17. 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?
Answer: D
Every real estate licensee must pay an annual fee to support the Education and Recovery Fund.
To protect the public from financial losses due to mistakes made by real estate licensees, the Tennessee Real Estate Commission requires that every real estate licensee pay an annual fee that contributes to the Education and Recovery Fund.
A) Every real estate licensee is covered by an E & O insurance policy.
While Errors and Omissions (E & O) insurance can provide protection to licensees, it is not a requirement set by the Tennessee Real Estate Commission. This option is incorrect because the commission specifically mandates the annual fee for the Education and Recovery Fund instead.
B) Every real estate broker carry E & O insurance covering the broker and any affiliated licensees.
Similar to option A, while E & O insurance is advisable for brokers and their affiliated licensees, it is not a requirement of the Tennessee Real Estate Commission. The focus of the commission's requirements is on the Education and Recovery Fund, making this option incorrect.
C) Every real estate licensee post a bond of at least $10,000 that can be used to reimburse client losses.
Posting a bond is not a requirement imposed by the Tennessee Real Estate Commission for real estate licensees. This option incorrectly suggests a bonding requirement, which is not part of the commission's measures to protect the public.
D) Every real estate licensee pay an annual fee to support the Education and Recovery Fund, which compensates clients who suffer such losses.
This option is correct as the Tennessee Real Estate Commission mandates that every real estate licensee contribute to the Education and Recovery Fund through an annual fee. This fund is specifically designed to protect clients who suffer financial losses due to the actions of real estate licensees.
Conclusion
The requirement for every real estate licensee to pay an annual fee to the Education and Recovery Fund is crucial for safeguarding clients from financial losses. Options A, B, and C do not align with the commission's specific requirements, as they focus on insurance and bonding rather than the mandated fee supporting the recovery fund. Thus, option D is the only choice that accurately reflects the commission's protective measures.