1. An affiliate broker may perform real estate brokerage activities for how many different brokerage firms during the same time period?
A. No more than one. Correct
B. No more than two.
C. One general brokerage firm and one time-share project.
D. An unlimited number, as long as Commission approval is obtained.
Explanation
Licensing laws universally require affiliate brokers to be associated with only one brokerage at a time to ensure clear lines of supervision, legal accountability, and compliance with agency duties. This prevents conflicts of interest and maintains the integrity of the broker-agent relationship under a single responsible broker. Option B is incorrect because no jurisdiction permits dual concurrent affiliations without violating core licensing standards. Option C is misleading — even if a timeshare project is involved, the affiliate broker must still operate under a single licensed brokerage entity. Option D is false because no real estate commission grants approval for multiple concurrent brokerage affiliations; such an arrangement would undermine regulatory oversight and consumer protection.
2. The Real Estate Commission does NOT have the power to
A. suspend or revoke real estate licenses.
B. subpoena witnesses for its investigations.
C. regulate commission rates. Correct
D. review broker's escrow or trustee accounts.
Explanation
Real estate commissions are regulatory bodies that oversee licensee conduct, enforce licensing laws, investigate violations, and protect the public — but they do not set or regulate commission rates. Commission rates are determined by market forces and private negotiation between brokers and clients, consistent with antitrust principles and federal law (e.g., Sherman Act). Option A is incorrect because commissions explicitly have authority to suspend or revoke licenses for violations. Option B is incorrect because commissions are granted subpoena power to compel testimony during investigations. Option D is incorrect because reviewing escrow and trust accounts is a core function to ensure proper handling of client funds and prevent commingling or misappropriation.
3. In order to protect the public from financial losses due to mistakes made by real estate licensees, what is REQUIRED by the Tennessee Real Estate Commission?
A. Every real estate licensee is covered by an E & O insurance policy.
B. Every real estate broker carry E & O insurance covering the broker and any affiliated licensees.
C. Every real estate licensee post a bond of at least $10,000 that can be used to reimburse client losses.
D. Every real estate licensee pay an annual fee to support the Education and Recovery Fund, which compensates clients who suffer such losses. Correct
Explanation
Tennessee law mandates that all licensees contribute to the Real Estate Education and Recovery Account (also called the Recovery Fund) through annual fees. This fund is specifically designed to reimburse members of the public who suffer monetary losses due to fraudulent, dishonest, or unethical acts committed by licensed real estate professionals in the course of their duties — provided certain conditions and limits are met. Errors and Omissions (E&O) insurance, referenced in options A and B, is not required by the Commission, though many brokers carry it voluntarily. Option C is incorrect because Tennessee does not require individual licensees to post surety bonds for client reimbursement purposes. Only the Recovery Fund, funded by licensee fees and administered by the Commission, serves this statutory protective function.
4. A principal broker decides to open a branch office of their firm in a neighboring town. The broker must
A. obtain an additional firm license from the Real Estate Commission for the branch office. Correct
B. scan the current license for display in the branch office.
C. pay a fee and obtain duplicate licenses for all the licensees in the branch office.
D. scan the licenses of all the licensees for display in the branch office.
Explanation
State real estate regulations typically require that each physical branch office location operated by a brokerage firm must be separately licensed or registered with the Real Estate Commission. This ensures proper oversight, accountability, and compliance at each location, including designation of a branch manager if required. Displaying licenses (options B and D) or obtaining duplicate licenses (option C) may be administrative or procedural preferences but are not the primary legal requirement for establishing a branch office. The core regulatory mandate is securing an additional firm license or branch office registration — making option A the only correct and legally necessary action.
5. For how long MUST real estate licensees retain the signed agency disclosure that they provide to customers and clients in the course of their real estate transactions?
A. Three months after the date of closing.
B. One year.
C. Three years. Correct
D. Five years.
Explanation
Real estate licensees are generally required by state regulatory agencies — including the Tennessee Real Estate Commission — to retain signed agency disclosure forms for a minimum of three years. This retention period aligns with standard recordkeeping rules for transactional documents and ensures that evidence of proper disclosure is available in case of disputes, audits, or investigations. Option A is too short and does not meet regulatory standards. Option B may apply to some non-critical documents but not agency disclosures, which carry legal significance regarding fiduciary duties. Option D exceeds the minimum requirement in most jurisdictions; while some brokers may choose to retain records longer, three years is the mandated minimum for agency disclosures.