South Dakota Real Estate Contracts: What the Exam Tests

South Dakota contract law follows general real estate principles with the notable feature of no state transfer tax.

Essential Elements Offer and acceptance, consideration, legal capacity (18+), legal purpose, in writing (Statute of Frauds).

Earnest Money - Salesperson delivers to broker by next business day; broker deposits promptly - 5-year record retention; Retained by seller if buyer defaults; returned to buyer if seller defaults

Deed of Trust in South Dakota SD uses deeds of trust: trustor (borrower) conveys title to trustee; beneficiary (lender) holds note. Default enables non-judicial foreclosure (trustee's sale) — faster than judicial foreclosure.

No Transfer Tax — Closing Cost Impact South Dakota's lack of a state real estate transfer tax means closing costs are lower than in states with transfer taxes. Contracts in SD do not need a transfer tax provision, unlike in states like Georgia ($1 per $1,000), Nebraska ($2.25 per $1,000), or Florida ($0.70 per $100).

Seller's Property Disclosure Required for residential sales. Sellers must disclose known material defects. Failure to disclose is grounds for rescission or damages.

Common Exam Question **Q**: A buyer in South Dakota asks their agent how much the state transfer tax will be on a $350,000 purchase. The correct answer is: **A**: $0 — South Dakota has no state real estate transfer tax.

[Practice South Dakota contract questions at CARealestate.com/states/south-dakota](https://carealestate.com/states/south-dakota)