A Tennessee real estate broker received a $5,000 earnest money deposit from a buyer and deposited it into the broker's personal checking account while waiting for the transaction to close. The seller later complained to TREC. Which specific violation has the broker most likely committed?
Correct Answer
B) Commingling, because the broker mixed client funds with personal funds
Depositing client funds — such as earnest money — into the broker's personal account rather than a separate trust or escrow account constitutes commingling under Tennessee license law. Commingling is a serious violation of Tenn. Code Ann. § 62-13-312 and TREC rules, as it fails to maintain the required separation between client funds and the broker's personal funds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
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.
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