Tennessee Real Estate Broker Exam — All Questions

Which body issues, renews, and disciplines Tennessee real estate broker licenses?

• a.The Tennessee Association of Realtors, a private trade membership organization for licensees
• b.The Tennessee Secretary of State, through its division of business services
• c.The Tennessee Attorney General, through its division of consumer protection
• d.The Tennessee Real Estate Commission, within the Department of Commerce and Insurance✓

Tenn. Code Ann. section 62-13-201 creates the Tennessee Real Estate Commission, section 62-13-203 gives it the power to do all things necessary and proper for carrying out the Real Estate Broker License Act and to promulgate rules under the Uniform Administrative Procedures Act, and section 62-13-312 gives it the power to refuse, suspend, or revoke a license. The Commission sits inside the Department of Commerce and Insurance's division of regulatory boards, which is why section 62-13-312(d) speaks of the director of that division examining a broker's escrow records. A trade association is a private membership body and issues no license. The secretary of state records business filings, and the attorney general represents the state in litigation; neither is given licensing power anywhere in chapter 13.

Two licensees at the same Tennessee firm disagree over how a closed sale's commission should be split, and one asks the Commission to decide. Under the Commission's rules, the Commission will:

• a.appoint a hearing officer to divide the commission between the licensees
• b.order the principal broker to pay each licensee the full amount in dispute
• c.suspend both licenses until the two licensees reach a written agreement
• d.not intervene in commission disputes between firms, brokers, or affiliates✓

Tenn. Comp. R. and Regs. 1260-02-.02(8) states flatly that the Commission will not intervene in the settlement of debts, loans, draws, or commission disputes between firms, brokers, and/or affiliates. A money quarrel between licensees is a civil matter for the courts or for whatever the firm's independent contractor agreement provides. The Commission's disciplinary jurisdiction under section 62-13-312 runs to conduct such as misrepresentation, mishandling of trust money, or failure to supervise, not to who is owed what share of a commission. Nothing in the rule authorizes a hearing officer to divide a commission, an order directing payment, or a suspension used as leverage to force a settlement.

The Commission notifies a Tennessee broker in writing that it has received a verified written complaint and encloses a copy of it. Under Tenn. Code Ann. section 62-13-313, the broker must file an answer with the Commission within:

• a.ten (10) days✓
• b.twenty (20) days
• c.thirty (30) days
• d.sixty (60) days

Tenn. Code Ann. section 62-13-313(a)(1) requires the Commission, before refusing to issue a license or suspending or revoking one on a verified written complaint, to notify the accused applicant or licensee in writing and enclose a copy of the complaint. Section 62-13-313(a)(2) then gives the accused ten days to file an answer with the Commission, a copy of which is transmitted to the complainant. Only after that exchange does section 62-13-313(a)(3) let the Commission decide, after investigation, that the matter should be set for hearing. The twenty, thirty, and sixty day figures appear nowhere in the complaint procedure; sixty days is the separate deadline in section 62-13-312(f) for reporting a criminal conviction.

What vote of the Tennessee Real Estate Commission does Tenn. Code Ann. section 62-13-313 require in order to revoke or suspend a license?

• a.An affirmative vote of a majority of the commission✓
• b.A unanimous vote of all nine members of the commission
• c.An affirmative vote of two thirds of the commission members
• d.A written recommendation from the executive director alone

Tenn. Code Ann. section 62-13-313(c) provides that the affirmative vote of a majority of the commission shall be necessary to revoke or suspend a license. The Commission has nine members under section 62-13-201, so a simple majority controls. Unanimity is not required and would make discipline nearly impossible; no two-thirds supermajority appears in chapter 13. The executive director administers the Commission's office and, under rule 1260-01-.18, decides firm-name appeals in the first instance, but the director cannot revoke or suspend a license alone. Compare section 62-13-311, which sets a different and higher bar: reissuance of a license revoked by a court requires the consenting vote of six members.

Under the Commission's civil penalty rule, what is the maximum civil penalty the Commission may assess against a licensee for each separate violation of a statute, rule, or order pertaining to the Commission?

• a.$1,000 per violation, with each day of a continued violation a separate violation✓
• b.$500 per violation, with any continuing violation treated as a single ongoing violation
• c.$2,500 per violation, with each transaction treated as a single violation
• d.$5,000 per violation, with each calendar month of noncompliance a separate violation

Tenn. Comp. R. and Regs. 1260-02-.32(1) authorizes the Commission, in addition to or in lieu of any other lawful disciplinary action, to assess a civil penalty of $0 to $1,000 for each separate violation of a statute, rule, or order pertaining to the Commission. Paragraph (2) applies the same range to an unlicensed person acting as a broker, and paragraph (3) provides that each day of a continued violation may constitute a separate violation, which is how a small daily amount becomes a large total. Paragraph (4) lists the factors the Commission weighs, including deterrence, the severity of the violation, and the economic benefit gained. The $500, $2,500, and $5,000 ceilings are not in the rule, and none of the alternative counting conventions appears in it.

In addition to or in lieu of other lawful discipline, Tenn. Code Ann. section 62-13-312 permits the Commission to impose which sanction on a Tennessee broker?

• a.Order the broker to pay treble damages to the complaining party
• b.Order the broker to transfer every listing to a competing firm
• c.Order the broker to sit the national portion of the examination again
• d.Order that the broker be downgraded to affiliate broker status✓

Tenn. Code Ann. section 62-13-312(c) provides that the Commission may, in addition to or in lieu of any other lawful disciplinary action against a broker, order that the broker be downgraded to affiliate broker status. That is a distinctly Tennessee remedy: it strips the licensee of the authority to hold escrow money and supervise others without ending the person's ability to practice. Damages are awarded by courts, not by the Commission, and treble damages appear nowhere in chapter 13. The Commission cannot reassign a firm's listings, which are contracts between the firm and its clients. Retesting is a condition of reinstatement in the expired-license and revoked-license rules, not a disciplinary sanction under section 62-13-312.