Tennessee Real Estate Affiliate Broker Exam — All Questions

Earnest money held by a Tennessee firm must be placed in a separate escrow or trust account and disbursed according to:

• a.The affiliate broker's personal discretion
• b.The terms of the agreement and TREC rules✓
• c.The buyer's verbal request only
• d.Whatever cash is on hand

Tennessee firms must deposit earnest money in a separate escrow or trust account and may disburse it only as the purchase agreement and TREC rules allow. The principal broker is responsible for proper handling; commingling or improper disbursement is a violation.

A Tennessee affiliate broker's license must be held by, and the affiliate must work under, the:

• a.Affiliate broker personally
• b.Principal broker of the firm✓
• c.Tennessee Real Estate Commission
• d.Local multiple listing service

An affiliate broker's license is held by and 'hangs with' the principal broker of the firm. The affiliate may conduct brokerage activity only under that principal broker's supervision, and compensation flows through the firm.

Absent a compelling reason, how soon must a Tennessee principal broker act on a written request to disburse earnest money?

• a.Within fourteen calendar days of receiving the request
• b.Within thirty calendar days of receiving the request
• c.Within twenty-one calendar days of receiving the request✓
• d.Within ten business days of receiving the request

Absent a demonstration of a compelling reason, earnest money must be disbursed, interpleaded, or turned over to an attorney with instructions to interplead within twenty-one calendar days from the date the written request for disbursement is received. The rule counts calendar days, not business days. Cite: Tenn. Comp. R. & Regs. 1260-02-.09(9).

A Tennessee affiliate broker takes an earnest money check from a buyer. What must he do with it?

• a.Pay it over to his principal broker immediately on receipt✓
• b.Deposit it in his own trust account within three banking days
• c.Hold it until the seller accepts or rejects the written offer
• d.Mail it to the closing attorney named in the sales contract

An affiliated broker must pay over to his principal broker all trust money immediately upon receipt; it is the principal broker who maintains the separate escrow or trustee account and who stays responsible for the funds. An affiliate broker does not hold a trust account of his own. Cite: Tenn. Comp. R. & Regs. 1260-02-.09(2)-(4).

How do the Tennessee rules define commingling?

• a.Holding earnest money in an interest-bearing escrow trust account
• b.Depositing two different buyers' deposits into one account
• c.Paying a firm operating expense out of the escrow account
• d.Keeping others' funds in an account holding the licensee's own✓

The rule defines commingling as a licensee maintaining funds belonging to others in the same bank account that contains his or her personal or business funds, and separately declares commingling of funds within firm accounts expressly prohibited. Holding several clients' deposits together in the firm escrow account is not commingling. Cite: Tenn. Comp. R. & Regs. 1260-02-.09(1)(a), (13).

May a Tennessee principal broker place trust money in an interest-bearing escrow account?

• a.No, because the Commission's rules require a non-interest account
• b.Yes, with disclosure to the payor and a written interest agreement✓
• c.Yes, and the broker may keep the interest as a service charge
• d.Only if the interest is remitted to the Commission each year

Interest-bearing escrow or trustee accounts are neither required nor prohibited. If one is used, the licensee must disclose at contract execution that the deposit will be placed in such an account, execute a written agreement with the payor on how interest is disposed of, and keep a precise accounting of interest earned per deposit; the licensee does not own that interest. Cite: Tenn. Comp. R. & Regs. 1260-02-.09(14).

A Tennessee seller offers to let the agent keep everything above a stated price. What do the rules say?

• a.No broker or affiliate broker may accept a net price listing✓
• b.It is permitted if the seller signs a written acknowledgment
• c.It is permitted only on commercial and vacant land listings
• d.It is permitted if the firm's principal broker approves it

The rule flatly bars a broker or affiliate broker from accepting or entering a listing based on a net price, meaning a price that excludes the customary commission and the expenses associated with the sale. No disclosure or broker approval cures it. Cite: Tenn. Comp. R. & Regs. 1260-02-.07.

How long must a Tennessee licensee keep promptly tendering written offers on a listed property?

• a.Until the seller accepts one of the offers presented to him
• b.Until the listing agreement expires or is cancelled by either
• c.Until a contract on the property is signed by all the parties✓
• d.Until the seller instructs the licensee in writing to stop

The rule requires every written offer to purchase or sell to be tendered promptly until a contract is signed by all parties, so offers keep coming even after the seller has accepted one but before full execution. If an offer is rejected, the licensee must ask the seller to note the rejection and return the offer. Cite: Tenn. Comp. R. & Regs. 1260-02-.08.

A Tennessee team advertises under its team name. What do the advertising rules require of the firm name?

• a.It may be left off if the team is registered with the firm
• b.It must appear in letters at least half the size of the team's name
• c.It must appear somewhere on the reverse side of the sign
• d.It must appear in letters the same size or larger than the team's✓

All advertising is under the direct supervision of the principal broker and must list the firm name and firm telephone number on file with the Commission, with the firm name in letters the same size or larger than the name of a licensee or of any team or group. Advertising only a franchise name without the firm name is treated as misleading. Cite: Tenn. Comp. R. & Regs. 1260-02-.12(3)(b), (3)(f).

Where must the firm name and firm telephone number appear in a Tennessee licensee's social media advertising?

• a.On the viewable page itself, in every individual post made
• b.No more than one click away from the viewable page✓
• c.In the profile biography and in every single photo caption
• d.Anywhere on the platform, as long as the firm has consented

For social media the rule relaxes the website standard: the firm name and firm telephone number on file with the Commission must be no more than one click away from the viewable page. On a firm website itself they must appear conspicuously on every page. Cite: Tenn. Comp. R. & Regs. 1260-02-.12(5)(a), (6)(b).

What must a Tennessee licensee have before posting a sign advertising a property for sale?

• a.Written authorization from the owner or the owner's agent✓
• b.A sign permit issued by the local zoning or codes authority
• c.An MLS listing number already issued for that same property
• d.Verbal permission from the property's current occupant

No licensee may post a sign advertising property for sale, purchase, exchange, rent or lease without written authorization from the owner of the advertised property or the owner's agent. A separate provision bars advertising another licensee's listing without the listing agent's or listing broker's written authorization. Cite: Tenn. Comp. R. & Regs. 1260-02-.12(3)(d)-(e).

May a Tennessee licensee advertise a cash rebate to attract buyers?

• a.Yes, if the rebate is shown on the closing disclosure form
• b.Yes, if the firm's principal broker approves it beforehand
• c.No, cash-based incentives in a transaction are prohibited✓
• d.No, unless the rebate stays under five hundred dollars

A licensee may not give or pay cash rebates, cash gifts, gift cards, cash prizes or any similar cash-based incentive in a real estate transaction, with two narrow exceptions: a gift card at an open house held for other licensees, and a gift card as a closing gift. A closing-gift card may not be used in advertising to induce business. Cite: Tenn. Comp. R. & Regs. 1260-02-.33(2).

Who may pay a Tennessee licensee who holds out as part of a team within a firm?

• a.The team leader, out of the team's own operating account
• b.Any cooperating broker involved in the team's transactions
• c.The team's registered entity, if it holds a firm license
• d.The principal broker of the firm, and no one else at all✓

Licensees holding themselves out as a team, group or similar entity within a firm may not receive compensation from anyone other than their principal broker for acts covered by the license law. The same rule bars a separate physical location for the team and bars the team from naming its own designated agents. Cite: Tenn. Comp. R. & Regs. 1260-02-.41(2), (1), (5).

A Tennessee licensee prepares an offer to buy a house served by a septic system. What does the Commission's rule require in the offer?

• a.A contingency letting the buyer void the offer if it fails
• b.Notice that a septic inspection letter is available for a fee✓
• c.A copy of the county health department's permit for the tank
• d.A statement that the seller warrants the system is working

The rule requires the licensee preparing an offer to buy to provide in the offer, and make the buyer aware, that a septic system inspection letter is available for a fee through the Tennessee Department of Environment and Conservation, Division of Ground Water Protection. It is a notice requirement, not a warranty or a contingency. Cite: Tenn. Comp. R. & Regs. 1260-02-.37.