From whom does a licensee receive compensation in Tennessee?
Question & Answer
Review the question and all answer choices
The buyer
Answer A is incorrect because a licensee in Tennessee cannot legally receive compensation directly from a buyer; all funds must pass through the principal broker regardless of which party to the transaction is the source of the money.
The seller
Answer B is incorrect because even though the seller typically funds the commission in a traditional transaction, the licensee does not receive payment directly from the seller — the funds must be channeled through the principal broker first.
Themselves
Answer C is incorrect because a licensee cannot pay themselves; compensation must come from an external, supervising source — specifically the principal broker — ensuring proper oversight and record-keeping.
The principal broker
Why is this correct?
Answer D is correct because Tennessee law explicitly requires that all compensation paid to a licensee must be received through their principal broker, not directly from any party to the transaction. This rule is found in TCA §62-13-302 and is enforced by the Tennessee Real Estate Commission (TREC). The principal broker then disburses the agreed-upon split to the affiliated licensee according to their internal compensation agreement.
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