A Tennessee Broker-in-Charge, Helen, discovers that one of her Affiliate Brokers, Kevin, has been commingling client funds with his personal bank account. Helen immediately terminates Kevin's affiliation with her firm and reports the situation to TREC. Under Tennessee law, which of the following best describes Helen's potential liability?
Correct Answer
D) Helen may face disciplinary action if TREC finds she failed to adequately supervise Kevin's activities
Under Tenn. Code Ann. § 62-13-312 and TREC's supervisory responsibility rules, a Broker-in-Charge has an affirmative duty to supervise the activities of affiliated licensees. If TREC determines that Helen failed to implement adequate supervisory procedures or oversight mechanisms that would have detected or prevented the commingling, she may face disciplinary action even if she did not personally participate in the misconduct. Prompt reporting and termination are mitigating factors but do not automatically eliminate liability.
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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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