SD Real Estate key terms

A legal obligation requiring an agent to put the principal's interests ahead of the agent's own, covering loyalty, confidentiality, disclosure, obedience, accounting, care, and reasonable skill. Breach can bring license discipline and civil liability.

A relationship in which a licensee is authorized to act for a principal and owes that principal fiduciary duties. In South Dakota real estate practice it is normally created by a written agency agreement.

A brokerage representing both sides of the same transaction, or two buyers competing for one property. It requires informed written consent from all principals and limits the confidential information the firm may share.

A party a licensee assists in a transaction without representing them as a principal. The licensee owes honesty, fairness, and disclosure of known material facts but not full fiduciary loyalty.

A definite proposal to enter a contract that shows intent to be bound, states the essential terms, and is communicated to the other party. Once accepted, it becomes a binding contract.

An unqualified agreement to all terms of an offer, made by the party to whom the offer was directed and communicated back to the offeror. Any change in terms creates a counteroffer instead.

A response that changes or adds terms of the original offer, which rejects that offer and puts a new proposal on the table. The original offeror may then accept, reject, or counter again.

A contract provision making an obligation conditional on a stated event, such as a satisfactory inspection, financing approval, or sale of the buyer's current home. Failing the condition usually lets the party cancel and recover earnest money.

A deposit a buyer gives to show good faith and bind the contract. It is usually held in the broker's trust account and applied to the purchase price or refunded according to the contract terms.

The most complete ownership interest in real property, lasting indefinitely and freely inheritable, with no conditions attached. It is the standard ownership estate transferred by most deeds.

Ownership lasting only for the lifetime of a named person, after which the property passes to a remainderman or reverts to the grantor. The life tenant may use the property but must not commit waste.

Co-ownership by two or more people with no right of survivorship. Each owner holds a separate, transferable share that passes to their heirs at death, and the shares need not be equal.

Co-ownership with equal undivided shares created at the same time with the same title, where a deceased owner's share passes automatically to the surviving owners instead of through probate.

A right to use another person's land for a specific purpose, such as a driveway or utility line, without owning it. It is an encumbrance that runs with the land.

A written pledge of real property as security for a debt, giving the lender the right to foreclose if the borrower defaults. The borrower keeps title and possession while the lien remains.

A security instrument that conveys title to a neutral trustee to hold as security for a loan, with the lender as beneficiary. Default can lead to a trustee's sale under the terms of the instrument.

The loan amount divided by the property's appraised value or purchase price, expressed as a percentage. Higher ratios generally mean more risk and often require mortgage insurance.

The four typical monthly housing payment components: principal, interest, taxes, and insurance. Lenders use the total to measure how much of a borrower's income the payment consumes.

The schedule by which a loan is paid off through regular payments that cover accrued interest first, with the remainder reducing principal. Early payments are mostly interest; later ones are mostly principal.

The most probable price a property should bring in a competitive, open market under all conditions for a fair sale, with both parties acting knowledgeably and without undue pressure.

An appraisal method that estimates value by comparing the subject property to recently sold similar properties, then adjusting for differences in features, size, condition, and location.

A valuation method that converts a property's expected net operating income into an estimate of value, usually by dividing income by a capitalization rate. It is most useful for rental and commercial property.

The reasonably probable, legally permissible, physically possible, financially feasible use of a property that produces the greatest value. Appraisers analyze it as the foundation of a market value opinion.

A written instrument that transfers an ownership interest in real property from a grantor to a grantee. To be effective it must be delivered, and recording protects the grantee's priority.

The recorded history of successive ownership transfers and encumbrances affecting a parcel. A title examiner reviews it to confirm the seller can convey the ownership interest being sold.

A policy protecting a lender or owner against losses from title defects that existed before the policy date, such as forged documents, undisclosed heirs, or recording errors.

Filing a document with the county register of deeds so it becomes part of the public record. Recording gives constructive notice to the world and helps establish priority among competing claims.

A deed that transfers whatever interest the grantor may have without any warranty of title. It is common in family transfers, divorce settlements, and clearing title defects.

Groups shielded from housing discrimination by law. Under the federal Fair Housing Act they are race, color, religion, sex, national origin, familial status, and disability; state and local laws may add more.

Directing prospective buyers or renters toward or away from neighborhoods based on race, national origin, religion, disability, or another protected characteristic. It is a fair housing violation even without an explicit refusal.

Pressuring owners to sell by suggesting that members of a protected class are moving into the area and will lower property values. It is illegal because it exploits fear to generate listings.

Refusing or limiting loans, insurance, or real estate services in particular neighborhoods because of their racial or ethnic makeup rather than the borrower's qualifications. It violates fair housing and lending laws.

A written statement in which a seller reveals known defects and material facts about the property to buyers. Many states, including South Dakota, require one for most residential resales, with limited exemptions.

The state regulatory body that licenses real estate brokers and salespersons, adopts rules, administers exams, and investigates complaints. It can impose discipline such as fines, suspension, or license revocation.

The licensed broker designated to supervise a brokerage's licensees and ensure compliance with license law and commission rules. This person is accountable for the acts of affiliated licensees.

A bank account a broker uses to hold money belonging to clients or others, such as earnest money and security deposits. Records must be kept and funds disbursed according to the agreement.

Mixing funds held for clients with the broker's own business or personal money, or failing to keep trust funds separate. It is prohibited and can lead to license discipline.

A state fund that may reimburse a consumer who obtained a court judgment against a licensee for wrongful acts and could not collect it. It is a remedy of last resort and does not bar discipline.