MN RE Broker cheat sheet

Minnesota real estate licensees are regulated by the Minnesota Department of Commerce; the Commissioner administers Minn. Stat. ch. 82 (Real Estate Brokerage) and the rules in Minn. R. ch. 2735.

Salesperson license requires sponsorship by a licensed Minnesota broker; the broker is responsible for the salesperson's real estate activities, and a salesperson may not conduct brokerage independently.

Broker license requires at least 3 years of experience as a licensed salesperson (or equivalent qualifying experience) plus completion of the required broker-level education and exam; both salesperson and broker must complete continuing education each renewal cycle.

A licensee must place the license with a broker and notify the Commissioner of changes of address or brokerage affiliation within the time set by statute or rule; failure to do so can result in license lapse or disciplinary action.

Trust funds (earnest money, rents, security deposits held for others) must be deposited in a properly designated trust account and not commingled with the broker's business or personal funds; the broker must keep records of each transaction.

Disciplinary grounds include fraud, misrepresentation, breach of fiduciary duty, commingling, undisclosed dual compensation, and failure to supervise; sanctions range from reprimand and fines to suspension or revocation.

Statutory duties owed to consumers include loyalty, obedience to lawful instructions, disclosure, confidentiality, reasonable care, and accounting; these duties are codified in Minn. Stat. ch. 82 and govern agency relationships.

Records of transactions, trust account activity, and required disclosures must be retained for the period specified by statute and rule (commonly 6 years for trust records) and made available to the Commissioner on request.

Minnesota recognizes seller's broker, buyer's broker, dual agency, and facilitator (non-agent) relationships; the Agency Disclosure form must be presented and explained to the consumer at first substantive contact and acknowledged in writing.

A facilitator does not represent either party as an agent and owes duties of honesty, disclosure of material facts, and accounting, but not loyalty, confidentiality, or obedience.

Dual agency requires the informed written consent of both buyer and seller; the broker may not advocate for one party over the other and must disclose material information to both.

Fiduciary duties include loyalty, confidentiality, disclosure, obedience to lawful instructions, reasonable care and diligence, and accounting for money and property; confidentiality survives termination of the agency.

A licensee must disclose in writing any compensation received from a source other than the client, and any interest the licensee has in the property or transaction, before the client commits.

Material facts about the property that are known to the licensee and not readily observable must be disclosed to all parties regardless of agency relationship; latent defects affecting value or use are material.

Agency relationships may be terminated by completion of the transaction, expiration of the agreement, mutual agreement, or revocation; written notice is recommended and the broker must account for all funds.

Minnesota requires disclosure of the agency relationship in writing before the parties sign a purchase agreement; oral disclosure alone does not satisfy the statutory requirement.

The Minnesota Residential Purchase Agreement (standard form) becomes binding when signed by both buyer and seller and delivered; all changes must be in writing and signed by both parties.

Earnest money is held in trust by the broker or closing agent; the purchase agreement must specify who holds the deposit, the amount, and the conditions for its release or forfeiture.

Contingencies (financing, inspection, appraisal, sale of buyer's home) must state a deadline; if the contingency is not removed in writing by the deadline, the agreement may be terminated and earnest money returned per its terms.

Minnesota statutory disclosures include the Seller's Property Disclosure Statement (residential), the well disclosure certificate, and disclosure of radon, methamphetamine contamination, and airport zoning where applicable.

Statute of Frauds requires real estate contracts and deeds to be in writing and signed by the party to be charged; oral agreements to convey real property are unenforceable.

The Inspection Contingency typically allows the buyer a stated number of days to inspect and either accept the property, request repairs, or terminate; the seller's response and buyer's final acceptance must be documented.

Minnesota requires a written agency disclosure and, for residential transactions, a buyer may be represented by a buyer's broker; the compensation arrangement must be disclosed in writing.

Closing documents include the deed, the closing disclosure/settlement statement, title commitment, affidavits, and the purchase agreement; the deed must be delivered and recorded to protect the grantee.

Forms of ownership include fee simple absolute, life estate, tenancy in common, joint tenancy (with right of survivorship), and tenancy by the entirety (available to married couples in Minnesota).

A deed must identify the grantor and grantee, contain words of conveyance, describe the property, be signed by the grantor, and be delivered; consideration is not required for validity but affects recording.

Minnesota uses Torrens (registered) title for some parcels and abstract (recorded) title for others; a Torrens certificate of title is conclusive as to ownership, subject to memorials on the certificate.

Recording with the county recorder or registrar of titles gives constructive notice; Minnesota is a race-notice state, so a subsequent purchaser who records first without notice prevails over an unrecorded prior interest.

Title insurance protects the lender (loan policy) and the owner (owner's policy) against covered defects; the title commitment lists requirements and exceptions that must be addressed before closing.

Easements, restrictions, encroachments, and liens appear as exceptions in the title commitment; a survey may be required to identify unrecorded encroachments or boundary issues.

A lien (mortgage, mechanic's lien, judgment) encumbers title; mechanic's liens in Minnesota must be recorded within 120 days after the last furnishing of labor or materials to preserve the lien.

Adverse possession in Minnesota generally requires 15 years of actual, open, hostile, exclusive, and continuous possession; boundary disputes may also be resolved by practical location.

Loan types include conventional, FHA, VA, USDA, and Minnesota Housing programs; each has distinct down payment, mortgage insurance, and property condition requirements that affect the purchase agreement.

The Loan Estimate must be provided within 3 business days of application, and the Closing Disclosure at least 3 business days before consummation under TRID rules.

A mortgage creates a lien on the property; the promissory note is the borrower's personal obligation. Minnesota uses mortgages (and deeds of trust in some contexts) recorded against the property.

The financing contingency should state the loan type, maximum interest rate, and deadline for loan approval; if financing fails within the deadline, the buyer may terminate and recover earnest money.

Closing involves prorations of taxes, rents, and HOA dues, payoff of existing liens, and disbursement of funds; the settlement statement itemizes debits and credits to buyer and seller.

Minnesota requires the seller to provide a well disclosure certificate at or before closing for properties with wells, and the buyer should confirm the certificate matches the property.

Escrow/impound accounts hold funds for taxes and insurance; RESPA limits the cushion to one-sixth of the annual disbursements, and servicers must provide an annual escrow statement.

Points paid to reduce the interest rate are disclosed on the Loan Estimate and Closing Disclosure; discount points are buyer costs and may be negotiable in the purchase agreement.

The sales comparison approach is the primary method for residential valuation; adjust comparable sales for differences in location, size, condition, age, and features to derive an indicated value.

The cost approach (replacement cost minus depreciation plus land value) is most reliable for new or special-purpose properties; the income approach (NOI divided by capitalization rate) is used for income-producing property.

A Comparative Market Analysis (CMA) is prepared by a licensee and is not an appraisal; an appraisal must be performed by a state-licensed or certified appraiser.

Gross rent multiplier equals sale price divided by gross monthly rent; the capitalization rate equals net operating income divided by value.

Adjustments are made to the comparable, not the subject: if the comparable is superior, subtract; if inferior, add, to arrive at the subject's indicated value.

Market conditions (absorption rate, days on market, list-to-sale ratio) inform pricing strategy; an overpriced listing tends to sit and ultimately sell below market.

Appraisal independence rules prohibit a licensee from attempting to influence an appraiser's value; pressuring an appraiser for a target value violates federal and state requirements.

Price per square foot is a screening tool only; above-grade and below-grade finished area, lot size, and garage count must be verified before relying on it.

Zoning ordinances regulate use, density, setbacks, height, and lot coverage; nonconforming uses may continue but generally cannot be expanded without a variance or conditional use permit.

Minnesota requires disclosure of radon, lead-based paint (pre-1978), methamphetamine contamination, and wells; the buyer has a 10-day opportunity to test for radon under the standard purchase agreement.

Wetlands, shoreland, floodplain, and critical area regulations restrict development; the local zoning administrator and the DNR are sources for permit requirements.

Property management agreements should address leasing authority, maintenance, accounting, and termination; the broker must maintain trust accounts for security deposits and rents held on behalf of owners or tenants.

Minnesota landlord-tenant law governs security deposits (return with itemized statement within 21 days), habitability, and notice to enter; managers must follow statutory notice and accounting rules.

Environmental contamination can create liability under state and federal law; a Phase I Environmental Site Assessment reviews records and site conditions, and a Phase II involves sampling.

A variance addresses hardship unique to the property, while a conditional use permit allows a use that is permitted with conditions; both require public hearings before the local governing body.

Fair housing and accessibility requirements apply to property management; reasonable accommodation requests must be evaluated and documented under fair housing law.

The federal Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status, and disability; Minnesota law adds sexual orientation, marital status, and status with respect to public assistance.

Prohibited practices include refusing to rent or sell, steering, blockbusting, discriminatory advertising, and differential terms or conditions based on a protected class.

Reasonable accommodations and modifications must be permitted for persons with disabilities; the landlord may not charge extra for a service animal that is a reasonable accommodation.

The NAR Code of Ethics and Minnesota statutes prohibit misrepresentation, undisclosed dual compensation, and failure to disclose material facts; Article 1 requires honesty and fairness to all parties.

Advertising must include the broker's name as required by rule, and team or assumed names must be registered with the Commissioner; misleading advertising is a disciplinary violation.

Consumer protection statutes prohibit deceptive trade practices and fraud; a licensee may not make false statements about the property, financing, or the licensee's services.

Testers and investigators may pose as buyers or renters to detect discrimination; licensees must document and follow a consistent, nondiscriminatory screening process.

A licensee may not discriminate in providing brokerage services and must not follow a client's instruction to discriminate; the licensee must withdraw rather than participate in prohibited conduct.

The broker is responsible for supervising all affiliated licensees and must establish written policies for advertising, agency, transaction handling, and trust account management.

Trust accounts must be designated as trust accounts, reconciled monthly, and supported by transaction records; the broker must not commingle personal or business funds with trust funds.

Earnest money must be deposited and accounted for as required by statute and the purchase agreement; the broker must maintain a ledger showing each deposit, disbursement, and balance.

Transaction files must contain the agency disclosure, purchase agreement, disclosures, closing statement, and compensation records, and must be retained for the required period (commonly 6 years).

A broker must maintain a current roster of affiliated licensees and notify the Commissioner when a licensee joins or leaves the brokerage.

Delegation of supervision (e.g., to a team leader or managing broker) does not relieve the broker of ultimate responsibility; written supervisory procedures should assign clear duties.

Compensation may be paid to a licensee only through the affiliated broker; paying a commission directly to a salesperson or unlicensed person violates licensing law.

Independent contractor status for affiliated licensees must be documented and consistent with IRS tests; the brokerage must issue appropriate tax reporting and maintain contracts.