors exist to justify approving a loan with an elevated risk profile. The decision hinges on the overall strength of the borrower’s file beyond just the DTI ratios.

In South Dakota, a responsible broker’s duty of risk management extends beyond standard contractual and title-related issues. It encompasses the identification and mitigation of significant risks to health, safety, and property value, particularly those governed by state law. South Dakota Codified Law, specifically chapter 34-45, establishes clear protocols for properties identified as former clandestine drug labs, including methamphetamine production sites. The law mandates that once a property is identified as contaminated, it must be remediated according to Department of Health standards, and its status must be disclosed to potential buyers until it is certified as clean. Given the serious health consequences and the specific legal framework, a responsible broker has an elevated duty to be vigilant about this potential risk. The failure to advise a client to investigate this possibility, especially in circumstances that might suggest a higher risk, constitutes a significant breach of the duty to exercise reasonable skill and care. This oversight exposes the buyer to severe health dangers and financial loss, and the brokerage to substantial legal and professional liability. While other environmental and title risks, such as radon, boundary lines, or mineral rights, are important, the risk of meth contamination is uniquely addressed by specific state statutes that impose direct disclosure and remediation obligations, making it a primary concern in a broker’s risk assessment protocol.

The correct answer is derived by analyzing the legal framework for mortgage foreclosures in South Dakota. South Dakota Codified Law (SDCL) Chapter 21-47 governs the foreclosure of real estate mortgages. This chapter explicitly outlines a process called “foreclosure by action,” which is a judicial proceeding. This means that for a lender to foreclose on a property secured by a mortgage in South Dakota, they must file a civil lawsuit against the borrower and obtain a judgment and a decree of foreclosure from a court. The court then orders the property to be sold by the sheriff at a public auction. This process is fundamentally different from the non-judicial foreclosure process commonly associated with Deeds of Trust in other states. A Deed of Trust typically includes a “power of sale” clause, which grants a third-party trustee the authority to sell the property upon default without court supervision. South Dakota law does not recognize this power of sale mechanism for standard mortgages. Therefore, the lender’s primary remedy is not a swift, out-of-court sale but a formal, court-supervised legal action. While the promissory note evidences the debt and the right of redemption is a critical component of the post-sale process, the foundational difference in the lender’s remedy lies in the mandatory judicial nature of the foreclosure itself.

This question does not require a mathematical calculation. The solution is based on the interpretation and application of South Dakota real estate laws regarding disclosure and fiduciary duties. Under South Dakota Codified Law, specifically within the statutes governing real estate licensees (SDCL 36-21A), a broker has a fiduciary duty to their client. This includes the duty of loyalty and the duty of disclosure. The duty of disclosure extends beyond just the physical condition of a property. It encompasses all material facts and any potential conflicts of interest. A material fact is any information that, if known, might cause a reasonable person to change their course of action regarding the transaction. A conflict of interest isn’t limited to a direct financial stake in the property. It can also include personal or business relationships that could compromise the licensee’s ability to act impartially and solely in the best interest of their client. In this scenario, the past contentious legal dispute represents a significant personal conflict. This history could reasonably be perceived as influencing the broker’s objectivity, negotiation strategy, and overall representation. For instance, the broker might be less aggressive in negotiations or push for a quick closing to avoid interaction with the seller, which may not align with the buyer’s best interests. Therefore, this past relationship is a material fact that must be disclosed in writing to the buyer client. The principle is that the client has the right to be fully informed of any circumstances that could potentially affect their agent’s performance and loyalty, allowing them to make an informed decision about continuing the agency relationship.

The legal conclusion is reached by analyzing the interplay between fair housing exemptions and the involvement of a real estate licensee, as well as the specific protected classes under South Dakota law. First, the property in question is an owner-occupied dwelling with fewer than four units, which would typically fall under the “Mrs. Murphy” exemption of the Fair Housing Act. However, this exemption is nullified the moment a real estate licensee becomes involved in the transaction. Because the landlord has engaged a broker, the property is no longer exempt and is fully subject to all federal and state fair housing regulations. Second, the landlord’s stated preferences involve discrimination based on “ancestry” and “creed.” While federal law protects against discrimination based on national origin, the South Dakota Human Relations Act (SDCL 20-13) specifically adds both “ancestry” and “creed” as protected classes. Therefore, refusing to rent to someone based on their ancestry or their specific system of beliefs is an unlawful discriminatory practice in South Dakota. The broker has an ethical and legal obligation to uphold these laws and cannot participate in or facilitate a transaction based on the landlord’s discriminatory instructions. The broker must advise the client that the requests are illegal and refuse to proceed with the listing under those terms.

The provided legal description is \(S \frac{1}{2}\) of the \(NW \frac{1}{4}\) of Section 22, Township 2 North, Range 7 East. This is a description based on the Public Land Survey System, also known as the Rectangular or Government Survey System. The fundamental components of this system are a single baseline, which runs east-west, and a single principal meridian, which runs north-south. All land within a survey area is located by its position relative to these two lines. Townships are located north or south of the baseline, and ranges are located east or west of the principal meridian. The critical issue for real estate in South Dakota is that the state is not surveyed from a single principal meridian. Land in the eastern part of the state is surveyed from the 6th Principal Meridian, while land in the western part of the state, including Pennington County, is surveyed from the Black Hills Meridian. A legal description that simply states “Range 7 East” without specifying whether it is east of the 6th Principal Meridian or east of the Black Hills Meridian is patently ambiguous. It describes two entirely different parcels of land within the same state. For a conveyance to be valid and for a title to be marketable, the legal description must be precise and unambiguous. Therefore, the failure to name the controlling principal meridian renders this description legally insufficient.

South Dakota law, specifically under SDCL 43-31, provides for a homestead exemption which protects a person’s home from forced sale to satisfy debts. A critical aspect of this law is that a family is entitled to only one homestead. The determination of which property constitutes the homestead is based on actual occupancy and its use as a primary residence. In this scenario, Miguel and Sofia reside in their Rapid City house for the majority of the year; it serves as their principal dwelling where they conduct their daily lives. This establishes the Rapid City property as their legal homestead. The cabin near Custer State Park, used only for a few months during the summer, is considered a secondary or vacation home and does not qualify for the homestead protection because it is not their primary residence. The homestead exemption in South Dakota protects the qualifying property from execution and forced sale by most judgment creditors. The debt in this case is an unsecured personal loan, which is the type of debt the homestead exemption is designed to protect against. Therefore, the creditor cannot force the sale of the Rapid-City house. However, since the cabin is not the designated homestead, it is considered non-exempt real property. As such, it is subject to the claims of creditors. A creditor who has obtained a valid judgment can legally attach a lien to the non-exempt cabin and proceed with a forced sale (sheriff’s sale) to satisfy the judgment amount. The law is clear in its intent to protect the family home, not all properties owned by an individual.

The correct action is determined by applying South Dakota Codified Law 43-32-30. The law mandates that a landlord or their agent must provide a written disclosure to a prospective tenant if the property was previously the site of methamphetamine production. This disclosure must be provided before the execution of the lease agreement. The tenant must then provide a written acknowledgment of receipt of the disclosure. The fact that the property has been professionally remediated and certified as safe does not negate this disclosure requirement. Under South Dakota law, the duty to disclose the prior existence of a methamphetamine laboratory on a rental property is a specific and absolute statutory obligation. This requirement, outlined in SDCL 43-32-30, is designed to ensure full transparency and protect prospective tenants by allowing them to make a fully informed decision. The law is clear that this disclosure must be made in writing and must occur prior to the tenant becoming legally bound by the lease agreement. Furthermore, the landlord or their agent must secure a written acknowledgment from the tenant confirming they have received this notice. This process is separate from and in addition to the landlord’s general duty to provide a safe and habitable premises. Even with a professional remediation certificate, the historical fact of the meth production is considered a material fact that requires disclosure. A broker’s failure to adhere to this specific statute constitutes a violation of South Dakota real estate law and can lead to significant legal liability and disciplinary action from the South Dakota Real Estate Commission. The intent of the law is to remove any ambiguity and ensure the tenant is aware of the property’s history, regardless of its current physical condition.

The legal process for eviction in South Dakota requires specific, sequential steps that a landlord or their agent must follow. The initial step for non-payment of rent is to serve the tenant with a written 3-Day Notice to Quit, as mandated by state law. This notice formally informs the tenant of the default and demands that they either pay the overdue rent or vacate the property within three days. If the tenant fails to comply with this notice by the end of the three-day period, the landlord cannot resort to self-help measures. Actions such as changing the locks, removing the tenant’s personal property, or shutting off utilities are illegal and can result in civil penalties against the landlord. The notice itself does not grant the authority to physically remove the tenant. Instead, upon the expiration of the notice period, the landlord’s sole legal recourse is to escalate the matter through the judicial system. This is accomplished by filing a formal lawsuit, specifically a summons and complaint for forcible entry and detainer (FED), with the appropriate magistrate court. This action requests the court to legally recognize the landlord’s right to possession and to issue an order for the tenant’s removal. Only after a court hearing and a judgment in the landlord’s favor can a writ of execution be issued, which then authorizes the sheriff to lawfully remove the tenant from the premises.

The core issue is the responsible broker’s duty of supervision and the prohibition against improper agency relationships under South Dakota law. The broker associate, Priya, is creating a potential undisclosed dual agency by offering paid services to the unrepresented seller, Ms. Gable, while simultaneously representing the buyer, Wei. According to SDCL 36-21A-71(10), a licensee is subject to disciplinary action for acting for more than one party in a transaction without the knowledge and written consent of all parties. Priya’s offer to “help with the paperwork” for a fee goes beyond performing simple ministerial acts for an unrepresented party; it creates a paid service relationship, which implies a duty to Ms. Gable that conflicts with her fiduciary duty of undivided loyalty to her client, Wei. As the responsible broker, Arlo is accountable for all real estate activities conducted by his affiliated licensees under ARSD 20:73:04:01, which mandates adequate supervision. His primary and immediate obligation is not merely to advise or report, but to actively intervene and ensure compliance with the law. He must stop the prohibited activity to prevent harm to the public and to protect the integrity of the transaction. This involves instructing Priya to cease her arrangement with Ms. Gable immediately. Allowing the transaction to proceed under this flawed arrangement, even with written consent, would be a failure of his supervisory duty, as the situation itself is professionally precarious and potentially exploitative of the unrepresented seller. The broker’s foremost duty is to uphold the law and prevent violations by those under his supervision.

Anja’s continuing education (CE) status is determined by the requirements set by the South Dakota Real Estate Commission. The standard renewal period is two years, requiring a total of 24 hours of CE. These hours are divided into 12 hours of required topics and 12 hours of elective topics. As a responsible broker, Anja must complete specific required courses designated for her license type, which often include topics like broker supervision and trust accounts. First, we assess her required hours. She completed 6 hours in ‘Advanced Contract Law’ and 6 hours in ‘Broker Supervision’. Both are stated as required topics. This totals 12 hours of completed required coursework, satisfying this portion of the requirement. Next, we assess her elective hours. She needs 12 hours. She completed 8 hours in ‘Luxury Home Marketing’, which is an approved elective. The 6-hour ‘National Fair Housing Symposium’, while not approved for *required* credit, can typically be counted toward the *elective* hour requirement if the provider and course content are deemed acceptable by the commission for general credit. Therefore, she has 8 + 6 = 14 hours of elective credit. This exceeds the 12-hour elective requirement. Her total completed hours for the current cycle are 12 (required) + 14 (elective) = 26 hours, which is more than the 24-hour total mandate. Finally, the 3-hour course taken 25 months ago falls outside the current two-year licensing period. South Dakota law, specifically ARSD 20:69:05:02(3), prohibits carrying over CE hours from one renewal period to the next. Therefore, this course is not applicable to the current renewal. Based on this analysis, Anja has successfully completed all necessary CE for her license renewal.

In South Dakota, a non-disclosure state, the sales price of real estate is not a matter of public record. This legal framework places a significant professional burden on real estate licensees to ensure the data used in a Comparative Market Analysis (CMA) is accurate and verifiable. The primary source for verifiable sales data is the Multiple Listing Service (MLS), where participating brokers report transaction details. When a licensee becomes aware of a private, off-market transaction, such as a For Sale By Owner (FSBO) deal, the information about that sale is essentially anecdotal until confirmed. A broker’s duty of reasonable care and competence, as mandated by the South Dakota Real Estate Commission, requires them to base their professional opinions on reliable information. Simply using a rumored or unconfirmed sales price from a private transaction as a key comparable in a CMA would be misleading and a breach of this duty. The most professionally responsible course of action is to make a direct effort to verify the terms and price of the sale with a party to the transaction, such as the buyer or seller. If the details cannot be independently and reliably confirmed, the data point is too weak to be used in the final calculation of the estimated value. It may be mentioned as supplemental information, but only with a clear and prominent disclosure to the client that the information is unverified and not used in the analysis. Prioritizing verified data is paramount to creating a credible and defensible market analysis.

The cost approach to appraisal is a method that determines a property’s value by calculating the cost to replace the improvements, subtracting the value lost to depreciation, and then adding the value of the land. The formula is Value equals Replacement Cost New minus Accrued Depreciation plus Land Value. Accrued depreciation is the total loss in value from all causes and is broken down into three categories: physical deterioration, functional obsolescence, and economic or external obsolescence. In the given scenario involving a unique, historic home in a remote area with no comparable sales, the cost approach becomes a primary tool. However, its application presents significant challenges. While calculating the replacement cost and estimating the cost to cure physical deterioration can be accomplished with reasonable accuracy using cost manuals and contractor estimates, the other components of depreciation are far more subjective. Functional obsolescence refers to a loss in value due to the property’s design, layout, or features being outdated by modern standards. For a historic home, what one person considers a functionally obsolete flaw, another might see as desirable historic character, making a monetary adjustment extremely difficult to support. Similarly, economic obsolescence, which is a loss in value from factors outside the property, such as its remote location and the stagnant local market, is also challenging to quantify precisely. Therefore, the most significant and subjective difficulty lies in accurately measuring and supporting the monetary adjustments for functional and economic obsolescence, as these elements lack a clear market-derived basis for calculation in this unique context.

Step 1: Identify the governing regulation for interest earned on real estate trust accounts in South Dakota. The applicable rule is ARSD 20:69:10:04. Step 2: Analyze the core requirement of this regulation. The rule states that if a trust account is interest-bearing, the broker must have a written agreement from all parties with an interest in the funds, specifying who is to receive the interest. Step 3: Evaluate the facts of the scenario. The purchase agreement, which is the primary written contract between the parties, is explicitly silent on the matter of who receives the interest. No other written agreement exists. Step 4: Apply the default provision of the regulation for situations where no written agreement exists. ARSD 20:69:10:04 mandates that in the absence of a written agreement directing the disposition of the interest, the broker must remit any accrued interest to the state treasurer. Step 5: Conclude the required action. The broker cannot disburse the interest to the buyer, the seller, or retain it for the brokerage. The only legally compliant action is to send the accrued interest to the South Dakota state treasurer. South Dakota law is very specific regarding the handling of interest earned on funds held in a broker’s trust account. The primary principle is that the interest does not belong to the broker. For the interest to be disbursed to any party involved in the transaction, such as the buyer or seller, there must be a pre-existing written agreement signed by all parties that clearly dictates this distribution. This clause is often included in the purchase agreement itself. If the contract is silent on this issue, and no separate written agreement exists, the broker has no authority to decide who gets the money. The law prevents potential disputes and self-dealing by providing a clear default action. Under South Dakota Administrative Rule 20:69:10:04, the accrued interest must be paid to the state treasurer. This is a non-negotiable fiduciary duty. The broker is responsible for segregating the interest from the principal amount and ensuring its proper remittance to the state, while the principal funds are disbursed according to the terms of the transaction’s closing statement.

Step 1: Identify the core issue. The broker is holding earnest money, and a dispute has arisen between the buyer and seller, both of whom have made written demands for the funds. Step 2: Reference the controlling South Dakota statute. South Dakota Codified Law (SDCL) 36-21A-81 outlines the specific procedure for a broker when trust funds are disputed. Step 3: Determine the broker’s initial obligation upon receiving conflicting demands. The law requires the broker to continue holding the money in the trust account. Step 4: Determine the required communication. The broker must, in writing, notify all parties to the contract of the dispute. Step 5: Identify the resolution period. This written notification must inform the parties that if the dispute is not resolved within thirty days, the funds will be remitted to the state treasurer. Step 6: Conclude the required action. The broker’s immediate and legally mandated action is to send the written notice detailing the dispute and the thirty-day deadline for resolution before the funds are turned over to the state as unclaimed property. Under South Dakota law, a real estate broker has very specific duties when handling disputed trust funds, such as an earnest money deposit. The broker acts as a neutral stakeholder and cannot unilaterally decide which party is entitled to the money, even if one party’s claim seems more valid. When a broker receives conflicting written demands from the parties to a transaction, SDCL 36-21A-81 dictates the procedure. The broker must first provide written notice to all parties involved. This notice must clearly state that a dispute exists and that if the parties cannot reach a mutual written agreement or obtain a court order for disbursement within thirty days of the notice, the broker is legally obligated to remit the funds to the South Dakota state treasurer as unclaimed property. This process protects the broker from liability and moves the dispute toward a formal resolution, either by the parties themselves or by placing the funds under the state’s care. Simply holding the funds indefinitely or filing a court action like an interpleader without first following this statutory notification process would not be in compliance with this specific regulation.

The core of this issue rests on the South Dakota Real Estate Commission’s statutory authority to initiate investigations as outlined in South Dakota Codified Law (SDCL) Chapter 36-21A. Specifically, SDCL 36-21A-81 delineates the process. This statute mandates that the Commission must investigate upon receiving a verified complaint in writing. A verified complaint is a formal, signed statement, often made under oath, by an identifiable person. However, the same statute grants the Commission a crucial discretionary power: it may also, upon its own motion, investigate the actions of any licensee. This “own motion” authority is vital. It means the Commission is not solely reliant on formal, verified complaints to protect the public. If the Commission receives information, even from an anonymous source, that it deems credible and indicative of a potential violation of license law or administrative rules, it has the full authority to initiate its own investigation. The decision to act on an anonymous tip is at the Commission’s discretion, based on the perceived severity and credibility of the allegations. This power ensures that serious potential misconduct does not go unexamined simply because a complainant is unwilling or unable to file a formal, verified statement. Therefore, the Commission is not prohibited from acting on the anonymous letter; rather, it can use the information as the basis for launching its own self-initiated investigation into the licensee’s conduct.

In a South Dakota real estate transaction, there are two primary types of title insurance: the owner’s policy and the lender’s policy. The lender’s policy is almost universally required by the financial institution providing the mortgage. It protects the lender’s interest in the property up to the loan amount in case a title defect is discovered after closing. The owner’s policy, conversely, protects the buyer’s equity in the property. While obtaining an owner’s policy is not mandated by state law, it is a critical protection for the new homeowner and is standard practice in virtually all transactions. The central issue in this scenario revolves around who pays for which policy. While all closing costs are technically negotiable, the established custom and standard contractual language in South Dakota purchase agreements stipulate that the seller is responsible for paying for and providing the owner’s title insurance policy to the buyer as evidence of conveying marketable title. The buyer is typically responsible for purchasing the lender’s title insurance policy, as it is a requirement of their loan. Therefore, if a charge for an owner’s policy appears on the buyer’s side of the Closing Disclosure, it is most likely an error by the closing agent. The responsible broker’s primary duty is to protect their client’s interests, which includes a thorough review of the purchase agreement and the closing statements. The broker must immediately compare the charge to the terms specified in the executed purchase agreement and contact the closing agent to rectify the error, ensuring the cost is allocated to the seller as agreed upon.