Agency is any relationship by which one person acts for or on behalf of a client subject to the client’s reasonable direction and control.

Agency agreement is a written agreement between a broker and a client, which creates a fiduciary relationship between the broker and client.

A single agent is any licensee who represents only one party to a transaction.

A limited agent is any licensee who has a written agency relationship with both the seller/landlord and the buyer/tenant in the same transaction.

A client is any person, including a seller/landlord or a buyer/tenant, who has entered into any agency relationship with a real estate licensee.

A consumer is any person seeking or receiving services from a real estate broker.

A customer is any party to a real estate transaction who does not have any agency relationship with a licensee.

A responsible broker is the "boss" of the real estate brokerage, whose job it is to bring parties together in a real estate transaction. The responsible broker usually collects a fee (commission) from the seller/landlord of the real estate; however, sometimes the buyer/tenant pays the commission.

A transaction broker agreement is a written agreement between a broker and a consumer, which does not create a fiduciary relationship between the broker and consumer.

A transaction broker is a broker who assists one or more parties with a real estate transaction without being an agent or advocate for the interest of any party to the transaction. The term includes the licensees associated with the broker.

The real estate broker associate and salesperson performs many of the same duties as a broker. However, they cannot do so under their own authority – they must act as a representative of the responsible broker with whom they are affiliated. The responsible broker is ultimately responsible for what the broker associate and salesperson does.

A real estate licensee who is a member of the NATIONAL ASSOCIATION OF REALTORS® is called a REALTOR® or REALTOR® ASSOCIATE. These terms are not synonymous with broker, broker associate, or salesperson. In some areas of South Dakota, the board of REALTORS® operates a "Multiple Listing Service" for its members.

To perform the terms of the written agreement made with the client;

To exercise reasonable skill and care for the client;

Any licensee representing a buyer or tenant has the following duties and obligations:

To perform the terms of any written agreement made with the client;

To exercise reasonable skill and care for the client;

To promote the interest of the client with the utmost good faith, loyalty, and fidelity, including:

Seeking a price and terms which are acceptable to the client;
Presenting all written offers to and from the client in a timely manner regardless of whether the client is already a party to a contract to purchase property or is already a party to a contract or a letter of intent to lease;

Disclosing to the client adverse material facts known by the licensee;

Advising the client to obtain expert advice as to material matters about which the licensee knows but the specifics of which are beyond the expertise of the licensee;

To account in a timely manner for all money and property received;

To comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes or regulations.

To perform the terms of any written agreement made with the client;

To exercise reasonable skill and care for the client;

To present all written offers to and from the client in a timely manner regardless of whether the client is already a party to a contract to purchase property or is already a party to a contract or a letter of intent to lease;

To disclose to the client adverse material facts known by the licensee;

To advise the client to obtain expert advice as to material matters about which the licensee knows but the specifics of which are beyond the expertise of the licensee;

To account in a timely manner for all money and property received;

To comply with any applicable federal, state, and local laws, rules, regulations, and ordinances, including fair housing and civil rights statutes or regulations.

Any licensee acting as a transaction broker has the following duties and obligations:

To perform the terms of any written agreement made with the customer;

To exercise reasonable skill and care for the customer;

To present all offers in a timely manner;

To account in a timely manner for all money and property received;

To comply with any applicable federal, state, and local laws, rules, regulations, and ordinances including fair housing and civil rights statutes or regulations;

To disclose to the customer all adverse material facts known by the licensee. No licensee acting as a transaction broker may advise any party to a transaction to the detriment of another party.

Listing Agreement – A contract between a seller of real property and a broker. The broker is employed to sell real estate on the owner’s terms within a given time, for which service the seller agrees to pay a commission.

Management Agreement – A contract between the owner of real property and a broker. The broker is employed to rent, exchange, or lease real estate on the owner’s terms within a given time, for which service the owner agrees to pay a fee.

Transaction Broker Agreement – A written agreement in which the broker does not represent either the seller/landlord or the buyer/tenant in a fiduciary capacity.

Buyer/Tenant Agreement – A contract between the client and broker. The broker is employed to seek a particular type of real property, within a certain geographic area, during a given time, for which service the buyer/tenant agrees on the amount and method of compensation to be paid.

Real Estate Relationships Disclosure – A form that specifically sets forth agency and brokerage relationships. At the first substantive contact with a seller or buyer who has not entered into a written agreement with a broker, the licensee discloses in writing to that person the types of agency and brokerage relationships available. The licensee also provides a written copy of the disclosure to the seller or buyer.

Seller’s Property Condition Disclosure – This form describes the condition of residential real property as known by the seller. Sellers of residential real property are required to furnish a completed copy of this form to a buyer before the buyer makes a written offer. There are some exceptions to this requirement, detailed in SDCL Chapter 43-4.

Lead Paint Disclosure – This form is required to comply with the sale or lease of any pre-1978 residential dwellings. This was enacted into law by Congress to disclose lead paint hazards.

Purchase Agreement – A contract for the purchase and sale of real property in which the buyer agrees to purchase for a certain price and the seller agrees to convey title. To be enforceable, it must be in writing and signed by both parties.

Closing Statement –A statement of receipts and disbursements in a real estate property transaction. The listing broker furnishes a closing statement to the seller. The selling broker furnishes a closing statement to the buyer.

Lease Agreement – A contract by which one (the lessor or landlord) gives to another (the lessee or tenant) temporary possession and use of real property for reward and the lessee agrees to return such property to the lessor at a future time. A one-year or longer lease requires a written lease agreement.

Single Family Residence – The single-family dwelling has always been a very popular kind of housing. Each type of home has its advantages and disadvantages, and tastes vary in architectural styles. But one thing to keep in mind is that eventually all homes are resold to new owners. The more unusual the type of construction, the more difficult it will probably be to find a buyer.

Duplex – A duplex is basically two single-family dwellings joined together. The middle wall separating the units is common to both. This type of housing offers an owner the opportunity to live in one side and rent the other side. The income from the rental portion helps the owner pay for the entire property.

Twin-home – Units owned by separate parties, utilizing a "zero lot line".

Condominium – Condominium ownership is designed to provide exclusive use and ownership of a portion of a larger property, plus shared use and ownership of common areas. Under the condominium arrangement, the individual owner purchases the exclusive right to occupy the space where the unit is located. The owner also receives an undivided interest in the land and common areas, such as hallways, elevators, structure of the building, and as a rule, the recreation facilities. A board of directors or a condominium association elected by unit owners administers the common area.

Townhouse – The townhouse combines features of a house and a condominium. The legal concept is that the owner enjoys a separate ownership of his/her dwelling and the land immediately beneath the dwelling, plus joint ownership of the common areas surrounding the dwelling units. There may be restrictions upon all separately owned lots and dwellings. The right to establish and enforce these restrictions is usually vested in an owner’s association. Title to the common areas is vested in the association, and it governs how the residents use the area.

Availability and quality of schools in the area.

How close you are to work.

Availability of shopping centers, churches and recreational facilities.

General condition of homes in the neighborhood.

Property taxes compared to similar houses in other neighborhoods.

Utility rates (gas, electricity, water, and telephone).

Police; fire protection and garbage collection.

Availability of public transportation.

Quiet neighborhood or on an arterial street.

Rural or Urban

PRICE

Condition of the house – A Seller’s Property Condition Disclosure form, completed by the seller, is required on most residential real property. This form is to be furnished to the buyer before making a written offer. This form can be utilized during the inspection of the property as a "checklist" of items to review. A person qualified to perform inspections can point out any concerns or problem areas. The money spent for an inspection may be a very wise investment. If obtaining a loan, most lenders will require a survey. Whether or not a loan is obtained, it may be wise to have a survey done prior to closing.

Zoning Restrictions – Ask how the area is zoned. Zoning is established by local government and designates the type of buildings and how they may be used, such as: residential, commercial, and industrial.

Restrictive Covenants – These are private agreements that restrict the use and occupancy of real property. Such things as the purpose of the structure to be built, architectural requirements, setbacks, size of structure and aesthetics are only some examples. The consumer or real estate licensee can contact the Register of Deeds to obtain further information.

Taxes – Find out the cost of property tax and if there are any special assessments regarding roads, streets, sewers, electrical, etc. Also check if there are any property tax reduction programs affecting the current year’s taxes.

Easements – An easement is a right or privilege one party has to the use of another’s land for a special purpose consistent with the general use of the land. Easements are commonly given to telephone and electric companies to erect poles and run lines, as well as gas and water companies. Other easements can be given to people to drive or walk across someone else’s land. The consumer or real estate licensee can find what easements exist on the property by contacting the Register of Deeds.

It is normal procedure for the buyer to pay a reasonable cash deposit (earnest money) to bind the buyer and show the seller that this is a sincere offer by the buyer. The earnest money is usually held by the broker in his/her trust account, and is deposited by the next legal banking day after the offer is accepted. If the sale "closes", the earnest money is applied to the total price of the property.

If the offer is not accepted, or if the seller refuses to complete the transaction, or if the sale is not completed through no fault of the buyer, the earnest money will be refunded to the buyer. If the buyer does not follow through with the transaction after the offer is accepted by the seller, the earnest money may be forfeited, in addition to other possible legal remedies. By law, if a transaction is not consummated, a broker may not disburse any funds held in the trust account, except pursuant to a written instruction of all parties to the transaction or pursuant to a court order.

Earnest money disputes are one of the most common types of complaints brought to the attention of the Commission. Unless it can be shown that the broker has acted in a reckless manner by holding or disbursing the earnest money, the Real Estate Commission will not get involved in this type of problem. It is up to the buyer and seller to reach an agreement or get the matter resolved in civil court. If the dispute involves $8,000 or less, it may be handled in Small Claims Court. The broker may resort to paying the earnest money to the court until a legal decision is made as to whom is entitled to the earnest money.

Offer presented for seller’s acceptance. Once the contract has been prepared, the salesperson or broker will take the offer to the seller as soon as possible. If the seller accepts the offer, the contract becomes binding upon both parties. If the seller rejects the offer, modifies the offer, or makes a counter-offer, the original offer that was presented becomes null and void. However, should the buyer accept in writing the modifications or counter-offer, the offer is considered valid. After acceptance, the offer becomes legally binding on both parties.

Title Insurance. Title insurance protects the buyer against title defects. The insurance is a one-time expense and covers the period up to the time the buyer takes possession. The lending agency often requires title insurance to be taken out to insure their interests in the property.

Contingencies. A contingency is a provision placed in a contract that requires the completion of a certain act or the happening of a particular event before that contract is binding. Often a buyer will submit an offer to purchase contingent upon his or her obtaining financing. Contingencies must be written clearly and concisely.

Closing. When all the inspections and contingencies are completed, the transaction can be closed. Closing can take place at the broker’s office, the title company, or the lending agency. The paperwork is signed. The buyer will usually have to pay money to cover the down payment and closing costs. The lender will notify the buyer in advance what is required, to allow time to obtain a check or money order. A closing statement detailing receipts and disbursements in the transaction is furnished to the buyer and the seller. The buyer and seller should review the closing statement for accuracy and completeness. Any questions about the statement should be asked of the real estate licensee, the title company representative, or the lending agency representative.

Recording. To establish clear title to the property, the deed must be recorded in the county where the property is located. Make sure this has been arranged to be done as soon as possible after the closing.

Rate of Interest. Interest rates vary depending upon the nature of the loan and the economic conditions. Shop for the best possible rate available when considering a purchase of real property.

Length of Mortgage Period. The longer the mortgage, the lower the monthly payment. However, the total interest paid is more. Most home mortgages are for 15 to 30 years. Some loans are obtained with a "balloon" payment, which permits smaller monthly payments for a time period, and then the unpaid balance is due.

Acceleration Clauses. One should pay careful attention to what will happen if payments are not made timely. In many cases, the failure to meet payment requirements causes the entire debt to become due.

Prepayment Clauses. This permits paying off the mortgage before the end of its term. This right is necessary if refinancing is to be possible, or if the borrower wants to sell before the mortgage is paid. Some lenders charge a penalty for prepayment.

Due-on-Sale Clause. If a mortgage contains this clause, the mortgagor is required to pay off the mortgage debt, at the lender’s option, when the property is sold. This eliminates the possibility of the buyer assuming the mortgage without the lender’s consent.

Insurance and Taxes. The borrower will be required by the lender to maintain insurance on the property as a protection against loss. The borrower may be required to pre-pay the property taxes to the lender, either in a lump sum or on a monthly basis as a part of the payment to the lender. The insurance premium may also be part of the monthly payment.
Down payment. In most cases, to obtain a mortgage loan, a down payment is made. The amount depends upon the lender and type of loan.

Fees. When a borrower asks for a mortgage loan, the lender incurs a number of expenses, including such things as the time the loan officer spends interviewing the borrower, office overhead, the purchase and review of credit reports, title searches, legal and recording fees, and so on. The general practice is for lenders to charge 1% to 2% of the amount of the loan. This is commonly known as the "Origination Fee."

Points. Points are percentage points of the amount of the loan. One point = 1%. Points are charged to raise the lender’s yield. For example, a lender may be willing to offer an interest rate that is lower than the general market rate and in return require the borrower to pay "points". The points are payable at closing.

Adjustable Rate Mortgages. Adjustable rate mortgages are generally originated at one rate of interest, with the rate fluctuating up or down during the loan term base upon economic conditions. Generally, interest rate adjustments are limited to one each year, and there are a maximum number of increases that may be made over the life of the loan.

Veterans Administration Loan. The main purpose of the VA loan is to assist veterans in financing the purchase of reasonably priced homes, including condominium units and mobile homes, with small or no down payment. The financing is limited to owner-occupied residential (1 to 4 family) dwellings.

Federal Housing Administration Loan. Purchasers wishing to use an FHA-insured mortgage must meet certain criteria. A charge will be made to the borrower as the premium for the FHA insurance. This protects the lender from loss. The property must be appraised by an FHA appraiser before the loan is made.

Conventional Loan. This type of loan is not insured by the government or guaranteed. The risk is therefore higher for the lender, which is reflected by higher interest rates and a larger down payment requirement. Lenders establish specific terms of the loan, and can vary according to market conditions, consumer needs, and state regulations.

South Dakota Housing Development Authority. This is an agency created for the purpose of administering housing programs enabling low and moderate income families in South Dakota to obtain decent and safe housing.

Refusing to sell, rent, or negotiate with any person, or otherwise making a dwelling unavailable to any person.

Changing terms, conditions, or services for different individuals as a means of discrimination.

Advertising or making statements which would discourage applicants or buyers from applying or offering for real estate. Also inducing someone to sell because of potentially mixed neighborhoods.

Representing to any person, as a means of discrimination, that a dwelling is not available for sale or rent.

Refusing to allow alterations to accommodate the disabled when an escrow account has been set up for restoration.

Altering the terms or conditions for a home loan to any person who wishes to purchase or repair a dwelling, or otherwise denying such a loan as a means of discrimination.

Denying persons membership or limiting their participation in any multiple listing service, real estate brokers’ organization, or other facility related to the sale or rental of a dwelling as a means of discrimination.

Administer and enforce the license law;

Create and enforce necessary rules;

License by examination qualified applicants as real estate licensees;

Investigate possible and alleged violations of the license law and rules;

Prescribe curricula and standards for entry level real estate educational programs;

Prescribe curricula and standards for continuing education of licensees;
Administer the Recovery Fund;

Conduct hearings to impose suspension and revocation of licensees for violations of the Law and/or Rules of the Commission.