Tennessee Real Estate Broker Exam — All Questions
3 questions
Tennessee recognizes an arrangement in which a principal broker assigns one affiliated licensee to represent the buyer and a different affiliated licensee to represent the seller in the same transaction. This is called:
- a.Subagency
- b.Designated agency✓
- c.Universal agency
- d.Open agency
Designated agency lets a principal broker assign separate affiliated licensees to represent the buyer and the seller within one firm, so each party receives individual representation while the principal broker manages confidentiality. This differs from one licensee acting as a dual agent for both parties, which in Tennessee requires the informed written consent of both.
In Tennessee, a single licensee who would represent both the buyer and the seller in the same transaction may do so only if:
- a.The transaction is residential
- b.The principal broker files a court petition
- c.Both parties give informed written consent to the arrangement✓
- d.The commission is split evenly
When one licensee represents both parties, that dual arrangement is permitted only with the informed written consent of both the buyer and the seller. Because the licensee cannot fully advocate for either side, the licensee must disclose the limited representation and must not reveal one party's confidential information, such as the highest price a buyer will pay, to the other.
A Tennessee principal broker's supervisory duty over affiliated licensees includes making sure they:
- a.Deliver required agency disclosures on time and follow the license law✓
- b.Give clients legal opinions when asked
- c.Hold client funds in their own personal accounts
- d.Avoid ever representing buyers
The principal broker is responsible for ensuring affiliated licensees deliver required disclosures, protect confidential information, and comply with the license law. A failure by an affiliate broker can expose the principal broker to discipline. Licensees must not give legal advice or draft legal opinions, which is the unauthorized practice of law, and client funds must go through the firm's escrow account, not a licensee's personal account.