Tennessee Affiliate Broker Rosa receives a $5,000 earnest money deposit from a buyer she is representing. Rosa's Broker-in-Charge is out of town for a week. Rosa deposits the funds into her personal checking account temporarily, intending to transfer them to the firm's escrow account when her BIC returns. Under Tennessee license law, which of the following best describes Rosa's action?
Correct Answer
D) Rosa has violated Tennessee license law by commingling client funds with her personal funds, regardless of her intent.
Under Tenn. Code Ann. § 62-13-101 et seq., commingling client funds with personal funds is a serious violation of Tennessee license law regardless of the licensee's intent or the temporary nature of the deposit. Rosa was required to immediately deposit the earnest money into the firm's escrow or trust account — the BIC's absence does not excuse this obligation. Commingling is one of the most serious violations under Tennessee license law and can result in license suspension or revocation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
FREC has the authority to impose fines and other disciplinary actions on licensees who violate real estate laws and rules.
A group boycott is an illegal antitrust practice in which two or more competing real estate businesses agree to refuse to work with a specific person, company, or entity in order to harm that party's ability to compete.
In real estate, the distinction between an independent contractor and an employee determines tax treatment, liability, and the level of control a broker may exercise over the agent's daily activities. Most real estate agents operate as independent contractors.
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