Broker David maintains a property management trust account for rental properties he manages. At the end of the month, he collects $15,000 in rent from various tenants. He deposits the full amount into the trust account and then writes himself a check from that account for $1,500 representing his earned management fees. Which statement best describes whether David's actions comply with Tennessee trust account rules?
Correct Answer
D) David's actions are compliant only if the trust account is at a federally insured Tennessee institution and withdrawals are documented
Under Tennessee TREC rules, a broker managing rental properties may withdraw earned management fees from the trust account, provided that: (1) the fees are actually earned, (2) the withdrawal is properly documented, and (3) the trust account is maintained at a federally insured institution in Tennessee. Depositing the full amount and then withdrawing earned fees with proper documentation is the correct procedure. Both conditions in option D must be satisfied for compliance.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
Continuing education (CE) refers to the ongoing coursework that licensed real estate professionals must complete during each renewal cycle to maintain an active license. CE ensures agents stay current with changes in laws, regulations, and industry practices.
More Practice Of Real Estate Questions
In Wyoming real estate practice, an associate broker or salesperson is not associated with a responsible broker at renewal. What should the licensee remember?
In Wyoming real estate practice, a first-time salesperson applicant completes coursework. What should the licensee remember?
A Wyoming licensee is reviewing an out-of-state salesperson applicant prepares for testing. What is the best answer?
In Wyoming real estate practice, a salesperson applicant age is reviewed. What should the licensee remember?
A responsible broker in Wyoming asks about a nonresident applicant provides home-state evidence. Which answer follows Wyoming law?
- → A responsible broker in Wyoming asks about a first-time salesperson applicant prepares for Wyoming-specific licensing. Which answer follows Wyoming law?
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