Tennessee Real Estate Practice Exam

Which of the following actions must a licensee take upon receiving trust money as an affiliate broker?

1. Deposit it in their personal account

2. Keep it for one week

3. Pay it over to the broker immediately

4. Inform the client of its receipt

The correct answer is: Pay it over to the broker immediately

When a licensee, acting as an affiliate broker, receives trust money, the correct action is to pay it over to the broker immediately. This procedure is crucial in maintaining the integrity of the trust account and ensuring compliance with real estate laws and regulations. Trust money typically includes earnest money, lease deposits, or other funds that must be handled with care and in accordance with fiduciary duties. The prompt transfer of trust money to the broker is a standard practice aimed at protecting the client's interests and ensuring that the funds are managed correctly within the broker's trust account. This process also provides a layer of accountability and transparency in financial transactions within real estate operations. Maintaining a clear separation between personal funds and trust funds is vital for legal and ethical reasons, which is why depositing the money into a personal account, keeping it for a week, or merely informing the client about its receipt are not appropriate actions in this context. Proper handling and immediate action reinforce the broker's responsibility to manage trust funds adequately and comply with Tennessee’s real estate regulations.