An affiliate broker in Memphis is representing a seller who receives two simultaneous offers: one from a white couple and one from a Black couple, both offering the same price and terms. The seller instructs the affiliate broker to accept the white couple's offer. The affiliate broker complies and presents only the white couple's offer to the seller for review, withholding the Black couple's offer. Which of the following most accurately describes the legal consequences under Tennessee law?
Correct Answer
B) Both the seller and the affiliate broker may be liable for fair housing violations, and the affiliate broker may also face TREC disciplinary action.
Under the Tennessee Human Rights Act (Tenn. Code Ann. § 4-21-101 et seq.) and the federal Fair Housing Act, both the seller and the affiliate broker may be held liable for racial discrimination. The affiliate broker cannot shield herself from liability by claiming she was following client instructions — an agent's duty to obey client instructions does not extend to illegal instructions. By withholding an offer based on the buyers' race, the affiliate broker actively participated in a discriminatory transaction. Additionally, TREC may impose disciplinary action, including license suspension or revocation, under the Tennessee Real Estate Broker License Act for conduct involving fair housing violations.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
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