Broker Elaine is opening a new real estate firm in Memphis, Tennessee. She plans to hold earnest money deposits for her clients. Under Tennessee license law, what is the FIRST step Elaine must take regarding trust accounts before she can begin accepting client funds?
Correct Answer
B) Obtain her Broker-in-Charge designation and establish a trust account at a federally insured Tennessee financial institution
Under Tennessee license law, a broker must hold a Broker-in-Charge (BIC) designation to operate a firm and supervise others. Before accepting client funds, Elaine must first obtain her BIC designation and establish a proper trust account at a federally insured financial institution located in Tennessee. Simply holding a broker license is not sufficient to operate a firm; the BIC designation is a separate, required step under Tennessee's three-tier licensing system.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
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.
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