Minnesota Real Estate Practice Test

Correct: B Closing agent

Minnesota Statute §82.55, subd. 4, defines a 'closing agent' as a person who, for another, directly or indirectly provides closing services incident to the sale, trade, lease, or loan of residential real estate. It is a distinct statutory term in Minnesota law — 'settlement officer,' 'escrow coordinator,' and 'title representative' are not defined in the statute. Closing agents are separately licensed under §82.641.

Correct: A The Minnesota state-specific exam portion

Actively licensed applicants from non-reciprocal states such as Illinois must pass only the state portion of the Minnesota exam — the national portion is waived. However, Minnesota does not waive education for them: they must still complete the full 90 hours (Courses I, II, and III). Licensees from Minnesota's reciprocal states (Colorado, Iowa, Nebraska, North Dakota, South Dakota, and Oklahoma) are licensed without any Minnesota exam or pre-license education.

Correct: D In a separate trust account at a bank, savings association, or credit union, which need not be in Minnesota

Minnesota Statutes 82.75 require client money to be held in a separate trust account, never commingled with the broker's own funds. The depository may be a Minnesota bank or trust company, a savings association, a credit union, or even an out-of-state (foreign) bank that authorizes the commissioner to examine its records, so it does not have to be located in Minnesota. Brokers hold these funds in a pooled interest-bearing trust account, with the interest remitted to the Minnesota Housing Finance Agency.

Correct: A The Commissioner of Commerce

Minnesota does not have a separate real estate commission. The Commissioner of Commerce heads the Department of Commerce, which is the sole regulatory authority over real estate licensees. This is a key structural difference from many other states that use a dedicated real estate commission.

Correct: D To compensate consumers harmed by licensee fraud

The Recovery Fund's core purpose is compensating consumers who suffer financial losses due to licensee fraud, deception, or dishonesty. The fund also supports real estate education and research, but it does not provide homebuyer loans, reimburse licensees for commissions, or insure trust accounts.

Correct: A Disclose the material fact to the buyer

Minnesota licensees must deal honestly and in good faith with ALL parties, not just their clients. This includes disclosing known material facts to the buyer even when representing the seller. Waiting to be asked or simply referring to an inspector does not satisfy this obligation.

Correct: C At first substantive contact

Minnesota law requires written agency disclosure at the first substantive contact with a consumer, before providing any real estate services. Waiting until an offer is made or closing occurs is too late to satisfy this requirement.

Correct: B Residential real property

Minnesota requires sellers to provide a property condition disclosure for residential real property. Commercial, industrial, and agricultural properties are generally not subject to the same residential disclosure requirements.

Correct: B Commissions are fully negotiable

Commissions in Minnesota are fully negotiable between broker and client. Minn. Stat. § 82.66 requires every listing agreement and buyer's broker agreement to carry a boldface notice that compensation 'shall be determined between each individual broker and the broker's client.' No state agency, MLS, or trade organization sets rates, and quoting a fixed 'standard' rate misrepresents the law.

Correct: C Sexual orientation and gender identity

The Minnesota Human Rights Act extends beyond federal fair housing protections to cover sexual orientation, gender identity (made a standalone protected class by a 2023 amendment), marital status, and status with regard to public assistance. Race, national origin, religion, color, disability, and familial status are covered under both federal and state law.

Correct: B One year

Minnesota's statute of frauds requires leases with terms exceeding one year to be in writing. Shorter leases may be oral, though written agreements are recommended for all tenancies.

Correct: B Both spouses must sign the deed

Minnesota homestead law requires both spouses to sign the deed for homestead property, even when title is held in only one spouse's name. This protects the non-titled spouse's homestead interest in the property.

Correct: C Chapter 515B, the MN CIO Act

Chapter 515B, the Minnesota Common Interest Ownership Act, governs condos, co-ops, townhomes, and planned communities created after June 1, 1994. A 2024 planned community falls under this statute.

Correct: B Abstract (regular) and Torrens

Minnesota maintains two parallel recording systems: the abstract (regular) system recorded with the county recorder, and the Torrens system administered by the county registrar of titles.

Correct: D May 15 and October 15

Minnesota property taxes are due in two installments: May 15 and October 15. These dates apply statewide regardless of county.

Correct: D A mortgage state

Minnesota uses mortgages as the primary security instrument for real estate loans. It does not use deeds of trust, which are common in many western states.

Correct: B Salesperson

Under Minnesota's statutory definitions in §82.55, a salesperson is a licensee who practices real estate under the direct supervision of a licensed broker. Minnesota does not use the term 'associate broker' or 'broker intern' as a license classification.

Correct: B Yes, a small amount to keep the account open is allowed

Minnesota Statutes 82.75, subdivision 4 prohibits commingling, but allows a broker to deposit and maintain a sum of personal funds in the trust account if the sum is specifically identified and used to pay service charges or satisfy the bank's minimum balance requirements. The statute sets no dollar cap; the limitation is purpose — the personal funds may be used only for account maintenance. Depositing $500 to cover monthly bank fees fits squarely within this exception.

Correct: B Chapter 82 and Chapter 45

Minnesota real estate practice is primarily governed by Chapter 82, which contains the real estate license law, and Chapter 45, which grants general regulatory authority to the Department of Commerce. Together these chapters provide the legal framework for licensure, practice standards, and enforcement.

Correct: C Real estate education and research

The Recovery Fund serves a dual purpose: compensating consumers harmed by licensee misconduct and supporting real estate education and research. It does not fund licensee marketing, legal defense, or property inspection training.