N.D. Admin. Code Title 70 — Real Estate Commission

Article 70-01 General Administration

Chapter 70-01-01 Organization of Commission

N.D. Admin. Code 70-01-01-01 Organization of real estate commission

1.History and functions. The 1957 legislative assembly passed a real estate licensing law, codified as North Dakota Century Code chapter 43-23. This chapter requires the governor to appoint a state real estate commission. It is the responsibility of the commission to administer the real estate license law regarding brokers and salespersons and to regulate the sale of out-of-state subdivided lands offered for sale to residents of North Dakota. In addition, the commission is required to administer a real estate education, research, and recovery fund whereby aggrieved persons may make application for the payment of unsatisfied judgments.

2.Commission membership. The commission consists of five members, three of whom are active real estate brokers, appointed by the governor. Members of the commission are appointed for a term of five years, staggered so the term of one member expires each year. At the expiration of the term of any member of the commission, the governor appoints a successor for a term of five years.

3.Executive director. The executive director of the commission is employed by the commission and is responsible for administration of the commission's activities.

4.Inquiries. Inquiries regarding the commission may be addressed to the executive director.

History

• History: Amended effective July 1, 2006; April 1, 2008; July 1, 2022.
• General Authority: NDCC 28-32-02
• Law Implemented: NDCC 43-23-03

Chapter 70-01-02 Rules for Pleading and Practice

N.D. Admin. Code 70-01-02-01 Place of hearing

All hearings shall be held at a location designated by the commission in its notice of hearing.

History

• History: Amended effective January 1, 1992; April 1, 1996.

N.D. Admin. Code 70-01-02-02 Public hearing

All hearings conducted by the commission, or its duly authorized employees, shall be open to the public, unless otherwise ordered by the presiding officer at the hearing, or specifically provided by statute.

History

• Law Implemented: NDCC 44-04-19

N.D. Admin. Code 70-01-02-03 Rules of procedure

The rules of procedure of the real estate commission shall be those adopted by the commission, together with those procedures outlined in North Dakota Century Code chapter 28-32.

History

• Law Implemented: NDCC 28-32, 43-23-11.1(3)

N.D. Admin. Code 70-01-02-04 Pleading

The form of pleading before the real estate commission shall be the same as that employed in the district courts of North Dakota. The caption of such pleadings should include: "BEFORE THE NORTH DAKOTA REAL ESTATE COMMISSION".

N.D. Admin. Code 70-01-02-05 Conduct of hearing

The hearing shall be conducted and presided over by a member of the commission or such subordinate as may be designated to hear the matter by the chair of the commission.

History

• History: Amended effective July 1, 2022.

N.D. Admin. Code 70-01-02-06 Prehearing conference

In any matter pending before it, the commission may direct any party, or attorney for any party, to appear before the commission for the purpose of considering simplification of the issues, amendments to the pleadings, obtaining admission of facts or documents which will avoid unnecessary proof, and such other matters as may aid in the disposition of the matter. Such orders may be made, as may be necessary, to show the action taken at such prehearing conference.

N.D. Admin. Code 70-01-02-07 Depositions

The commission or any party may in an investigation of hearing cause the deposition of witnesses or parties residing within or without the state to be taken in the manner prescribed by law.

N.D. Admin. Code 70-01-02-08 Hearings

1.Proceedings going to the revocation or suspension of licenses may be initiated by a verified complaint of an individual or an individual's representative. Proceedings requesting the promulgation, amendment, or repeal of any rules of the commission may be initiated on a verified petition by an individual, or an individual's representative.

2.The commission may in its discretion initiate proceedings to discipline a licensee whenever an investigation by the commission or its employees discloses probable grounds therefore. No hearings shall be initiated until a motion duly authorizing the hearing has been recommended by the commission.

History

• History: Amended effective May 1, 1986; July 1, 2022.

N.D. Admin. Code 70-01-02-09 Service of process

Complaints, notices, orders or other processes of the commission shall be served personally, or by registered or certified mail, as the real estate commission may direct. Time for answering, or time required on other motions, shall be as prescribed by the commission by rule, or in the absence of such

rule, as prescribed by the district courts of North Dakota.

History

• History: Amended effective May 1, 1986.
• Law Implemented: NDCC 43-23-11.1(2)(3)

N.D. Admin. Code 70-01-02-10 Rehearings and appeals

The procedure for rehearing and appeals shall be that prescribed in North Dakota Century Code

chapter 28-32.

History

• Law Implemented: NDCC 28-32-14, 28-32-15

Article 70-02 Real Estate Licensure

Chapter 70-02-01 Licensing, Trust Accounts, and Complaints

N.D. Admin. Code 70-02-01-01 Application and purpose of title

1.This title applies in all proceedings and hearings had before the commission in matters within its jurisdiction, except in cases where the statute involved provides a procedure inconsistent with this title, and in such case the statute shall govern to the extent of such inconsistency.

2.It is the purpose of this commission, acting under the provisions of the law creating it, to safeguard the public interest in real estate transactions, to regulate the licensing of real estate brokers and salespersons, to encourage and require the maintenance of high standards of ethics and practices by all real estate licensees doing business in North Dakota.

History

• Law Implemented: NDCC 43-23-02

N.D. Admin. Code 70-02-01-02 Application for license

1.No application for either a broker's or salesperson's license will be accepted from a person under the age of eighteen years.

2.All applications must be filed with the commission before an examination, complete in every detail with every question answered and correct fees submitted.

3.It shall be incumbent upon the applicant for a real estate broker's license to submit the applicant's proofs of qualification pursuant to subsection 3 of North Dakota Century Code

section 43-23-08. Broker applicants wishing to qualify under the two-year experience requirement shall be required to submit to the commission a letter from said applicant's broker or brokers that the applicant has been actively engaged in the real estate business as a salesperson for at least two years.

"Actively engaged" means that the applicant must have devoted the applicant's full time as a licensed real estate salesperson. The foregoing shall be certified by a licensed real estate broker.

4.Each application for license shall be made on application forms provided by the real estate commission.

5.After an application is filed, no refund of application fee will be made to any applicant.

6.The commission may deny any application for license when one or more of the following conditions are present:

a.The application contains any false statement.

b.An investigation fails to show affirmatively that the applicant possesses in every instance the necessary qualifications.

c.The applicant has acted or attempted to act in violation of North Dakota Century Code

chapter 43-23 or this title.

d.The applicant has had a real estate license suspended or revoked in North Dakota or another state.

e.The applicant has issued one or more checks or drafts which have been dishonored by a payor bank because:

(1)No account exists;

(2)The account was closed; or (3)The account did not contain sufficient funds to pay the check or draft in full upon its presentment.

f.The applicant's credit history shows the existence of unpaid and overdue judgments, liens, or other debt obligations which, for the protection of the public, requires that the application be denied.

7.If the application and supporting documents on their face show that the applicant is qualified, but from complaints and information received or from investigation it shall appear to the commission at any time before the initial license is delivered, that there may be cause to deny a license, the commission may order a hearing to be held to consider such complaints or information.

8.The commission may require such other proof as may be deemed advisable of the honesty, truthfulness, and good reputation of any applicant, including the officers and directors of any corporation, or the members of any copartnership or association making such application, before accepting an application for license.

9.Inquiry and investigation may be made by the commission as to the financial responsibility of each applicant.

10.When a corporation submits its application for a license, the application must be accompanied by a copy of the articles of incorporation and a certificate of authority issued by the secretary of state.

11.When a partnership submits its application for a license, the application must be accompanied by a copy of the partnership agreement.

12.An applicant for licensure in another state may request the commission to certify to such other state that the applicant is a licensee of this state. A fee as set by the commission shall accompany the request.

13.An application for an organization to be licensed for a salesperson, broker associate, or broker pursuant to North Dakota Century Code section 43-23-05.1 must be accompanied by a one-time license fee of not more than three hundred dollars, as set by the commission. The individual who owns the organization must possess and maintain a valid and active real estate license in order for the organization to be licensed. The failure to do so will cause the organization's license to become inactive and invalid. The fee must be paid each time the organization's license is activated.

January 1, 2006; April 1, 2008; July 1, 2022.

History

• History: Amended effective August 1, 1981; May 1, 1986; January 1, 1992; February 1, 2004;
• Law Implemented: NDCC 43-23-05.1, 43-23-08, 43-23-09, 43-23-11.1

N.D. Admin. Code 70-02-01-03 Examinations

1.An applicant will not be permitted to take the examination until and unless the applicant has been authorized in writing to take the examination.

2.If an applicant should fail to take the examination within four months after notification by the commission that the applicant is qualified to take the examination, an applicant must submit a new application together with fees.

3.During the examination the use or possession of any unfair methods or notes, the giving or receiving of aid of any kind, or the failure to obey instructions will result in a denial of the application and license.

4.If the salesperson applicant passes one portion of the examination, national or state, the salesperson applicant shall not be required to repeat that portion of the examination if that applicant passes the remaining portion within twelve months from the date of the first examination. An applicant must submit a new application with fees if the examination has not been passed within the same twelve-month period.

5.A broker applicant must pass the broker examination within twelve months from the date of the first examination. An applicant must submit a new application in complete detail together with the statutory fees if the examination has not been passed within the same twelve-month period.

6.A prelicensure course is valid for two years from the date the applicant completed the course, as indicated on the certificate of completion or other official documentation provided by the school.

History

• History: Amended effective January 1, 1992; February 1, 2004; April 1, 2008; July 1, 2022.
• Law Implemented: NDCC 43-23-13(4)

N.D. Admin. Code 70-02-01-04 Renewal of license

All licenses expire on December thirty-first of each year. Persons desiring to continue in business must make proper application for renewal on or before November fifteenth of each year in order for the respective license to be renewed on a timely basis for the following license period. Failing to do this subjects such persons to loss of the right to charge a commission and also prosecution for doing business without a license after December thirty-first. Any person whose license has been canceled for failure to renew the person's license when due must submit a new application with the fees and pass the examinations to be licensed again. No license renewal fees are refunded after the beginning of the new license year if a licensee cancels their license or is deceased.

History

• History: Amended effective October 1, 2015; July 1, 2022.
• General Authority: NDCC 43-23-08, 43-23-08.2, 43-23-11.1(3)
• Law Implemented: NDCC 43-23-13(4)

N.D. Admin. Code 70-02-01-05 Inactive licenses

1.A qualified licensed salesperson desiring to place the salesperson's license on an inactive status may do so by a request from the salesperson in a format prescribed by the commission that the salesperson's license be placed on an inactive status. The salesperson may keep the salesperson's license on an inactive status for an indefinite period. The salesperson placing the salesperson's license on inactive status shall pay the required fee for renewing such salesperson's license each year. A salesperson whose license is in an inactive status shall not engage in any manner in any of the activities described under North Dakota Century Code chapters 43-23 and 43-23.1, until the salesperson shall first request that the salesperson's license be reactivated by the commission. During the time that a salesperson's license is on an inactive status educational requirements do not need to be met. However, if any applicable education requirements are unsatisfied, proof of fulfillment must be submitted before the license can be reissued on an active status.

2.A qualified licensed broker who desires to place the broker's license on an inactive status may do so in a format prescribed by the commission that requests the license be placed on an inactive status. The broker may keep the broker's license on an inactive status for an indefinite period. The broker placing the broker's license on inactive status shall pay the required fee for renewing such broker's license each year. During the time that a broker's license is on an inactive status educational requirements do not need to be met. However, if any applicable education requirements are unsatisfied, proof of fulfillment must be submitted before the license can be reissued on an active status.

3.While a license is on inactive status it is not necessary, in the case of a broker, to maintain an active trust account. While a license is on inactive status, in the case of a designated broker, the firm license is automatically canceled unless another broker is the designated broker. A firm license that is canceled may be activated only by submitting a firm license application with all fees.

4.To reactivate an inactive license, a licensee must meet the continuing education hours as required by section 70-02-04-02 for each continuing education period the licensee's license was inactive, not to exceed the number of hours required for the three continuing education periods prior to reactivation. The requirements of section 70-02-04-02 must have been fulfilled within the three years immediately preceding the return to active status.

History

• History: Amended effective May 1, 1986; January 1, 1992; February 1, 2004; July 1, 2010; July 1, 2022.
• Law Implemented: NDCC 43-23-08, 43-23-08.2

N.D. Admin. Code 70-02-01-06 Nonresident brokers and salespersons

1.Any person who becomes an applicant for a nonresident license shall become subject to the same rules required of an applicant whose residence is in North Dakota. A designated broker shall obtain a nonresident license before an associate broker or salesperson licensed under the designated broker can be issued a nonresident license.

2.An applicant for nonresident broker's or salesperson's license shall hold a currently valid broker's or salesperson's license in the state of the applicant's principal place of business and that state shall certify that the applicant is in good standing and no complaints are pending.

3.A nonresident broker must maintain an active place of business as a real estate broker in the state of the broker's principal place of business. The nonresident broker shall furnish proof of maintaining an active place of business by submitting information deemed necessary by the commission. A North Dakota firm license shall be obtained if the company is a partnership, corporation, limited liability company, or association.

4.North Dakota will not recognize the licensee from another state for a reciprocal license unless an agreement granting reciprocal privileges to North Dakota licensees has been made by the commission with the proper regulatory authorities of that state. The agreement shall set out the terms and the regulations to be followed.

5.An applicant currently licensed in a nonreciprocal state who has successfully passed the real estate licensing examination given in another state need only take the state portion of the examination in North Dakota. Prelicensure course is not required if the applicant is already licensed in another nonreciprocal state.

History

• History: Amended effective May 1, 1986; January 1, 1992; April 1, 2008; October 1, 2015; July 1, 2022.
• Law Implemented: NDCC 43-23-10

N.D. Admin. Code 70-02-01-07 Licensee's duties upon release of license due to cancellation, transfer, suspension, or revocation

Upon release of license or upon notice of suspension, revocation, or cancellation of the license, the designated broker shall destroy the license and remove the licensee's name and licensee's number from the broker's website. If the license is that of a broker, the broker shall also release all licensees associated with the broker. No refund will be made upon any license when released.

History

• History: Amended effective January 1, 1992; February 1, 2004; July 1, 2022.
• Law Implemented: NDCC 43-23-11.1

N.D. Admin. Code 70-02-01-08 Salesperson and broker associate transfer or release

When for any reason a licensee severs connection with the licensee's designated broker and desires to transfer to another broker, the licensee must complete a transfer and release form provided by the commission, to be executed by the licensee, the licensee's current broker, and the licensee's new broker. Should the licensee's current broker not be agreeable to the transfer or release, the current broker then shall have the right to state the broker's reasons for refusal. Unless there is sufficient justification, the license will be transferred pending the receipt of the transfer form and fee.

History

• History: Amended effective May 1, 1986; January 1, 1992; July 1, 2022.
• Law Implemented: NDCC 43-23-12(2), 43-23-13(6), 43-23-13(7)

N.D. Admin. Code 70-02-01-09 Broker associates

A real estate broker who does not have an office under the broker's own name, but is affiliated with another licensed broker and performs service similar to that of a salesperson, must not at any time act independently as a broker, and shall not perform any real estate service without full consent and knowledge of the broker's supervising broker. The designated broker shall at all times be responsible for the action of the affiliated broker associate to the same extent as though the affiliated broker were an affiliated salesperson.

History

• Law Implemented: NDCC 43-23-06.1(5)

N.D. Admin. Code 70-02-01-10 Salesperson

A salesperson shall not commence work until the salesperson's broker receives notification of licensure from the commission. Any licensee leaving a broker shall not take nor use any agreements secured through the office or through licensees of the former broker unless specifically authorized by the former broker. All materials and records that belong to the former broker shall be returned to the former broker.

History

• History: Amended effective January 1, 1992; February 1, 2004; July 1, 2022.
• Law Implemented: NDCC 43-23-12(2)

N.D. Admin. Code 70-02-01-11 Branch office

1.Definition. If a broker maintains more than one office, then one office shall be designated as the main office and each additional office shall constitute a branch office. If a real estate broker maintains a regular office, the broker's home shall not be considered a branch office.

2.Applications. The broker desiring to open a branch office shall file with the commission an application for a branch office license on forms provided by the commission.

3.Supervision. The applicant broker must designate the applicant broker or another licensee to act as branch office manager to aid the broker in actively managing each branch office and to aid the broker in supervising the licensees working from such branch office. The designated licensee shall be responsible for all activities of that branch office. The applicant broker may designate the applicant broker to act as manager for all branch offices.

4.Notification to commission of change. It shall be the responsibility of the applicant broker to notify the commission in writing of any change of address of a branch office or change of supervisor of the branch office, within five days after the change.

5.Notification to commission. The applicant broker shall at all times notify the commission of the location and address of each branch office which the broker operates and the name of the licensee who supervises the branch office.

6.Additional office. Every additional office or place of business, other than the principal place of business of a broker, shall be licensed only with the approval of the commission and only after the applicant broker has given satisfactory proof that this additional office shall be under the supervision of a duly authorized licensee.

7.Display license. A branch license shall be displayed in the branch office or listed on the broker's website, shall bear the address of the branch office, and shall bear the name of the licensee designated to actively manage the branch office.

8.Identical name. The branch office must be operated under the same name as the principal office.

History

• History: Amended effective December 1, 1999; July 1, 2022.
• Law Implemented: NDCC 43-23-12, 43-23-13(5)

N.D. Admin. Code 70-02-01-12 Sharing office space

It shall be acceptable for more than one broker to operate in an office at the same address if each broker maintains all records and trust accounts separate from all other brokers. Each broker shall operate under a business name which clearly identifies the broker as an individual broker within the group of brokers.

History

• Law Implemented: NDCC 43-23-12(1), 43-23-14.1

N.D. Admin. Code 70-02-01-13 Prevention of same or deceptively similar real estate firm names

The commission within its discretion may prevent a real estate firm from using the same name or a name deceptively similar to that of a real estate firm already in the community if the commission determines that the interests of the public are thereby endangered.

History

• Law Implemented: NDCC 43-23-12(1)

N.D. Admin. Code 70-02-01-14 Salesperson closing

A salesperson shall not handle the closing of any real estate transaction (unless authorized by the salesperson's broker), except under the direct supervision of the broker, a licensed officer, or a licensed partner of the corporation or partnership under whom the salesperson is licensed.

N.D. Admin. Code 70-02-01-15 Trust account requirements - Handling of funds - Records

1.All moneys belonging to others and accepted by the broker while acting in the capacity as a broker shall be deposited in a federally insured financial institution in this state in an account separate from money belonging to the broker. Clients' funds shall be retained in the depository until the transaction involved is consummated or terminated, at which time the broker shall account for the full amounts received.

a.Name of account. The name of such separate account shall be identified by the words "trust account" or "escrow account".

b.Notification. Each broker shall notify the commission of the name of the institution in which the trust account or accounts are maintained and also the name of the accounts on forms provided therefore. A new form shall be filed with the commission each time a broker changes the real estate trust account in any manner whatsoever, including change of depository, change of account number, change of business name, or change of method of doing business. The form shall be filed with the commission within ten days after the aforementioned change takes place.

c.Authorization. Each broker shall authorize the commission to examine and audit the trust account and shall complete an authorization form attesting to the trust account and consenting to the examination and audit of the account by a duly authorized representative of the commission.

d.Commingling prohibited. Each broker shall only deposit trust funds received on real estate transactions in the broker's trust account and shall not commingle the broker's personal funds or other funds in the trust account with the exception that a broker may deposit and keep a sum not to exceed five hundred dollars in the account from the broker's personal funds which sum shall be specifically identified and deposited to cover service charges relating to the trust account.

e.Number of accounts. A broker may maintain more than one trust account provided the commission is advised of the account.

f.Time of deposit. Each broker shall deposit all real estate trust money received by the broker or the broker's salesperson in the trust account within twenty-four hours of receipt of the money by the broker or the salesperson unless otherwise provided in the purchase contract. In the event the trust money is received on a day prior to a holiday or other day the depository is closed, the money shall then be deposited on the next business day of the depository. If the trust money is wired by the buyer to either the broker's trust account or a nonbroker third party, the broker shall maintain in the broker's office a complete record of all moneys transferred, including the initial contact request for the wire from the buyer to their financial institution, and confirmation of completion of the transfer. If earnest money is mailed by the buyer to the broker or the nonbroker third party, the envelope containing the postmark must be retained by the broker to establish the date the money was sent.

g.Responsibility. When a broker is registered in the office of the real estate commission as in the employ of another broker, the responsibility for the maintenance of a separate account shall be the responsibility of the employing broker.

h.Noninterest bearing accounts. All trust accounts must be noninterest bearing.

2.Brokers are responsible at all times for deposits and earnest money accepted by them or their salespersons.

a.Personal payments. No payments of personal indebtedness of the broker shall be made from the trust account other than a withdrawal of earned commissions payable to the broker or withdrawals made on behalf of the beneficiaries of the trust account.

b.Withdrawals. Money held in the trust account which is due and payable to the broker should be withdrawn promptly.

c.Earnest money. A broker shall not be entitled to any part of the earnest money or other moneys paid to the broker in connection with any real estate transaction as part or all of the broker's commission or fee until the transaction has been consummated or terminated. The earnest money contract shall include a separate written provision, approved by all parties including the broker, for any division of moneys taken in earnest, when the transaction is not consummated and such moneys are retained as forfeiture payment.

d.Abandoned deposits. Abandoned deposits in a broker's trust account are subject to the laws governing abandoned property as provided in North Dakota Century Code chapter 47-30.1. A deposit that has remained unclaimed for more than three years after it became payable or distributable is presumed abandoned by North Dakota Century Code

chapter 47-30.1 and must be reported and delivered to the administrator of the unclaimed property division as provided by North Dakota Century Code chapter 47-30.1.

Earnest money deposits are considered payable or distributable as of the closing date on the purchase agreement or date of cancellation of the purchase agreement.

3.A broker shall maintain in the broker's office a complete record of all moneys received or escrowed on real estate transactions, in the following manner:

a.Bank deposit slips. A bank deposit slip showing the date of deposit, amount, source of the money, and where deposited.

b.Bank statements. Monthly bank statements are to be retained and kept on file.

c.Trust account checks. Trust account checks should be numbered and all voided checks retained. The checks should denote the broker's business name, address, and should be designated as "real estate trust account".

d.Journal. A journal which shows the chronological sequence in which funds are received and disbursed:

(1)For funds received, the journal must include the date, the name of the party who is giving the money, the property address, and the amount.

(2)For disbursements, the journal must include the date, the payee, and the amount.

(3)A running balance must be shown after each entry (receipt or disbursement).

e.Ledger. This record book will show the receipt and the disbursements as they affect a single, particular transaction as between buyer and seller, etc. The ledger must include the names of both parties to a transaction, the dates, and the amounts received. When disbursing funds, the date, payee, and amount must be shown.

f.Reconciliation. The trust account must be reconciled monthly except in the case where there had been no activity during that month.

g.Maintain records. Every broker shall keep permanent records of all funds and property of others received by the broker for not less than six years from the date of receipt of any such funds or property.

History

• History: Amended effective August 1, 1981; January 1, 1992; April 1, 1992; December 1, 1999; July 1, 2010; January 1, 2016; July 1, 2022.
• General Authority: NDCC 28-32-02, 43-23-14.1
• Law Implemented: NDCC 43-23-11.1(1), 43-23-14.1

N.D. Admin. Code 70-02-01-16 Complaints - Answer - Dismissal - Hearing

1.All complaints to be investigated by the real estate commission, as required by North Dakota Century Code section 43-23-11.1, must be in writing on forms furnished by the commission.

The complaint shall be verified and shall include: the full name and address of the person making the complaint, hereinafter referred to as the complainant; the full name and address of the person against whom the complaint is made, hereinafter referred to as the respondent; an allegation that respondent is either a licensed broker or salesperson, and if the respondent is a salesperson, then the full name and address of the broker employer; and a clear and concise statement of the facts constituting the alleged complaint including the time and place of occurrence of particular acts and the names of persons involved.

2.The licensee against whom a complaint has been filed must, within twenty days from receipt of complaint, file the licensee's answer on forms furnished by the commission. This answer must be in affidavit form, properly certified, and contain a factual response to the allegations set out in the complaint.

3.If the investigation reveals that the complaint does not involve a violation of the laws or rules, the complaint shall be dismissed without a formal hearing, and the complainant and respondent so informed in writing.

4.If the investigation reveals that the acts of the respondent may be such as to justify disciplinary action against the respondent, a formal hearing will be held on the complaint.

Notice of such hearing shall be given at least twenty days in advance by serving upon the respondent a copy of the complaint against the respondent and the date and place of hearing.

History

• History: Amended effective May 1, 1986; January 1, 1992; July 1, 2022.
• Law Implemented: NDCC 43-23-11.1

N.D. Admin. Code 70-02-01-17 Disputes between licensees

The commission is not authorized by law nor will it consider or conduct hearings involving disputes over fees or commissions between licensees.

N.D. Admin. Code 70-02-01-18 Commissions

The real estate commission neither recommends nor recognizes any agreement to fix or impose uniform rates of commission on any real estate transaction.

N.D. Admin. Code 70-02-01-19 Definitions - Psychologically impacted properties

As used in this section, the term "psychologically impacted properties" means any real property within this state that is known to be, or is suspected to have been, the site of a suicide, homicide, or other felony, or there are other circumstances, suspicions, or facts which may cause emotional or psychological disturbance or concerns to a prospective purchaser or lessee that have the potential of influencing whether that individual will purchase or lease the property. "Psychologically impacted property" does not mean the fact or suspicion that any present or past occupant is, or has been, infected with or died from human immunodeficiency virus or acquired immune deficiency syndrome or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted through the occupancy of real property.

History

• History: Effective April 1, 1992.

N.D. Admin. Code 70-02-01-20 Disclosure of psychologically impacted properties - Not a material defect

The fact that a parcel of real property, or any building or structure thereon, may be psychologically impacted, or may be in close proximity to a psychologically impacted property, is not a material or substantial fact that is required to be disclosed in a sale, lease, exchange, or other transfer of real estate. Licensees are not required to inform a prospective purchaser that certain real property is psychologically impacted real property. However, if the prospective purchaser asks whether the real property may be psychologically impacted, the licensee is required to inquire of the owner whether there are any facts or suspicions that the property is in fact psychologically impacted, and to advise the prospective purchaser of the owner's response. If the owner refuses to answer the inquiry, the prospective purchaser must be so advised.

History

• History: Effective April 1, 1992.

N.D. Admin. Code 70-02-01-21 Responsibilities of designated broker

The designated broker must have a written company policy that identifies and describes the types of real estate agency relationships in which the agency may engage. In addition, any agency that offers representation to both buyers and sellers must also address in the policy manual the agency's procedures intended to prevent any mishandling of information through both formal and informal sharing of information within the agency, the arrangement of agency office space, and the personal relationships of agents who are representing clients with adverse interests. The designated broker is responsible for supervising teams and shall have a written policy that identifies and describes the team relationships in which its licensees may engage. Designated brokers shall maintain a chronological written record of all teams and team membership and provide such records to the commission upon request.

History

• History: Effective July 1, 2010; amended effective July 1, 2022.
• Law Implemented: NDCC 43-23-12.1

Chapter 70-02-02 Education and Experience Standards

N.D. Admin. Code 70-02-02-01 Purpose of chapter

The purpose of this chapter is to delineate the rules which the real estate commission will follow in approving and regulating all schools offering prelicensure courses to meet the requirements in North Dakota Century Code section 43-23-08.

History

• General Authority: NDCC 28-32-02, 43-23-08, 43-23-08.2

N.D. Admin. Code 70-02-02-02 Application for prelicensure course approval

In order for any prelicensure course to be approved by the real estate commission a complete application shall be filed with the commission not less than forty-five days prior to the contemplated date of offering the first course. The application, in addition to the name and address of the school offering the course as well as any other identifying criteria which the commission may require, must be accompanied by a nonrefundable fee not to exceed two hundred dollars, and must include:

1.A proposed course outline, in reasonable detail, with hours spent on each subject area to be covered by the course. Each outline shall make reference to the textbook used and other material related to the course or subject matter, and shall substantially conform to the approved curricula outlines prepared by the commission.

2.An instructor application or resume on all instructors and subject to be taught.

3.The date, time, and place of any synchronous course hours.

4.Tuition and other costs or fees for students.

History

• History: Amended effective January 1, 1992; January 1, 2006; July 1, 2022.
• General Authority: NDCC 28-32-02, 43-23-08, 43-23-13
• Law Implemented: NDCC 43-23-08, 43-23-13

N.D. Admin. Code 70-02-02-03 Qualifications for classroom instructors

Any person applying for commission approval of classroom instruction must furnish to the commission evidence satisfactory to the commission that every instructor giving classroom instruction has the necessary specialized preparation, training, and experience to ensure competent instruction.

Instructors who, in the estimation of the school administration, are deemed inadequate or do not satisfy the school's standards of quality should have their services terminated by the school.

History

• General Authority: NDCC 43-23-08

N.D. Admin. Code 70-02-02-04 Courses of study approved by the commission

N.D. Admin. Code 70-02-02-05 Commission review of all real estate courses

Every three years, the school shall submit another complete application. The commission shall review the school to determine if it meets the requirements of law and commission for certification for another three years.

N.D. Admin. Code 70-02-02-06 Approval of classroom instruction

N.D. Admin. Code 70-02-02-07 Review of courses not having received prior approval

N.D. Admin. Code 70-02-02-08 Withdrawal of approval

If the commission determines a school is not meeting the requirements of law for continued approval, the commission shall immediately notify the school in writing detailing the deficiencies requiring correction. The schools' approval by the commission shall continue ninety days from the date of the commission's written notice to the school, and if, at the expiration of that period, the school has failed to correct to the commission's satisfaction the deficiencies noted, the commission may withdraw approval of the school.

N.D. Admin. Code 70-02-02-09 Advertising of approved courses

If the name of the commission is used or if commission approval is indicated, any advertisement may not make or imply any guarantee concerning the applicant's passing of the real estate licensing examination or that the commission has any interest in the school other than ensuring that it complies with the standards imposed by North Dakota Century Code chapter 43-23. The phrase "North Dakota real estate commission" may not appear in the advertisement in larger type than the words and phrases preceding or following the phrase "North Dakota real estate commission". No promotional material of any school approved by the commission shall state or imply that its program of instruction is the sole vehicle for which the education requisites for licensure shall be attained. Schools or their representatives shall not promote their school in such a manner as to state or imply that their program excels over any other course of instruction.

N.D. Admin. Code 70-02-02-10 Course hour

A course hour shall be defined as fifty minutes.

History

• History: Amended effective October 1, 2015; July 1, 2022.

N.D. Admin. Code 70-02-02-11 Coordinators

N.D. Admin. Code 70-02-02-12 Examinations

Each prelicensure course shall include examinations as a component to determine successful course completion.

The weight of examinations as the determination of successful completion of a course and the criteria for passing of examinations may be developed by each school. However, the commission may direct alterations in examination procedures, criteria for passing, and the administration whenever deemed necessary. Each school shall furnish the commission with copies of its examinations.

History

• General Authority: NDCC 43-23-08, 43-23-08.2

N.D. Admin. Code 70-02-02-13 Certificate of completion

Each school shall issue to the students successfully completing a course of instruction an official certificate of completion which reflects the school's name, course title, and number of classroom hours (or other recognized educational unit) involved in the course. Such certificate, or copies thereof, shall serve as evidence when presented to the commission of successful completion of the course of instruction. Letters of other official communication may also be provided the student, which may be utilized by the student for submission to the commission as evidence of satisfactory completion of the course. The letters will fully reflect the school name, the course title and number, educational units, and be dated and signed by an official of the school.

History

• General Authority: NDCC 43-23-08, 43-23-08.2

N.D. Admin. Code 70-02-02-14 Facilities

N.D. Admin. Code 70-02-02-15 Course content must not be duplicated

N.D. Admin. Code 70-02-02-16 No credit given for salesmanship courses

N.D. Admin. Code 70-02-02-17 Correspondence courses

N.D. Admin. Code 70-02-02-18 Online-only asynchronous prelicensure courses must be certified

Online-only asynchronous prelicensure courses must be certified by the association of real estate license law officials before being approved by the commission. A student must complete the online-only asynchronous prelicensure course within one year of the date of enrollment.

History

• History: Effective December 1, 1999; amended effective July 1, 2022.
• General Authority: NDCC 43-23-08, 43-23-08.1, 43-23-08.2

Chapter 70-02-03 Licensee Responsibilities

N.D. Admin. Code 70-02-03-01 Application of licensee responsibilities

The commission shall have the power to investigate and to discipline a licensee upon violation by a licensee of any provisions of the licensee responsibilities.

History

• History: Amended effective January 1, 1992; April 1, 2008; July 1, 2022.

N.D. Admin. Code 70-02-03-02 Advertising

Repealed effective January 1, 1992. 70-02-03-02.1. Advertising.

1.Definition. As used in this section, the terms "advertise", "advertising", and "advertisement" include all forms of representation, promotion, and solicitation disseminated in any manner and by any means of communication for any purpose related to real estate brokerage activity, including, at a minimum, advertising the sale or purchase of real estate or promotion of real estate brokerage services.

2.Trade name. Advertising must be done in the real estate brokerage agency's trade name as licensed with the commission and the trade name must be equal to or greater than, in size and visibility, the name of any salesperson, associate broker, or team on the advertising.

Discipline of licensees based on failure to meet this size and visibility requirement will be delayed until January 1, 2023.

3.Contact information. Advertising must include information on how the public can contact the real estate brokerage agency.

4.Advertising by licensees. Advertising by licensees must be under the supervision of the designated broker. Such advertising may include a licensee's name and telephone number or other contact information, provided the real estate brokerage agency's registered business name or trade name and contact information are also clearly included as required in this

section.

5.Deception and misrepresentation prohibited. Advertising and promotion must be free from deception and shall not misrepresent the terms of the sale or purchase, real estate brokerage agency policies, or real estate brokerage services.

6.A real estate broker may advertise, in the licensee's own name, property which is owned by the licensee, provided that following the licensee's name where it appears in the advertisement, the words "Owner/Licensed Broker" must also appear. The provisions of this subsection apply both to active broker licensees and licensees whose license is on an inactive status.

7.A real estate salesperson may advertise in that person's own name property which is owned by the salesperson, provided that following the name where it appears in the advertisement, the words "Owner/Licensed Salesperson" must also appear. The provisions of this subsection apply both to active salesperson licensees and licensees whose license is on an inactive status.

8.Teams. A team is two or more licensees who work for the same brokerage under the supervision of the designated broker, work together on real estate transactions to provide real estate brokerage services, represent themselves to the public as being part of a team, and are designated by a team name. Advertising by a team must comply with all requirements of

section 70-02-03-02.1. Teams may not advertise in any manner which suggests a team is an independent real estate brokerage firm.

History

• History: Effective January 1, 1992; amended effective February 1, 2004; April 1, 2008; July 1, 2022.

N.D. Admin. Code 70-02-03-03 Commission split - Out of state

A licensed broker in this state may divide or share a real estate commission with a licensed broker in another state if the latter broker does not carry on any of the negotiations in this state either by physically entering the state or by communicating with the broker electronically or through other media.

History

• History: Amended effective October 1, 2015.

N.D. Admin. Code 70-02-03-04 Listings

In instances where residential real property consists of separate dwelling units for one through four families, the licensee shall obtain a signed listing agreement in writing from the seller, properly identifying the listed property and containing all of the terms and conditions under which the property is to be sold; including the price, the commission to be paid, the signatures of all parties concerned, and definite expiration date prior to the time that the property is advertised or offered for sale. It shall contain no provision requiring a party signing the listing to notify the broker of the party's intention to cancel the listing after such definite expiration date. An "exclusive agency" listing or "exclusive right to sell" listing shall clearly indicate in the listing agreement that it is such an agreement and a copy shall be given to the owner at the time of signing. If the licensee chooses to represent both buyers and sellers in the same transaction, a separate dual agency disclosure statement must be provided in accordance with the provisions of section 70-02-03-15.1.

History

• History: Amended effective September 1, 1994.
• General Authority: NDCC 28-32-02.2

N.D. Admin. Code 70-02-03-05 Listing contracts must include commission amount

All listing contracts or sales contracts must state the amount of brokerage agreed; either a specific amount or a specific percentage. 70-02-03-05.1. Buyer's broker agreements.

In instances where residential real property consists of separate dwelling units for one through four families, a licensee must obtain a signed buyer's broker agreement from a buyer before performing any act as a buyer's representative. All buyer's broker agreements must be in writing and must include:

1.A definite expiration date.

2.The amount of commission or other compensation.

3.A clear statement explaining the services to be provided to the buyer, and the events or condition that will entitle the licensee to a commission or other compensation.

4.If the licensee chooses to represent both buyers and sellers in the same transaction, a separate dual agency disclosure statement in accordance with the provisions of section 70-02-03-15.1.

History

• History: Effective September 1, 1994.

N.D. Admin. Code 70-02-03-06 Offer to purchase

A licensee shall promptly tender to the seller every written offer to purchase obtained on the property involved and, upon obtaining a proper acceptance of the offer to purchase, shall promptly deliver true executed copies of same, signed by the seller and purchaser, to both seller and purchaser.

All licensees shall make certain that all of the terms and conditions of the real estate transaction are included in the offer to purchase. Licensees shall also make certain that any changes in the text of the offer made by the seller are agreed to and initiated by the offeror in the first place before proceeding with the transaction. If any changes made are material or extensive, the entire offer or contract should be rewritten.

History

• History: Amended effective January 1, 1992; July 1, 2022.

N.D. Admin. Code 70-02-03-07 Closing statements

In every real estate sales transaction wherein the closing is handled by an attorney, bank, or similarly recognized individual or group other than a real estate broker, it shall be the responsibility of the broker involved to see the party or parties represented by the broker receive a complete, detailed closing statement showing all of the receipts and disbursements handled in such transaction. The broker must retain true copies of such statements for the represented party or parties in the broker's files.

History

• History: Amended effective April 1, 2008; July 1, 2022.
• Law Implemented: NDCC 43-23-11.1(1)(o)

N.D. Admin. Code 70-02-03-08 Legal advice

No licensee should engage in activities that constitute the practice of law and should recommend that title be examined and legal counsel be obtained when the interest of either party requires it.

N.D. Admin. Code 70-02-03-09 Use of false or misleading documents

Any licensee who uses, proposes the use of, agrees to the use of, or knowingly permits the use of any contract of sale, earnest money agreement, loan application, mortgage, note, or other document, which is not made known to the prospective lender or the loan guarantor, to enable the purchaser to obtain a larger loan than the true sales price would allow, or to enable the purchaser to qualify for a loan which the purchaser otherwise could not obtain, shall be deemed to have engaged in a course of misconduct permitting suspension or revocation of the broker's or salesperson's license or assessment of fines.

History

• History: Amended effective August 1, 1981; January 1, 1992; July 1, 2022.

N.D. Admin. Code 70-02-03-10 For sale signs

No signs shall be placed on any property for its sale or lease without the consent of the owner, or the owner's duly authorized agent.

History

• History: Amended effective April 1, 2008.

N.D. Admin. Code 70-02-03-11 Negotiate listings

A real estate licensee shall not negotiate a sale, exchange, lease, or listing contract of real property directly with an owner for compensation from the owner or a purchase, exchange, lease, or exclusive right to buy contract with a buyer, if the licensee knows that the owner or the buyer has a written unexpired contract in connection with the property which grants an exclusive right to sell to another broker, or which grants an exclusive agency, or an exclusive right to buy, to another broker. This section does not preclude a licensee from entering into an agency contract with an owner or a buyer who is a party to an existing agency contract when the contact culminating in such a contract is initiated by the owner or buyer, and not by the licensee, and provided that such agency contract does not become effective until after the expiration or release of any existing agency contract.

History

• History: Amended effective March 1, 2002.

N.D. Admin. Code 70-02-03-12 Refund of purchaser's money

When for any reason the owner fails, refuses, neglects, or is unable to consummate the transaction as provided for in the contract, and through no fault or neglect of the purchaser the real estate transaction cannot be completed, the broker has no right to any portion of the deposit money which was deposited by the purchaser, even though the commission is earned, and such deposit should be returned to the purchaser at once and the broker should look to the owner for the broker's compensation.

N.D. Admin. Code 70-02-03-13 Personal interest

1.A broker shall not, either directly or indirectly, buy for oneself property listed with the broker or as to which the broker has been approached by the owner to act as broker, nor shall the broker acquire interest in any other property therein, either directly or indirectly, without first making the broker's true position clearly known to the owner. Satisfactory written proof of this fact must be produced by the broker upon a request.

2.A broker shall not take an option to oneself, either directly or indirectly, upon property for the sale of which the broker has been approached by the owner to act as a broker, without first making the broker's true position clearly known that the broker is now acting as a prospective buyer and is no longer acting as a broker or agent for the owner. Satisfactory proof of this must be produced by the broker upon request.

3.A salesperson shall not buy for oneself, either directly or indirectly, property listed with the salesperson's broker, nor shall the salesperson acquire interest in any other property, either directly or indirectly, without first making the salesperson's true position clearly known to the owner, nor shall the salesperson take an option unto oneself from any such owner or to anyone on the salesperson's behalf upon any property without first making the salesperson's position known. Satisfactory written proof of these facts must be produced by the salesperson on request.

4.A real estate broker or salesperson who sells property in which the broker or salesperson owns an interest must make such interest known to the purchaser.

History

• History: Amended effective January 1, 1992; July 1, 2022.

N.D. Admin. Code 70-02-03-14 Accepting nonnegotiable instruments

A broker or salesperson shall not accept any note or any nonnegotiable instrument or anything of value not readily negotiable as a deposit on a contract or offer to purchase without the knowledge and permission of the broker's or salesperson's principal.

History

• History: Amended effective January 1, 1992.

N.D. Admin. Code 70-02-03-15 Agency disclosure required

In all real estate transactions the licensee is the agent of the seller unless all parties otherwise agree in writing. The agency relationship must be disclosed in writing to the parties before the signing of a written contractual agreement. The disclosure language must state at least the following information in substantially this form:

"I ___________________, a real estate licensee, stipulate that I am representing the ___________________ (Buyer/Seller) in this transaction.

Licensee"

Each licensee in the transaction shall make such a disclosure.

This section applies only to transactions involving agricultural and commercial property, residential property that provides separate dwelling units for five or more families, and commercial leaseholds.

Residential property that provides separate dwelling units for one through four families is subject to the agency disclosure requirement of section 70-02-03-15.1.

1.As used in this section, unless the context or subject matter otherwise requires:

a."Dual agency" means a situation in which a licensee owes a duty to more than one party to the real estate transaction. Dual agency is established as follows:

(1)When one licensee represents both the buyer and the seller in a real estate transaction; or (2)When two or more licensees, licensed to the same broker, each represent a party to the real estate transaction.

b."Party to the real estate transaction" includes any individual or individuals who are a seller or buyer, or potential seller or buyer.

c."Real estate transaction" means any transaction involving residential real property that consists of separate dwelling units for one through four families. "Real estate transaction" does not include transactions involving agricultural or commercial property, residential property that provides separate dwelling units for five or more families, or commercial leaseholds.

2.In all real estate transactions in which the licensee represents any party to a real estate transaction, the licensee must make an affirmative written disclosure identifying which party that person represents in the transaction. The disclosure must be made at the time of the first substantive contact between the licensee and any party to the real estate transaction. The disclosure must be represented by a separate written document, and offered to the party to the real estate transaction for signature. True copies of the disclosure form must be retained in the broker's file. As used in this subsection, the term "substantive contact" means:

a.When representing the seller, prior to the signing of a listing agreement.

b.When representing a buyer, prior to the signing of a buyer's broker agreement.

c.As to all other parties, such as potential buyers or sellers, who are not represented by the licensee, prior to the discussion of personal financial information or the commencement of negotiations, which could affect that party's bargaining position in the transaction.

However, a licensee shall have complied with the provisions of this subsection if, in those circumstances where it is impossible as a practical matter to obtain a signed written disclosure statement from a party at the time of the first substantive contact, such as telephone contact with an absent party, the licensee orally discloses the status of the licensee's representation and, as soon as practicable thereafter, makes the written disclosure required by this subsection.

d.As to any change in the licensee's representation, including dual agency, that makes the initial disclosure of representation incomplete, misleading, or inaccurate, a new disclosure must be made at once to any party to the transaction.

e.Nothing in this section requires written notice to each prospective buyer who comes to an open house display of real property; provided, however, the licensee, by sign, poster, distributed listing literature, or property description form, conspicuously discloses the licensee's agency relationship.

3.Each licensee owes a duty of confidentiality to a party being represented in a real estate transaction. The following information may not be disclosed without the informed, written consent of the party being represented:

a.That the party being represented is willing to pay more than the purchase price or lease price offered for the property.

b.That the party being represented is willing to accept less than the purchase price or lease price being asked for the property.

c.What the motivating factors are for the buying, selling, or leasing of the property by the party being represented.

d.That the party being represented will agree to terms for financing of the property other than those which are offered.

4.A licensee shall also keep confidential all information received from a party being represented, which has been made confidential by request or instruction of that party.

5.The obligation of confidentiality set forth in subsections 3 and 4 continues in effect during the time a party is being actively represented, and continues on after the termination, expiration, or completion of the representation until one of the following occurs:

a.The party being represented permits the disclosure by subsequent word or conduct.

b.Disclosure is required by law, by court order, or order of the commission.

c.The information is made public through disclosure from a source other than the licensee.

6.The provisions of subsections 3 and 4 do not serve to permit or require a licensee to keep confidential any material defects in the property of which the licensee is aware or which would constitute fraudulent misrepresentation unless disclosed.

7.The written disclosure required by this section must advise a party to the real estate transaction of the different types of representation that are available. The explanation must include information pertaining to how that party's interest shall be represented if the party chooses the licensee to act as the owner's agent, the buyer's agent, or as a dual agent. The written disclosure forms, in clearly understood terms, must inform the party to the transaction as follows:

a.If the party chooses seller representation, it must be explained that this relationship typically arises from entering into a listing agreement, or by agreeing to act as a subagent through the listing agency. A subagent may work in a different real estate office.

A listing agent or subagent can assist the buyer but does not represent that party. A listing agent or subagent is required to place the interest of the owner first, and a buyer should not tell a listing agent or subagent anything that the buyer would not want the owner to know, because the listing agent or subagent must disclose any material information to the owner. Also, it must be explained that if the real estate brokerage firm and its licensees represent two or more sellers as clients who both desire to offer competing real property for sale or lease, the real estate brokerage firm and its licensees may do so without breaching any duty to such clients. In such an event, the brokerage firm and its licensees still owe agency duties to the clients, except as limited in this subsection.

b.If the party chooses buyer representation, it must be explained that the licensee typically becomes the buyer's agent by entering into an agreement for such representation. A buyer's agent may assist the owner but does not represent the owner. A buyer's agent must place the interest of the buyer first, and the owner should not tell a buyer's agent anything the owner would not want the buyer to know because the buyer's agent must disclose any material information to the buyer. Also, it must be explained that if the real estate brokerage firm and its licensees represent two or more buyers as clients who desire to make an offer to purchase the same real property, the brokerage firm and its licensees do not breach any duty by assisting such clients with multiple offers even though the interest of such clients are competing. However, if the same licensee represents two or more buyers who desire to make an offer to purchase the same property, that licensee must disclose to buyer clients the fact that a competing written offer has been submitted by another buyer client of that licensee without disclosing the identity of the other buyer client or the terms of the offer. In such an event, the brokerage firm and its licensees still owe agency duties to the clients, except as limited in this subsection.

c.If the party selects dual agency, it must be explained that the licensee must enter into a written agreement obtaining the consent of both parties before such representation is authorized. This agreement must set forth who will be responsible for paying the licensee's fee. Under this arrangement, the licensee is required to treat both parties honestly and impartially so as not to favor one over the other. Unless written permission from the appropriate party is obtained, the licensee is prohibited from disclosing that the owner will accept less than the asking price, that the buyer will pay a price greater than that submitted in the written offer, or any other information of a confidential nature or which the party has instructed the licensee not to disclose. Potential conflicts exist when the licensee represents more than one party, and the licensee's activities may be more limited. The licensee is required to inform each party of any facts that would affect a party's decision to permit representation of both the owner and buyer. This includes any arrangement by which the licensee will or expects to represent a party in a future transaction.

d.It must be explained that a duty of loyalty and faithfulness are owed to the party or parties to the transaction with whom the licensee has an agency relationship, and the licensee must inform that party of all important information which might affect a decision concerning the real estate transaction. This includes disclosure of any material facts to the buyer that may adversely and significantly affect that person's use or enjoyment of the property. It also includes disclosure of any information to either party which may indicate that one of the parties does not intend to perform in accordance with the terms of the purchase agreement or any other written agreement or obligation. However, it must be explained that knowledge of one licensee of a real estate brokerage firm regarding an affected real property is not imputed to another licensee in the same brokerage firm and no duty is imposed upon a licensee in a real estate brokerage firm to disclose facts that are known by that licensee regarding the affected real property to another licensee within the same real estate brokerage firm. Also, it must be explained that unless otherwise agreed in writing, a real estate brokerage firm and its licensees are not obligated to a client, a customer, or any other person to discover defects in any real property, to verify the ownership of any real property, or to independently verify the accuracy or completeness of any statement or representation made by any person other than the real estate brokerage firm and the real estate brokerage firm's licensees involved in the transaction under question.

e.It must be explained that a licensee must deal honestly with any party to a real estate transaction, regardless of whether the party is represented by that licensee.

8.No person required to be licensed by North Dakota Century Code chapter 43-23 may maintain any action to recover any commission, fee, or other compensation with respect to the purchase, sale, lease, or other disposition or conveyance of real property, or with respect to the offer, negotiation, or attempt to negotiate any sale, lease, purchase, or other disposition, unless that person's agency relationship has been disclosed to the party or parties to the transaction in accordance with the requirements of this section.

9.The commission may approve a specific form or forms to implement the provisions of this

section.

In all real estate transactions in which the licensee performs services for a customer, as that term is defined by North Dakota Century Code section 43-23-06.1, the licensee must disclose the nonagency relationship in writing to the customer. This document must be signed by the customer prior to the licensee performing any services for the customer. A copy of the signed written disclosure must be retained in the broker's file. The written disclosure must explain that as to a customer the real estate brokerage firm and its licensees are nonagents that owe to the customer only limited legal duties.

These limited legal duties are to perform the customary acts typically performed by real estate licensees in assisting a transaction to the transaction's closing or conclusion with honesty and good faith and to disclose to the customer any adverse material facts actually known by the licensee which pertain to the title of the real property, the physical condition of the real property, and defects in the real property. The real estate brokerage firm and its licensees do not owe the agency duties of loyalty, obedience, disclosure, confidentiality, reasonable care, diligence, and accounting to the customer. The disclosure must also explain that if the brokerage firm and its licensees represent another party in the same real estate transaction, the licensee is required to place the interest of the represented client first.

History

• History: Effective January 1, 1988; amended effective September 1, 1994. 70-02-03-15.1. Licensee to disclose agency relationships - Duty of confidentiality.
• History: Effective September 1, 1994; amended effective April 1, 2012. 70-02-03-15.2. Licensee to disclose nonagency relationship.
• History: Effective April 1, 2012.

N.D. Admin. Code 70-02-03-16 Licensee acting in own behalf to set forth terms and conditions and make disclosure

A broker or salesperson acting in his own behalf shall disclose his licensed status in writing to any person with whom he purchases, sells, exchanges, or options real property. All the terms and conditions of the transaction as agreed upon must be in writing, properly executed, and a copy furnished to such person. Copies of the disclosure of his licensed status and of the documents containing the terms and conditions of the transaction must be retained by the broker or salesperson and made available to the commission upon request.

History

• History: Effective September 6, 1989; amended effective January 1, 1992.

N.D. Admin. Code 70-02-03-17 Designated broker - Appointed agent

1.Appointed agent procedures and disclosure.

a.A designated broker appointing a licensee to act as an agent of a client shall take ordinary and necessary care to protect confidential information disclosed by the client to the appointed agent.

b.An appointed agent may reveal to the agency's designated broker confidential information of a client for seeking advice or assistance for the benefit of the client about a possible transaction. The designated broker shall treat confidential information as such and may not disclose such information unless otherwise requested or permitted by the client who originally disclosed the confidential information.

2.Appointed agent - Written disclosure.

a.An appointed agent shall disclose in writing such appointment to the client before entering into a brokerage agreement and shall include, at a minimum, the following provisions:

(1)The name of the appointed agent;

(2)A statement that the appointed agent will be the client's agent and will owe the client fiduciary duties, which among other things, include the obligation not to reveal confidential information obtained from the client to other licensees, except to the designated broker for seeking advice or assistance for the benefit of the client;

(3)A statement that the agency may be representing both the seller and the buyer in connection with the sale or purchase of real estate;

(4)A statement that other licensees may be appointed during the term of the brokerage agreement should the appointed agent not be able to fulfill the terms of the brokerage agreement or as by agreement between the designated broker and client. An appointment of another agent as a new or additional agent does not relieve the first appointed agent of any of the fiduciary duties owed to the client. At the time of the appointment of the new or additional agents, the designated broker must comply with the provisions of this section; and (5)A section for the client to consent or not consent, in writing, to the appointment.

3.Appointed agent's duty to the designated broker. In any appointed agent transaction, the appointed agent shall keep the designated broker fully informed of all activities conducted by the appointed agent during the transaction and shall notify the designated broker of any other activities that might affect the responsibility of the designated broker.

History

• History: Effective April 1, 1996; amended effective July 1, 2010.
• Law Implemented: NDCC 43-23-12.3

Chapter 70-02-04 Continuing Education

N.D. Admin. Code 70-02-04-01 Continuing education defined

As used in this chapter, continuing education, unless the context otherwise requires, means education in areas related to real estate, which has been approved by the commission, to maintain and improve the professional skills and upgrade the standard of all real estate licensees, and to qualify for license activation and renewal.

The commission considers courses in the following areas to be acceptable, but not limited to, when considering approval:

1.Real estate ethics;

2.Legislative issues that influence real estate practice;

3.The administration of licensing provisions of real estate law and the rules, including compliance and regulatory practices;

4.Real estate financing, including mortgages and other financing techniques;

5.Real estate market measurement and evaluation, including site evaluations, market data, and feasibility studies;

6.Real estate brokerage administration, including office management, trust accounts, and employee contracts;

7.Real property management, including leasing agreements, accounting procedures, and management contracts;

8.Real property exchange;

9.Land use planning and zoning;

10.Real estate securities and syndication;

11.Estate building and portfolio management;

12.Accounting and taxation as applied to real property;

13.Land development;

14.Real estate appraising;

15.Real estate marketing procedures;

16.Marketing business opportunities;

17.Business courses which relate to the practice of real estate;

18.Agency representation; and

19.Contracts.

History

• History: Effective August 1, 1981; amended effective May 1, 1986; January 1, 2006; July 1, 2022.

N.D. Admin. Code 70-02-04-02 Hours required

To qualify for the renewal of a real estate license, each broker or salesperson must complete twelve hours of continuing education in approved courses every continuing education period. The continuing education period is twelve months preceding the renewal application deadline date. The commission may require that a portion or all of the continuing education hours must be in one or more specific areas for salespersons or brokers. Such areas may include the following:

1.Fair housing and antitrust.

2.Environmental issues.

3.License law and ethics.

4.Agency law and principles.

5.Contracts.

History

• History: Effective August 1, 1981; amended effective January 1, 1992; October 1, 1993; December 1, 1999; July 1, 2010; October 1, 2015; July 1, 2022.

N.D. Admin. Code 70-02-04-03 Hour defined

An hour of continuing education is fifty minutes. Time spent on breaks does not count toward the fifty-minute hour.

N.D. Admin. Code 70-02-04-04 Exceptions and extensions

The commission may make exceptions and grant extensions for continuing education as follows:

1.For reasons of health, military service, or other good cause if adequate proof is provided to the commission; and

2.A nonresident licensee is exempted from the continuing education requirements if the licensee meets the real estate licensing requirements in the state of the licensee's residence.

N.D. Admin. Code 70-02-04-05 Nonqualifying courses

The following courses will not be considered as qualifying for continuing education purposes:

1.Courses in general office and business skills, such as report writing.

2.Sales promotion or other meetings held in conjunction with the general business of the licensee's broker.

3.Any course certified by the use of a challenge examination. All students must complete the required number of classroom hours in order to receive credit.

The listing of the above courses does not limit the commission's authority to disapprove any application which fails to meet the standards for course approval.

History

• History: Effective August 1, 1981; amended effective January 1, 1992; October 1, 1993; December 1, 1999; January 1, 2006; July 1, 2022.

N.D. Admin. Code 70-02-04-06 Criteria for course approval

The commission may approve education provided by a course sponsor, such as the commission, a public or private school, organization, association, person, corporation, society, or similar organization.

The commission, when acting on an application for approval of a course, will consider the following criteria:

1.Courses will be eligible for approval only if the total instruction time is two hours or more.

2.A course sponsor shall certify to the best of its knowledge the attendance of each student at the offering. The course sponsor's criteria for measuring attendance shall be submitted in the application for course approval.

3.The course sponsor shall maintain, for a minimum of three years, records of students successfully completing any course.

4.Credit is earned based on in-person or virtual attendance or completion of online-only asynchronous courses.

5.Each course shall have a coordinator supervising the program.

6.All instructors in a real estate course shall complete and submit an instructor application for each course before teaching the course. Instructors must meet at least one of the following qualifications:

a.A bachelor's degree in the field in which the person is to teach.

b.A valid teaching credential or certificate from North Dakota or another state authorizing the holder to teach in the field of instruction being offered.

c.Five years' full-time experience in a profession, trade, or technical occupation in the applicable field.

d.Any combination of at least five years of full-time applicable field and college level education.

History

• History: Effective August 1, 1981; amended effective October 1, 1993; July 1, 2022.

N.D. Admin. Code 70-02-04-07 Application for approval of courses

A course sponsor shall apply for approval of courses in a form prescribed by the commission. The application form shall include:

1.The name, address, telephone number, and website of the course sponsor.

2.The name and electronic mail address of the course coordinator.

3.The title of the course.

4.A description, copies, or examples of all materials to be distributed to the participants.

5.The date and exact location of the course.

6.The duration and time of course.

7.A comprehensive, detailed outline of the subject matter together with the time sequence of each segment, faculty for each segment, and teaching technique used in each segment.

8.A sample of any proposed advertising used for promotional purposes.

9.The method of evaluation of the program.

10.The procedure for measuring attendance.

11.An instructor application for each instructor.

12.A fee not to exceed one hundred dollars per course.

N.D. Admin. Code 70-02-04-08 Filing deadline for course approvals

Application for course approvals must be filed thirty days preceding the proposed public offering.

History

• History: Effective August 1, 1981.
• General Authority: NDCC 43-23-08.2

N.D. Admin. Code 70-02-04-09 Application for post course approval

A course sponsor may seek approval of a course subsequent to a course offering by submitting all information requested on the commission's application forms.

N.D. Admin. Code 70-02-04-10 Material change

The course coordinator or instructor of each approved real estate offering shall promptly notify the commission of any material changes contained in the application for approval or attached exhibits.

Changes shall be deemed acceptable to the commission if no action has been taken after fourteen days from the date received by the commission.

N.D. Admin. Code 70-02-04-11 Suspension, revocation, or denial of course approval

The commission may deny, suspend, or revoke approval of a real estate course, coordinator, or instructor if it is determined that it is not in compliance with the statute or rules and regulations. If disciplinary action is taken a written order of suspension, revocation, or denial of approval will be issued.

N.D. Admin. Code 70-02-04-12 Correspondence programs

N.D. Admin. Code 70-02-04-13 Substantively identical courses

Courses may not be taken for continuing education more than once during any continuing education period, unless material has been significantly changed, or updated, or both.

History

• History: Effective August 1, 1981; amended effective December 1, 1999; July 1, 2010; July 1, 2022.

N.D. Admin. Code 70-02-04-14 Maximum hours of accreditation per day

N.D. Admin. Code 70-02-04-15 Exemptions from continuing education requirement

Any salesperson who completed the prerequisite ninety hours of course of study to obtain a license is exempt from the continuing education requirement for the first license renewal. Any broker, upon successful completion of the real estate broker licensing examination is exempt from the continuing education requirement for only the continuing education period during which the broker applicant successfully completed said examination.

History

• History: Effective August 1, 1981; amended effective January 1, 1992; December 1, 1999; January 1, 2006; July 1, 2010; July 1, 2022.

N.D. Admin. Code 70-02-04-16 Service as an instructor

Instructors who are licensees may request one-hour credit for every hour as an instructor of a unique course, not to exceed fifty percent of the continuing education requirement for any continuation education period and not to replace any mandatory continuing education requirement. Requests for credit must be accompanied by an outline of the instruction and be submitted before a licensee renews their license. The commission may disapprove a request.

History

• History: Effective August 1, 1981; amended effective December 1, 1999; July 1, 2010; July 1, 2022.
• Law Implemented: NDCC 43-23-08, 43-23-08.2

N.D. Admin. Code 70-02-04-17 Responsibilities of course sponsors

In addition to other responsibilities imposed on course sponsors, they must comply with the following:

1.Disclose to prospective participants the prerequisites, course content, and number of continuing education hours in the program.

2.Selection and review of instructors. The program sponsor or coordinator has the obligation for selecting and assigning qualified instructors for the continuing education program. Sponsors are required to evaluate the performance of the instructors at the conclusion of each program to determine their suitability for continuing to serve as instructors in the future.

N.D. Admin. Code 70-02-04-18 Facilities

N.D. Admin. Code 70-02-04-19 Certificate of accreditation

A certificate of accreditation shall be granted for each course of study approved by the commission.

This certificate shall remain valid for a two-year period at which time the course will be reviewed and, if approved, will continue valid for the next two-year period unless suspended or revoked.

History

• History: Effective August 1, 1981; amended effective December 1, 1999.
• General Authority: NDCC 43-23-08.2

N.D. Admin. Code 70-02-04-20 Inspections and audits

By applying for the commission's approval of any course in real estate, the sponsor or coordinator agrees to permit periodic inspections, audits, and monitoring by the commission or its authorized representative for the purpose of evaluating facilities, course content, instructor performance, or any other relevant aspect of the administration and conduct of such course.

N.D. Admin. Code 70-02-04-21 Continuing education certificate of completion

All course sponsors shall provide an individual certificate of completion to each licensee upon completion of the course under the following conditions:

1.No certificate of completion shall be issued to a licensee who is absent for more than ten percent of the classroom hours.

2.The certificate shall contain information as to the licensee's name, course title, course number, date, location of course, number of approved credit hours, and course sponsor or instructor.

3.The licensee shall retain the certificate. The responsibility for recordkeeping will remain with the licensee.

4.The North Dakota real estate commission shall not be required to maintain a list of licensees and their completed courses of education.

History

• History: Effective August 1, 1981; amended effective December 1, 1999; January 1, 2006; July 1, 2022.

N.D. Admin. Code 70-02-04-22 Online-only asynchronous education courses must be certified and approved

1.Courses offered online only and in an asynchronous format must be certified by the association of real estate license law officials, and approved by the commission. The commission may waive the certification by the association of real estate license law officials. A student must complete the distance education course within one year of the date of enrollment.

2.Courses which are presently certified by the association of real estate license law officials must be approved under this rule upon provision of appropriate documentation that the certification by the association of real estate license law officials is in effect and that the course meets the content requirements and any other requirements of the commission.

Approval under this subsection must cease immediately if the certification by the association of real estate license law officials is discontinued for any reason.

History

• History: Effective December 1, 1999; amended effective July 1, 2022.

N.D. Admin. Code 70-02-04-23 Model rule for distance education

Chapter 70-02-05 Errors and Omissions Insurance

N.D. Admin. Code 70-02-05-01 Definitions

When used in this chapter, unless the context otherwise requires:

1."Aggregate limit" means a provision in an insurance contract limiting the maximum liability of an insurer for a series of losses in a given time period, such as the policy term.

2."Equivalent coverage" means coverage obtained independently of the group plan available from the commission and subject to the terms and conditions as set forth in this chapter.

3."Extended reporting period" means a designated period of time after a claims-made policy has expired during which a claim may be made and coverage triggered as if the claim has been made during the policy period.

4."Licensee" means any active individual broker, broker associate, or salesperson.

5."Prior acts coverage" means claims that are made during a current policy period, but the act or acts causing the claim or injuries for which the claim is made occurred prior to the inception of the current policy period.

6."Proof of coverage" means the group plan carrier has submitted to the commission a list of all policyholders, or a licensee has submitted to the commission a certificate of equivalent coverage with a list of all licensees covered by the policy on a form prescribed by the commission.

7."Qualified insurance carrier" means an insurance carrier:

a.Which for the entire term of its contract shall provide the group plan of errors and omissions insurance contemplated by these rules, maintains an A.M. Best financial size category of class VI or higher;

b.Which shall remain for the policy term authorized by the North Dakota insurance department to do business in North Dakota as an insurance carrier;

c.Which is and will remain for the policy term qualified and authorized by the North Dakota insurance department to write policies of errors and omissions insurance in North Dakota of the type contemplated by these rules;

d.Which, after competitive bidding, has been notified by the commission that it is the successful bidder for the group plan to provide the errors and omissions insurance contemplated by these rules; and

e.Which has entered into a contract to provide said group errors and omissions plan in conformity with said contract, these rules, and the North Dakota license law.

The insurance carrier will collect premiums, maintain records, and report names of those insured and a record of claims to the commission on a timely basis and at no cost to the state.

8."Retroactive date" means the date when the first real estate errors and omissions coverage was effective insuring the named insured on a claims-made basis and since which time the insured has been continuously insured.

9."Single-limit liability" means the maximum limit payable, per licensee, for damages arising out of the same error, omission, or wrongful act.

N.D. Admin. Code 70-02-05-02 Insurance required

An applicant for issuance of a license on active status, a licensee renewing a license, or an inactive licensee activating a license must submit proof of insurance coverage through the group plan or through certification of equivalent coverage.

N.D. Admin. Code 70-02-05-03 Minimum standards

The group policy obtained by the commission shall provide to each individual licensee, at a minimum, the following terms of coverage:

1.Not less than one hundred thousand dollars single-limit liability coverage for each licensee per occurrence or claim made, not including costs for investigation or defense;

2.An annual aggregate limit of not less than five hundred thousand dollars per licensee;

3.A deductible amount for each occurrence of not more than one thousand dollars for single-limit liability coverage and one thousand dollars maximum additional deductible for defense and investigation;

4.An extended reporting provision of ninety days and an option to purchase an additional three years extended reporting provision for a premium not to exceed two hundred percent of the premium charged for the last year of the terminating coverage;

5.Coverage under this section for covered acts in any state, United States territory, or Canada in which a covered individual, domiciled in North Dakota, holds a license;

6.Stacking of benefits;

7.Proration of premiums for coverage that is purchased during the course of a calendar year but with no provision for refunds of unearned premiums;

8.The ability of a licensee, upon payment of an additional premium, to obtain higher or excess coverage or to purchase additional coverages from the group carrier as may be determined by the carrier;

9.That coverage is individual and license-specific and will cover the licensee regardless of changes in employing broker; and

10.Prior acts coverage shall be offered to licensees with continuous past coverage.

N.D. Admin. Code 70-02-05-04 Exceptions to coverage

Except as provided in this section, coverage may not exclude claims brought against the insured licensee arising out of an act or failure to act by the licensee when performing a professional service for which a real estate license is required. Coverage may limit or exclude claims brought against a licensee which arise as follows:

1.Out of claims or suits made or brought by any insured person against any other insured person within the same firm or from compensation disputes between licensees;

2.Out of loss assumed under contract or agreement, except for liability the insured would have had in the absence of such agreements;

3.From any criminal, dishonest, actual fraud, or willful act or omission. This exclusion does not apply to any insured person who did not personally participate in committing such an act or omission and who, upon having knowledge of the act or omission, reported it;

4.From unlawful discrimination committed by or for the insured person;

5.From fines or penalties imposed by law;

6.From failure to maintain any type or amount of insurance for managed property;

7.From bodily injury, personal injury, advertising injury, or property damage;

8.From related business activities for which a license is not required under this chapter;

9.From involvement in any real estate investment contract or syndication as a partner, joint venturer, or underwriter;

10.From hazardous materials, nuclear materials, or pollutants;

11.From prior wrongful acts;

12.From management or sale of property in which the insured or spouse has more than a ten percent financial or ownership interest. This exclusion does not apply for one year from the date a property is acquired under a guaranteed sale listing contract if the property is listed for sale during that entire period;

13.From any violation of the Securities Act of 1933, as amended through July 1, 1993, or the Securities Exchange Act of 1934, as amended through July 1, 1993, or any state blue sky or securities law or similar state or federal statutes; or

14.Other standard exclusions that are typical in the professional liability insurance industry may be permitted, subject to the approval of the North Dakota real estate commission.

N.D. Admin. Code 70-02-05-05 Group policy approval requirements

Any group policy to be issued must conform to the standards and practices of the insurance industry and be approved by the North Dakota insurance department.

N.D. Admin. Code 70-02-05-06 Equivalent coverage

An active licensee who chooses the option of obtaining errors and omissions insurance independently from a carrier other than the group carrier under contract with the commission must show evidence of coverage by providing certification of coverage on a form prescribed by the commission. The form must show proof that the licensee has coverage in compliance with the minimum standards established by section 70-02-05-07. The form must be signed by an authorized representative of the insurance company and must contain a cancellation notification clause as required by section 70-02-05-09.

N.D. Admin. Code 70-02-05-07 Standards for equivalent coverage

A carrier issuing insurance coverage pursuant to North Dakota Century Code section 43-23-22 must be an admitted carrier in North Dakota or an approved surplus lines carrier in the state in which the licensee being certified resides. All activities contemplated under North Dakota Century Code sections 43-23-19 through 43-23-23 must be covered.

The insurance must provide a minimum, not less than one hundred thousand dollars single-limit liability coverage for each licensee for each occurrence or claim made, not including the cost of investigation or defense, and an annual aggregate of five hundred thousand dollars for each licensee, not including the cost of investigation and defense. A designated broker may comply with this requirement by certifying coverages of a minimum of five hundred thousand dollars/one million dollars, if all licensees associated with the broker are covered.

A person who resides in and is licensed in a state that has a mandated program of errors and omissions insurance and who is also licensed in North Dakota meets the requirements for errors and omissions insurance in North Dakota upon providing proof that the person meets the requirements of the person's state of residence.

N.D. Admin. Code 70-02-05-08 Time for filing certification of equivalent coverage

Certification of equivalent coverage must be filed with the commission by five p.m. on the date of expiration of coverage. If the certification is not filed on time, the commission shall place the license on inactive status on that date.

N.D. Admin. Code 70-02-05-09 Nonpayment of premium

If a certifying insurance company that submitted certification of equivalent coverage or group plan notifies the commission that a licensee has not paid a premium, the commission shall place that licensee's license on inactive status as of the date of termination of coverage.

N.D. Admin. Code 70-02-05-10 Release of license for failure to provide proof of insurance

When a licensee receives notice of being placed on inactive status for failure to provide proof of insurance, the broker shall immediately destroy the license and the licensee's name and licensee's number must be removed from the broker's website.

History

• History: Effective February 1, 2002; amended effective January 1, 2006; July 1, 2022.

N.D. Admin. Code 70-02-05-11 Notification required for cancellation

If insurance under equivalent coverage is to lapse or be nonrenewed, the providing company must notify the North Dakota real estate commission of its intent to lapse or nonrenew before the expiration date of the term.

N.D. Admin. Code 70-02-05-12 Proof of insurance required to activate license

A licensee whose license has been placed on inactive status for failure to provide proof of insurance may not conduct any activities for which a license is required until proof of insurance has been provided to the commission and the license has been activated. The license shall be considered active as of the effective date of the insurance.

N.D. Admin. Code 70-02-05-13 Authenticity of coverage

A licensee may not willfully or knowingly cause or allow a certificate of coverage to be filed with the commission that is false, fraudulent, or misleading.