Tennessee Real Estate Practice Exam

Who typically holds the deposit for a timeshare?

1. Real estate agent

2. Attorney, bank, or title company

3. Timeshare company

4. Individual buyer

The correct answer is: Attorney, bank, or title company

In the context of a timeshare transaction, it is common for the deposit to be held by a neutral third party to ensure security and trust between the buyer and seller. An attorney, bank, or title company serves this purpose effectively. They act as intermediaries, safeguarding the funds until the transaction is finalized and both parties fulfill their obligations. This practice helps to protect the buyer’s interests, assuring them that their deposit will not be misappropriated. Additionally, it provides a level of trust in the transaction, as these entities are regulated and have specific professional standards that they must adhere to. In contrast, other options would not be appropriate holders of the deposit due to potential conflicts of interest or lack of regulatory oversight. For example, a real estate agent typically facilitates the transaction but is not the ideal entity for holding deposits, as they may have a vested interest in finalizing the sale. A timeshare company could also have conflicts of interest since they stand to gain from the transaction, and an individual buyer is not a suitable option due to the risks associated with handling deposits directly.