Before you read
Test yourself first: 5 questions
Question 1 of 5
A Tennessee licensee receives a complaint-based investigation from TREC for alleged mishandling of escrow funds. TREC's authority in such a matter includes:
Answer: B. TREC has administrative authority to investigate and discipline licensees, including suspending or revoking a license, for violations such as escrow mishandling, following appropriate due process.
Question 2 of 5
An affiliate broker in Tennessee receives an earnest money deposit on an accepted offer. What is the proper handling of those funds?
Answer: B. Earnest money and other client funds must be turned over to the firm and placed in the broker's separate escrow/trust account, not commingled with personal funds.
Question 3 of 5
Which statement about a Tennessee broker's brokerage operations and recordkeeping is correct?
Answer: A. The principal/managing broker bears responsibility for supervising the firm, including proper handling and supervision of escrow/trust accounts and maintenance of required transaction and financial records, which must be retained and available for TREC inspection.
Question 4 of 5
Where must a Tennessee affiliate broker deposit earnest money and other trust funds received in a transaction?
Answer: B. Trust funds such as earnest money must be turned over to the managing broker and held in the firm's separate escrow/trust account, never commingled with personal or operating funds.
Question 5 of 5
Which of the following best describes a permissible use of a broker's escrow/trust account in Tennessee?
Answer: B. The escrow/trust account exists to hold entrusted funds such as earnest money separately from the broker's own funds; commingling or converting client money is prohibited.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
All active Tennessee licensees are required to carry errors and omissions (E&O) insurance for the entire time their license is active. Licenses are renewed on a recurring cycle, and licensees must complete the required continuing education hours before renewal to keep their license active.
Handling Escrow Funds and Renewal in Tennessee: FAQs
Is Handling Escrow Funds and Renewal in Tennessee on the real estate exam?
Yes. State License Law is a scored domain on the Tennessee real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Tennessee test this differently?
Tennessee applies its own license law on top of the national portion. This page covers the Tennessee rules specifically, which is what the state section of your exam tests.
