Free North Dakota Real Estate Practice Exam

Q1.Under the Equal Credit Opportunity Act (ECOA), which of the following actions by a lender would be considered illegal discrimination?

• A.Requiring higher down payments for investment properties
• B.Charging higher interest rates based on credit score
• C.Asking about marital status on a joint application
• D.Requiring income verification for all applicants

Q2.A property was the site of a methamphetamine laboratory that was properly remediated according to state standards. The current seller was never involved in the drug activity and purchased the property after remediation was completed. What is the seller's disclosure obligation regarding this information?

• A.No disclosure required since the property was properly remediated
• B.Must disclose as it may affect the property's value or desirability
• C.Must disclose only if specifically asked by the buyer
• D.Disclosure prohibited as it would constitute housing discrimination

Q3.According to North Dakota Real Estate Commission rules governing broker supervision, which of the following statements is TRUE regarding a salesperson's relationship with a broker?

• A.A salesperson may operate a real estate business independently as long as they maintain an active license.
• B.A salesperson must be affiliated with and supervised by a licensed North Dakota broker at all times while performing licensed activities.
• C.A salesperson may supervise other salespersons if given written permission by the Commission.
• D.A salesperson may accept compensation directly from a buyer or seller without routing it through the broker.

Q4.Under N.D.C.C. Chapter 43-23, the North Dakota Real Estate Commission has the power to subpoena witnesses and compel the production of documents during an investigation. If a licensee refuses to comply with a lawful Commission subpoena, what is the likely outcome?

• A.The Commission may only issue a written warning to the licensee for non-compliance
• B.The Commission may seek enforcement of the subpoena through the district court
• C.The Commission automatically revokes the licensee's license without a hearing
• D.The matter is referred to the federal Department of Housing and Urban Development

Q5.Under N.D.C.C. Chapter 43-23, which of the following statements CORRECTLY distinguishes the authority of a licensed North Dakota salesperson from that of a licensed North Dakota broker?

• A.A salesperson may independently operate a real estate brokerage and supervise other salespersons.
• B.A salesperson must perform all licensed activities under the supervision of a licensed broker and may not act independently.
• C.A salesperson may hold escrow funds in a personal bank account as long as the supervising broker is notified.
• D.A salesperson who has at least one year of experience may accept compensation directly from a buyer without broker involvement.

Q6.North Dakota Administrative Code and NDCC § 43-23-11 require a broker to perform a three-way reconciliation of the trust account. During an NDREC audit, the examiner finds that the broker's trust account ledger balance, the individual client ledger totals, and the bank statement balance all differ by more than $50 for three consecutive months. The broker claims the discrepancy is due solely to outstanding checks. Which response best describes the broker's obligation and potential liability under North Dakota law?

• A.Outstanding checks are a recognized reconciling item; as long as the broker documents them on the monthly reconciliation worksheet and resolves the difference within 30 days, no violation exists.
• B.The broker must immediately notify NDREC of any unresolved discrepancy, and a persistent three-month discrepancy—regardless of the stated cause—constitutes a prima facie failure of trust account management that may result in disciplinary action under NDCC § 43-23-11.
• C.Because the discrepancy is less than $100 per month, NDREC regulations provide a de minimis safe harbor that exempts the broker from discipline.
• D.The broker's only obligation is to correct the discrepancy before the next transaction closes; no reporting to NDREC is required unless a client formally complains.

Q7.Which government-sponsored enterprise (GSE) primarily purchases conventional mortgage loans to provide liquidity to the mortgage market?

• A.Fannie Mae
• B.Federal Housing Administration (FHA)
• C.Veterans Administration (VA)
• D.Department of Housing and Urban Development (HUD)

Q8.Which agency is responsible for administering and enforcing the licensing requirements for real estate salespersons in North Dakota under N.D.C.C. Chapter 43-23?

• A.The North Dakota Department of Financial Institutions
• B.The North Dakota Secretary of State's Office
• C.The North Dakota Real Estate Commission
• D.The North Dakota Attorney General's Consumer Protection Division

Q9.Under NDCC § 43-23-11 and applicable NDREC regulations, a North Dakota broker receives an earnest money deposit from a buyer on a Friday afternoon after banking hours. The listing agreement specifies that earnest money must be deposited into the broker's trust account 'promptly.' The broker places the check in the office safe and deposits it the following Tuesday morning (the next business day after the weekend and a Monday state holiday). A competing offer is also received on Monday. Which statement most accurately reflects the broker's compliance with North Dakota trust account deposit requirements?

• A.The broker violated NDREC rules because earnest money must be deposited within 24 hours of receipt regardless of banking hours, weekends, or holidays.
• B.The broker is in compliance because NDREC rules require trust account deposits to be made by the end of the next banking day following receipt; depositing on Tuesday after a weekend and a state holiday satisfies this standard, provided the funds were safeguarded in the interim.
• C.The broker is in compliance only if the seller's written consent was obtained before the close of business on Friday authorizing the delayed deposit.
• D.The broker violated NDREC rules because receipt of a competing offer on Monday triggered an immediate obligation to deposit the first earnest money check before presenting either offer to the seller.

Q10.Under RESPA (Real Estate Settlement Procedures Act), which federal agency has regulatory oversight and enforcement authority?

• A.Federal Housing Administration (FHA)
• B.Department of Housing and Urban Development (HUD)
• C.Consumer Financial Protection Bureau (CFPB)
• D.Federal Reserve Board

Q11.Which type of title insurance policy protects the mortgage lender's interest in the property?

• A.Lender's policy
• B.Owner's policy
• C.Extended coverage policy
• D.Standard coverage policy

Q12.A buyer's financing contingency specifies a 'conventional loan at no more than 7% interest' and the buyer can only get a 7.5% rate. What is the buyer's position under the contract?

• A.The buyer must proceed — interest rate variations are not grounds for cancellation
• B.The buyer can only cancel if the rate exceeds 8%
• C.The seller must reduce the purchase price to compensate for the higher rate
• D.The buyer may cancel and recover earnest money because they cannot obtain financing meeting the specified terms

Q13.Under N.D.C.C. Chapter 43-23, which of the following best describes a primary power granted to the North Dakota Real Estate Commission?

• A.Prosecuting criminal violations of real estate fraud in district court
• B.Adopting rules necessary to administer and enforce the real estate licensing laws
• C.Setting mortgage interest rates for real estate transactions
• D.Approving all real estate purchase contracts in North Dakota

Q14.Under RESPA Section 8, a title company provides a broker with free monthly office space valued at $600, in exchange for the broker recommending the title company's services to all transaction clients. Which statement BEST describes this arrangement?

• A.It is permissible if the broker discloses the arrangement in writing to all clients at the time of the recommendation
• B.It is permissible only if the title company and the broker are affiliated business arrangements registered with the CFPB
• C.It is an illegal kickback under RESPA Section 8(a) regardless of disclosure, because it is a thing of value exchanged for referrals of settlement services
• D.It is permissible because office space is an in-kind benefit rather than a monetary payment and falls outside RESPA's scope

Q15.During a North Dakota Real Estate Commission investigation, an investigator requests access to a licensed broker's transaction files. Under N.D.C.C. Chapter 43-23, which of the following best describes the broker's obligation?

• A.The broker may refuse access until a court subpoena is issued
• B.The broker must provide access only if the request is accompanied by a search warrant
• C.The broker must cooperate and make records available to the Commission as part of its investigative authority
• D.The broker is only required to provide a written summary of the files, not the actual documents