South Dakota Requires Written Agency Disclosure First

South Dakota issues fewer real estate licenses per year than almost any other state, which means most prep companies have never written materials specifically for this market. Candidates who train on generic national courses walk in carrying rules that do not match what the SDREC actually puts on the exam.

The SDREC regulates real estate licensing in South Dakota. The PSI exam covers 60 state specific questions and 80 national questions. You need 70% to pass. Three topics account for the majority of missed points on the state portion: the written agency disclosure requirement, South Dakota's two-tier adverse possession statute, and the Property Condition Disclosure Statement's exemption list. Here's the thing most people miss: South Dakota's low exam volume doesn't mean a forgiving exam. It means less help exists when you're stuck.

Agency Disclosure (Mandatory)

South Dakota's written agency disclosure requirement has a specific timing trigger (it must be delivered before substantive discussion, not before a contract is signed), and candidates who assume these two thresholds are the same will miss every question that tests the distinction.

South Dakota mandates written agency disclosure before any contract is signed, miss the timing rule and you will lose easy points on the state portion.

The PSI exam will ask you to identify what constitutes "substantive discussion," which specific form must be used, and what happens if disclosure is delayed. Knowing that disclosure is required isn't enough. The exam tests the exact point at which the obligation attaches.

Adverse Possession Rules

South Dakota's adverse possession statute creates two separate tracks with different time requirements, and the exam tests which track applies based on whether the claimant has color of title and is paying property taxes.

South Dakota requires 20 years of open, continuous, and hostile possession (or 10 years with color of title plus tax payments), the exam tests the difference between those two statutory periods.

The PSI exam presents scenarios where you must determine which period applies, 10 or 20 years, based on the facts given. Know that color of title combined with tax payments is the trigger for the shorter period, and that neither element alone is sufficient to reduce the requirement. Why did the adverse possession claimant need color of title? To cut his waiting time in half. (My son Sam is four, and this is already his level of humor.)

The SDREC tests these two adverse possession tracks because most national prep courses teach only a single general period. Candidates who know only one threshold will answer correctly for one scenario and fail the other.

Seller Disclosure Conditions

South Dakota's Property Condition Disclosure Statement has a long exemption list (court orders, foreclosures, fiduciary transfers, among others), and the exam tests which transactions are exempt far more than it tests what the form requires for standard residential sales.

Seller disclosure condition forms vary significantly across states. Montana uses a seller's property disclosure statement under its statutory agency framework, and Kansas tests disclosure of compensation alongside property condition. South Dakota's specific conditions and exemptions on the seller disclosure form are what the state exam covers in detail.

Sellers must provide the Property Condition Disclosure Statement before the buyer makes a written offer, but the long list of exemptions (court orders, foreclosures, fiduciary transfers) is where most students get tangled.

The PSI exam will present a transaction scenario and ask whether the disclosure form is required. Know each exemption category by name, because the exam doesn't ask about the form's content for exempt transactions. It asks whether the exemption applies in the first place.

The buyer's right to rescind after receiving a late or deficient disclosure is also tested. Know the rescission window and what triggers it under South Dakota's statute specifically.