Tennessee Real Estate Broker Exam — All Questions

Tenn. Code Ann. section 62-13-312(b)(6) makes it a ground for discipline to fail to preserve records relating to a real estate transaction for how long following its consummation?

• a.one (1) year
• b.three (3) years✓
• c.two (2) years
• d.seven (7) years

Tenn. Code Ann. section 62-13-312(b)(6) makes it a ground for discipline to fail to preserve, for three years following its consummation, records relating to any real estate transaction. Section 62-13-321 sets the same three-year period for escrow account records specifically. Tenn. Comp. R. and Regs. 1260-02-.40(1) quotes the statutory three-year period when it allows electronic recordkeeping, and conditions that allowance on documents being readily accessible in an organized format within twenty-four hours of a Commission request and on the principal broker maintaining a retention schedule that safeguards the security, authenticity, and accuracy of the records. One, two, and seven years appear nowhere in chapter 13; the four-year figure that does appear, in rule 1260-06-.02, applies to a time-share developer's receipt for a public offering statement.

A Tennessee firm keeps all of its transaction records electronically. Tenn. Comp. R. and Regs. 1260-02-.40 requires those documents to be readily accessible in an organized format within:

• a.five (5) business days of a request for inspection by the Commission
• b.ten (10) business days of a request for inspection by the Commission
• c.twenty-four (24) hours of a request for inspection by the Commission✓
• d.thirty (30) days of a request for inspection by the Commission

Tenn. Comp. R. and Regs. 1260-02-.40(1)(a) permits electronic recordkeeping only if all documents required to be retained are readily accessible in an organized format providing ease in document identification within twenty-four hours of any request for inspection by representatives of the Commission. Subparagraph (b) places the burden on the principal broker of every firm using electronic methods to develop and use a retention schedule that safeguards the security, authenticity, and accuracy of the records for the entire retention period and that provides for technology and hardware keeping the records accessible in a readable format. The rule is written against the three-year retention period of section 62-13-312(b)(6). Five days, ten days, and thirty days are not in the rule.

Tenn. Code Ann. section 62-13-321 requires a Tennessee broker's escrow account records to show the depositor of the funds, the date of deposit, the date of withdrawal, and:

• a.the payee of the funds✓
• b.the buyer's credit score
• c.the listing agent's commission split
• d.the appraised value of the property

Tenn. Code Ann. section 62-13-321 requires every broker to keep an escrow or trustee account of funds deposited with the broker relating to a real estate transaction, in accordance with rules promulgated under section 62-13-203, and to maintain accurate records of the account for at least three years showing the depositor of the funds, the date of deposit, the date of withdrawal, the payee of the funds, and any other pertinent information the Commission may require. That last catch-all is what rule 1260-02-.09 builds on. A credit score, a commission split, and an appraised value may appear elsewhere in a transaction file but none of them is an element of the statutory escrow ledger, and none of them identifies where the money went, which is the point of the record.

A Tennessee seller rejects a written offer. Under Tenn. Comp. R. and Regs. 1260-02-.08, the licensee shall:

• a.destroy the rejected offer once the seller states in writing that it has been rejected
• b.file a copy of the rejected offer with the Commission within ten days of the rejection
• c.request the seller to note the rejection on the offer and return the offer to the offeror or the offeror's agent✓
• d.hold the rejected offer in the transaction file until the property closes with another buyer

Tenn. Comp. R. and Regs. 1260-02-.08 requires a broker or affiliate broker promptly to tender every written offer to purchase or sell obtained on a property until a contract is signed by all parties, and on a proper acceptance of an offer or counteroffer promptly to deliver true executed copies signed by the seller to both the purchaser and the seller. It closes with the rejection instruction: in the event an offer is rejected, the licensee shall request the seller to note the rejection on the offer and return the same to the offeror or the offeror's agent. Destroying the offer would defeat the three-year retention duty in section 62-13-312(b)(6). The Commission does not receive rejected offers, and holding the offer without returning it does not satisfy the rule.

Under Tenn. Code Ann. section 62-13-312(b)(8), a Tennessee licensee must furnish a copy of any listing, sale, lease, or other contract relevant to a real estate transaction to all signatories of that contract:

• a.within three business days
• b.at or before the closing
• c.upon written request only
• d.at the time of execution✓

Tenn. Code Ann. section 62-13-312(b)(8) makes it a ground for discipline to fail to furnish a copy of any listing, sale, lease, or other contract relevant to a real estate transaction to all signatories of the contract at the time of execution. The duty attaches at signing, not later, and it does not depend on anyone asking. Rule 1260-02-.08 works the same way for accepted offers, requiring prompt delivery of true executed copies to both purchaser and seller. Rule 1260-02-.10 adds that if a broker acts as closing agent, the broker shall provide copies of the closing documents to each customer or client. A three-day window, delivery by closing, and delivery on request all describe a slower duty than the statute imposes.

A Tennessee broker refuses to let the director of the division of regulatory boards examine escrow records at a reasonable hour. Under Tenn. Code Ann. section 62-13-312(d), that refusal:

• a.constitutes grounds for the Commission to suspend or revoke the license✓
• b.may be cured by producing the requested records within the next thirty days
• c.is permitted whenever a civil lawsuit over the disputed funds is pending
• d.requires the director to obtain a search warrant from a court of record

Tenn. Code Ann. section 62-13-312(d) allows the director of the division of regulatory boards or the director's duly authorized representatives, at all reasonable hours, to examine and copy books, accounts, documents, or records relevant to whether a licensee has properly maintained and disbursed funds from escrow or trustee accounts. On a refusal, the director may pursue the remedies in section 4-5-311(b) for disobedience to a lawful agency requirement for information, and the statute adds that refusal shall also constitute grounds for the Commission to suspend or revoke a license. There is no thirty-day cure period, no litigation exception, and no warrant requirement; the same inspection power appears for time-share escrow in rule 1260-06-.03(4).