Broker Diane receives a $10,000 earnest money deposit in the form of a personal check from a buyer. The buyer asks Diane not to deposit the check until after the seller has accepted the offer, which is expected within two days. The seller accepts the offer the following day, making the contract fully executed. Diane holds the undeposited check for five business days after the contract is executed before depositing it. Which of the following most accurately describes Diane's compliance with Tennessee trust account rules?
Correct Answer
D) Diane may be in violation because trust funds must be deposited within a reasonable time not exceeding three business days, and five days after execution likely exceeds that standard
Under Tennessee TREC rules, trust funds must be deposited within a reasonable time, interpreted as not exceeding three business days. The clock for this requirement begins when the broker receives the funds (or when the agreed-upon condition for deposit is met, such as contract acceptance). Once the contract was executed and the condition for deposit was satisfied, Diane had three business days to deposit the check. Waiting five business days after execution likely violates this standard. The buyer's request to hold the check does not indefinitely suspend the deposit obligation once the triggering condition occurs.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
The National Do Not Call Registry is a federal program administered by the FTC that allows consumers to opt out of receiving unsolicited telemarketing calls, including calls from real estate agents soliciting business.
Brokers in Florida have strict responsibilities for managing escrow accounts, including monthly reconciliation and proper handling of trust funds.
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