Tennessee Real Estate Affiliate Broker License, Practice Exams

Before closing, a buyer learns of an unrecorded claim against the title but does not tell the title insurer. After closing the claim causes a loss. Does the buyer's owner's policy cover it?

1. No; known defects not disclosed to the insurer are excluded. ✓
2. Yes; a title policy covers every defect existing at issue.
3. Yes, if the claim was one that the county records omitted.
4. No, because only a lender's policy covers unrecorded claims.

Why: DRE Reference Book ch. 5: THE STANDARD POLICY OF TITLE INSURANCE DOES NOT HOWEVER PROTECT THE POLICYHOLDER AGAINST DEFECTS IN THE TITLE KNOWN TO THE HOLDER OR TO THE AGENT OF THE HOLDER TO EXIST AT THE DATE OF THE POLICY AND NOT PREVIOUSLY DISCLOSED TO THE INSURANCE COMPANY; the extended policies carry the same limit.

A creditor's money judgment becomes a lien on the debtor's real property in the county where the debtor lives. While the lien is still in force, the debtor buys a lot in that county. Does the lien reach the lot?

1. No; it reaches only the land he owned when the lien arose.
2. Yes; it extends to land the debtor later acquires there. ✓
3. Yes, but only after the creditor files a second lawsuit.
4. No, since a judgment lien is a specific lien on one lot.

Why: DRE Reference Book ch. 5: once the judgment is recorded IT BECOMES A LIEN UPON ALL REAL PROPERTY OF THE JUDGMENT DEBTOR LOCATED IN THAT COUNTY. IT EXTENDS IN THAT COUNTY TO ALL REAL PROPERTY THE DEBTOR MAY THEREAFTER ACQUIRE BEFORE THE LIEN EXPIRES. A money judgment is a general lien, not a specific one.

As the Tennessee rules use the term, what is a “net price” listing?

1. A listing shared with other firms through the MLS.
2. A listing that pays a flat fee instead of a percentage.
3. A price excluding the usual commission and costs. ✓
4. A price the seller may lower without a new agreement.

Why: Rule 1260-02-.07: a “NET PRICE” is A PRICE EXCLUDING THE CUSTOMARY COMMISSION AND EXPENSES ASSOCIATED WITH THE SALE; no licensee may accept or enter such a listing.

A state has its own lead disclosure law that asks more of sellers than the federal rule does. How does the federal rule affect a seller's duty under that state law?

1. It preempts the state law, so only the federal rule then applies.
2. It lets the seller choose which one of the two laws to follow.
3. It leaves the state duty in place; the seller must meet both. ✓
4. It keeps the state law only for sales that are made without agents.

Why: 40 CFR 745.119: NOTHING IN THIS SUBPART SHALL RELIEVE A SELLER, LESSOR, OR AGENT FROM ANY RESPONSIBILITY FOR COMPLIANCE WITH STATE OR LOCAL LAWS, ORDINANCES, CODES, OR REGULATIONS GOVERNING NOTICE OR DISCLOSURE OF KNOWN LEAD-BASED PAINT OR LEAD-BASED PAINT HAZARDS. The federal rule is a floor; the state duty still binds the seller.

A mortgage applicant's income comes partly from a public assistance program. The lender refuses her for that reason alone, though her income is steady and sufficient. Is this lawful under the Equal Credit Opportunity Act?

1. Yes; a lender may exclude any income that does not come from wages.
2. Yes, as the Act protects only race, color, religion and national origin.
3. No; the Act bars refusing credit because income is public assistance. ✓
4. No, but only if the lender also refuses applicants who receive alimony.

Why: 15 U.S.C. 1691(a)(2): it is unlawful for any creditor to discriminate against any applicant BECAUSE ALL OR PART OF THE APPLICANT'S INCOME DERIVES FROM ANY PUBLIC ASSISTANCE PROGRAM. Under (b)(2) the creditor may inquire only to determine THE AMOUNT AND PROBABLE CONTINUANCE OF INCOME LEVELS.

A homeowners' association may amend its subdivision's restrictions. It votes to let owners run small shops from their garages, a use the city's zoning bars there. Does the amendment make the shops lawful?

1. Yes; the association's vote controls land use in the tract.
2. Yes, since private restrictions take precedence over zoning.
3. No; amendments cannot override zoning or building codes. ✓
4. No, unless every lot owner signs the amendment in writing.

Why: DRE Reference Book ch. 5: SUCH ASSOCIATIONS (TYPICALLY DESCRIBED AS HOMEOWNER’S ASSOCIATIONS) ARE OFTEN GIVEN THE POWER TO AMEND TRACT/SUBDIVISION RESTRICTIONS FROM TIME TO TIME TO CORRESPOND WITH COMMUNITY GROWTH (PROVIDED THE AMENDMENTS ARE NOT INCONSISTENT WITH THE CONDITIONS IMPOSED BY THE LOCAL GOVERNMENT ... AND ARE NOT INCONSISTENT WITH APPLICABLE LAW, INCLUDING ZONING ORDINANCES AND BUILDING CODES. A private amendment cannot authorize a use the zoning ordinance prohibits, however many owners sign it.

Which of these is NOT “advertising” under the Tennessee advertising rule?

1. A yard sign offering a home for sale.
2. A pen with the licensee's name on it. ✓
3. An e-mail signature naming the firm.
4. A social media post about a listing.

Why: Rule 1260-02-.12(1): ADVERTISING DOES NOT INCLUDE PROMOTIONAL MATERIALS THAT ADVERTISE A LICENSEE SUCH AS HATS, PENS, NOTEPADS, T-SHIRTS, NAME TAGS, BUSINESS CARDS, AND THE SPONSORSHIP OF CHARITABLE AND COMMUNITY EVENTS; signs, e-mail signatures and social media are included.

Transfer tax is $2.20 per $500 of price or fraction of $500, and deed recording is a flat $95; the seller pays both. The price is $389,250. What do the two cost the seller?

1. $953
2. $1,713.80
3. $1,807.70
4. $1,808.80 ✓

Why: Reference Book chapter 26's rate formula applies: $389,250 / $500 = 778.5, and a fraction counts as a whole unit, so 779 x $2.20 = $1,713.80, plus the $95 fee = $1,808.80. Not rounding up gives $1,807.70; leaving out the fee gives $1,713.80.

Within how many days after a fair housing complaint is filed must HUD complete its investigation, unless it is impracticable to do so?

1. 30 days.
2. 60 days.
3. 100 days. ✓
4. 180 days.

Why: 42 U.S.C. 3610(a)(1)(B)(iv): THE SECRETARY SHALL MAKE AN INVESTIGATION OF THE ALLEGED DISCRIMINATORY HOUSING PRACTICE AND COMPLETE SUCH INVESTIGATION WITHIN 100 DAYS AFTER THE FILING OF THE COMPLAINT ..., UNLESS IT IS IMPRACTICABLE TO DO SO; under (C) HUD must then explain the delay in writing.

A seller lists a 1962 house. She knows of no lead-based paint in it and has no reports. A buyer with a toddler is about to make an offer. What must the seller still do before the buyer is obligated under a contract?

1. Give an EPA-approved lead pamphlet and a 10-day chance to inspect ✓
2. Have the home tested for lead by a certified inspector before listing
3. Remove or seal any painted surfaces that could contain lead
4. Nothing, since the rule applies only when lead paint is known

Why: Under 40 CFR 745.107 and 745.110 the seller of target housing must, before the purchaser is obligated, provide an EPA-approved lead hazard information pamphlet and permit a 10-day period for a risk assessment or inspection; the disclosure attachment records either known lead or no knowledge of it (745.113). Section 745.107(a) states that nothing in it implies a positive obligation on the seller to conduct any evaluation or reduction, so testing and removal are not required.

A listing makes the commission payable only if the buyer's loan is approved. The seller, in bad faith, persuades the lender to deny the loan. May the broker recover?

1. No; the condition failed, so no commission could ever become due.
2. Only if the broker can find a second lender within the listing.
3. Yes; the seller's bad faith in blocking it does not defeat the claim. ✓
4. No, since conditions on commissions are void as against policy.

Why: DRE Reference Book ch. 10: THE PAYMENT OF A COMMISSION UNDER A LISTING CONTRACT MAY BE MADE DEPENDENT UPON ANY LAWFUL CONDITION. ... IF THE FULFILLMENT OF A CONDITION IS PREVENTED BY THE FRAUD OR BAD FAITH OF THE SELLER, OR THROUGH COLLUSION BETWEEN THE SELLER AND OTHER PARTIES, THE BROKER MAY RECOVER COMPENSATION EVEN IF THE CONDITION HAS NOT BEEN MET.

A seller agrees to pay 2 discount points on the buyer's 90% loan. The price and the appraised value are both $400,000. What do the points cost the seller?

1. $720
2. $7,200 ✓
3. $8,000
4. $72,000

Why: DRE Reference Book ch. 27, DISCOUNT POINTS: THE AMOUNT OF MONEY THE BORROWER OR SELLER MUST PAY THE LENDER ... A POINT EQUALS ONE PERCENT OF THE LOAN. Loan $400,000 x 0.90 = $360,000; 2 points = $360,000 x 0.02 = $7,200. $8,000 wrongly takes the points on the price.

A buyer hopes to use a USDA Rural Development guaranteed loan. Which combination meets that program's rules?

1. A modest principal residence in a designated rural area, on a fixed rate ✓
2. A rural weekend cabin kept as an investment, on an adjustable rate
3. A small farm with income-producing fields, on a fixed-rate balloon loan
4. A rural duplex she will rent out in full, on a fixed-rate 30-year note

Why: 7 CFR 3555.201 limits guarantees to areas Rural Development designates as rural, 3555.151 requires that the applicant occupy the dwelling as a principal residence and excludes investment properties, and 3555.104 requires a fixed rate and makes adjustable-rate and balloon loans ineligible. Income-producing land is barred by 7 CFR 3555.102.

Units in a well-located building are priced at market rent, yet they stay empty because prospects see stained carpet and old tenants' wear. What cause of vacancy does this show?

1. A rent set above market.
2. No traffic or lookers.
3. A high area vacancy rate.
4. Space not ready to rent. ✓

Why: DRE Reference Book ch. 22: reasons a space may be vacant include IMPROPER RENT REQUIRED; SPACE NOT READY TO RENT ... RENTAL PROPERTIES SHOWING THE WEAR AND TEAR OF THE PREVIOUS OCCUPANTS WILL DISCOURAGE A PROSPECTIVE TENANT. The rent is at market and prospects are coming, so the problem is readiness.

A home's annual property tax is $4,200 and the tax rate is 3.5% of assessed value. What is the assessed value?

1. $14,700
2. $120,000 ✓
3. $1,200,000
4. $1,470,000

Why: DRE Reference Book ch. 26, property tax formula: TAX = ASSESSED VALUE x RATE, so A = T ÷ R: $4,200 ÷ 0.035 = $120,000.

Which characteristic of real estate subjects a parcel to the influence of its surroundings?

1. Transferability
2. Fixity of location ✓
3. Principle of change
4. Conformity

Why: Reference Book chapter 27 defines fixity of location as the physical characteristic of real estate that subjects it to the influence of its surroundings. Because land cannot be moved, what happens around it affects its value.

The Federal Reserve buys government securities in the open market. What effect should this have on mortgage credit?

1. Bank reserves fall, so less credit is available.
2. Only the discount rate charged to banks changes.
3. Bank reserves rise, so more credit is available. ✓
4. Only loans already made have their rates adjusted.

Why: DRE Reference Book ch. 12: WHEN THE FED BUYS GOVERNMENT SECURITIES, CASH IS DEPOSITED INTO SELLERS' BANK ACCOUNTS, INCREASING RESERVES AND ALLOWING BANKS TO EXTEND MORE CREDIT TO BORROWERS. IF THE FED SELLS SECURITIES, THE OPPOSITE EFFECT OCCURS.

An owner grants land to a city 'so long as it is used as a public library.' Years later the library closes. What happens to the city's estate?

1. It ends automatically; title returns to the grantor ✓
2. The grantor must reenter or sue before the estate ends
3. Nothing, because a use limit in a deed is unenforceable
4. The city keeps title but owes the grantor the land's value

Why: Reference Book chapter 6 explains that when an owner imposes a special limitation and the stated event occurs, the estate automatically terminates and the grantor or successor reacquires title; the chapter 27 glossary defines a determinable fee as an estate that may end on an event that may or may not occur. The need to act to terminate belongs to a condition subsequent, not to a determinable fee.

Which method converts income into value by discounting each year's cash flow and the eventual sale proceeds to present value?

1. Direct capitalization using one year's overall rate.
2. Gross rent multiplier analysis of a single year's rent.
3. Yield capitalization, such as discounted cash flow. ✓
4. The building residual technique with a land rate.

Why: Reference Book chapter 15: yield capitalization "measures the present worth of a series of income payments occurring over the multi-year life of the investment"; its most common form, discounted cash flow analysis, discounts each benefit, including the reversion, to present value. Direct capitalization, including overall rate and GRM analysis, converts a single year's income.

A seller lied about a flooded basement. A boilerplate clause in the purchase contract says the buyer "relies on no representations of the seller and waives any claim based on them." Does the clause protect the seller from the fraud?

1. Yes; the buyer signed the waiver and is bound by it.
2. Yes, if the waiver was printed in bold type.
3. No; fraud makes the whole agreement voidable, waiver and all. ✓
4. No, unless the buyer's agent drafted the waiver.

Why: DRE Reference Book ch. 6: A PARTY TO A CONTRACT WHO IS GUILTY OF FRAUD IN ITS INDUCEMENT IS NOT RELIEVED OF THE EFFECTS OF THE FRAUD BY ANY STIPULATION IN THE CONTRACT THAT STATES EITHER THAT NO REPRESENTATIONS HAVE BEEN MADE OR THAT ANY RIGHT WHICH MIGHT BE GROUNDED UPON THEM IS WAIVED ... BECAUSE THE FRAUD RENDERS THE WHOLE AGREEMENT VOIDABLE.

A Tennessee licensee also holds a nonresident license from Georgia. Where must she file a copy of it?

1. Only with the Georgia commission.
2. With the Commission and her principal broker. ✓
3. With her local association of realtors.
4. Nowhere; out-of-state licenses need not be filed.

Why: Rule 1260-01-.04(4): ALL TENNESSEE LICENSEES HOLDING NONRESIDENT LICENSES ISSUED IN OTHER STATES SHALL FILE COPIES OF SUCH LICENSES IN THE OFFICE OF THE TENNESSEE REAL ESTATE COMMISSION AND WITH THEIR PRINCIPAL BROKER.

A seller agrees to carry back most of the price on the buyer's bare promise to pay later, with no lien or other security. The seller balks, and the buyer sues for specific performance. What is a likely ground for denial?

1. Seller financing cannot be specifically enforced at all.
2. The buyer was required to pay the entire price in cash.
3. The contract is not just and reasonable to the seller. ✓
4. A promise to pay later is never valid consideration.

Why: DRE Reference Book ch. 6: IN ORDER FOR THE PLAINTIFF TO UTILIZE THE EQUITABLE REMEDY OF SPECIFIC PERFORMANCE, HE OR SHE MUST SHOW THAT THE CONTRACT WITH THE DEFENDANT IS JUST AND REASONABLE. THE COURT DENIED SPECIFIC PERFORMANCE IN ONE CASE BECAUSE THE SELLER HAD NOT BEEN GIVEN ADEQUATE SECURITY TO INSURE THE PAYMENT OF THE BALANCE OF THE PRICE. A return promise is still consideration: ANY VALID PROMISE ... IS SUFFICIENT CONSIDERATION FOR ANOTHER PROMISE.

A seller signed a complete written sales memorandum, but the buyer never signed it. The buyer now sues the seller to enforce it. Does the buyer's missing signature defeat the suit?

1. Yes; both parties must sign before either may sue.
2. No; only the party to be charged must have signed. ✓
3. Yes, unless the buyer paid a deposit at signing.
4. No, since oral terms may stand in for any signature.

Why: DRE Reference Book ch. 6: the memorandum MUST, BEAR THE SIGNATURE OF THE PARTY TO BE CHARGED OR HELD TO THE AGREEMENT. THE OTHER PARTY BRINGING THE ACTION CAN ALWAYS ADD HIS OR HER SIGNATURE LATER. Here the seller, the party to be charged, signed.

A licensee took extra approved classes during a previous license period. May she use those hours for the current period's continuing education?

1. Yes, up to 8 hours may carry over.
2. No; prior-period hours do not count. ✓
3. Yes, all of them may carry over.
4. Only if her principal broker approves.

Why: Rule 1260-05-.12(3)(c): A LICENSEE WILL NOT RECEIVE CONTINUING EDUCATION CREDIT FOR CLASSROOM HOURS COMPLETED DURING A PRIOR LICENSE PERIOD.

An owner's operating statement lists property taxes, hazard insurance, common-area utilities and monthly mortgage payments. Which item is left out of the expenses used to find NOI?

1. The property tax bill.
2. The hazard insurance.
3. The common-area utilities.
4. The loan payments. ✓

Why: Reference Book chapter 15 says principal and interest payments on mortgages must be disregarded by the appraiser as not being allowable expense items. Taxes and insurance are fixed expenses and utilities a variable expense, all deducted from effective gross income to reach NOI.

Under an open listing, Broker A's prospect declines to make a deal. Later, Broker B persuades the same prospect to buy on substantially the terms he first rejected. Is Broker A the procuring cause?

1. No; Broker B induced the contract the prospect declined. ✓
2. Yes; Broker A introduced the buyer to the property first.
3. Yes, so the owner must pay both brokers a full commission.
4. Only if Broker A showed the home within the prior month.

Why: DRE Reference Book ch. 10: IF THE OFFEROR PRESENTED BY BROKER A DECIDES NOT TO ENTER INTO A CONTRACT, BUT IS THEREAFTER INDUCED BY BROKER B OR ANOTHER PERSON TO ENTER INTO THE CONTRACT ON SUBSTANTIALLY THE SAME TERMS THAT OFFEROR ORIGINALLY DECLINED, BROKER A IS NOT ENTITLED TO A COMMISSION UNDER THE THEORY THAT BROKER A IS THE PROCURING CAUSE OF THE SALE.

A buyer purchases the SE 1/4 of the NE 1/4 of the SE 1/4 of a standard section. How many acres is that?

1. 10 acres ✓
2. 40 acres
3. 80 acres
4. 160 acres

Why: Reference Book chapter 4 gives a section as 640 acres and a quarter-quarter as 40 acres. A quarter of a quarter-quarter is 640 / 4 / 4 / 4 = 10 acres; the chapter uses this same parcel as its worked example.

A qualified recipient in a time-share promotion has not received the promised gift. After how long may the recipient choose cash equal to the gift's cost instead?

1. 24 hours
2. 48 hours
3. 72 hours ✓
4. 96 hours

Why: Tenn. Code 66-32-133(13)(A): A QUALIFIED RECIPIENT SHALL BE ALLOWED TO CHOOSE EITHER THE GIFT OR PRIZE OR CASH IN AN AMOUNT EQUAL TO THE COST OF THE GIFT OR PRIZE ONLY IF THE GIFT OR PRIZE IS NOT DELIVERED TO A QUALIFIED RECIPIENT WITHIN SEVENTY-TWO (72) HOURS of the time the recipient became entitled to it; (13)(B) requires that choice to be disclosed at the initial offering.

A seller signs a listing agreement. When must the licensee give the seller a copy?

1. At the time it is signed. ✓
2. Within 10 days of signing.
3. When the property sells.
4. Only if the seller asks.

Why: T.C.A. 62-13-312(b)(8): grounds for discipline include FAILING TO FURNISH A COPY OF ANY LISTING, SALE, LEASE OR OTHER CONTRACT RELEVANT TO A REAL ESTATE TRANSACTION TO ALL SIGNATORIES OF THE CONTRACT AT THE TIME OF EXECUTION.

A broker pays an unlicensed friend a fee for each sale she negotiates for his sellers, work the Act reserves for licensees. How does Tennessee law treat this?

1. It is lawful if the broker supervises each deal.
2. It is lawful if the pay is a flat fee, not a split.
3. It is unlawful for the broker to pay her for it. ✓
4. It is lawful if she is on the firm's regular payroll.

Why: Tenn. Code 62-13-302(a): IT IS UNLAWFUL FOR ANY LICENSED BROKER TO EMPLOY OR COMPENSATE ANY PERSON WHO IS NOT A LICENSED BROKER OR A LICENSED AFFILIATE BROKER FOR PERFORMING ANY OF THE ACTS REGULATED BY THIS CHAPTER. The form of pay and the broker's oversight do not matter; the person paid must be licensed.

A seller agrees to pay 1.5 points on the buyer's loan. The price is $400,000, the home appraises at $392,500, and the lender lends 80% of the appraised value. What do the points cost the seller?

1. $4,710. ✓
2. $4,800.
3. $5,887.50.
4. $6,000.

Why: DRE Reference Book ch. 27: DISCOUNT POINTS are THE AMOUNT OF MONEY THE BORROWER OR SELLER MUST PAY THE LENDER TO GET A MORTGAGE AT A STATED INTEREST RATE, and A POINT EQUALS ONE PERCENT OF THE LOAN; the LTV ratio applies to the APPRAISED VALUE. Working: $392,500 x 0.80 = $314,000 loan; x 0.015 = $4,710. $4,800 uses 80% of the price; $5,887.50 takes points on the appraised value and $6,000 on the price, not on the loan.

What must an instructor complete before teaching the core course the Commission requires every two years?

1. A law degree from an ABA-accredited law school.
2. Two full terms teaching the course under supervision.
3. A broker license held for at least twelve years.
4. An approved instructor course of at least 4 hours. ✓

Why: Tenn. Code 62-13-324(c): BEFORE TEACHING THE CORE COURSE REQUIRED EVERY TWO (2) YEARS BY THE REAL ESTATE COMMISSION, AN INSTRUCTOR SHALL DEMONSTRATE COMPETENCY IN THE SUBJECT BY TAKING AN APPROVED INSTRUCTOR COURSE OF AT LEAST FOUR (4) HOURS ON THE SUBJECT MATTER BEING PRESENTED IN THE CORE COURSE.

If a landlord properly terminates a tenant's lease for the tenant's default, what happens to a subtenant's rights under a sublease from that tenant?

1. They go on until the sublease itself expires.
2. They turn into a direct lease with the landlord.
3. They go on if the subtenant paid its own rent.
4. They end at the same time as the tenant's lease. ✓

Why: DRE Reference Book ch. 9: THE SUBTENANT'S RIGHTS ARE DERIVED ENTIRELY THROUGH THE TENANT ... IF THE LANDLORD TERMINATES THE TENANT'S LEASE FOR DEFAULT, WHETHER IT WAS THE TENANT OR THE SUBTENANT WHO PERFORMED THE ACT OR OMISSION LEADING TO THE DEFAULT, THE SUBTENANT'S RIGHTS IN THE PREMISES WILL BE SIMULTANEOUSLY EXTINGUISHED.

Under Tennessee law, a person becomes a time-share resale broker by listing or selling how many resale intervals per year for others?

1. More than 2.
2. More than 3.
3. More than 5. ✓
4. More than 10.

Why: Tenn. Code 66-32-102(23): “TIME-SHARE RESALE BROKER” MEANS ANY PERSON OR ENTITY WHO UNDERTAKES TO LIST, ADVERTISE FOR SALE, PROMOTE OR SELL BY ANY MEANS WHATSOEVER MORE THAN FIVE (5) TIME-SHARE INTERVALS PER YEAR ... ON BEHALF OF ANY NUMBER OF PURCHASERS. A TIME-SHARE RESALE BROKER MUST BE A LICENSED REAL ESTATE BROKER.

An owner dies without a will and with no heirs capable of inheriting. By what process does the land pass to the state?

1. Eminent domain
2. Dedication
3. Escheat ✓
4. Adverse possession

Why: Reference Book chapter 27 defines escheat as the reverting of property to the state when heirs capable of inheriting are lacking. Eminent domain is a paid taking for public use, dedication is an owner's voluntary gift of land to public use, and adverse possession passes title to a private possessor, not to the state.

A company books and manages mountain cabins for their owners, renting them to guests for a week at a time. What license does Tennessee require of it?

1. A vacation lodging service firm license. ✓
2. A full firm license and a principal broker.
3. None; lodging services are wholly exempt.
4. A time-share developer's registration.

Why: Tenn. Code 62-13-104(b)(2): EACH VACATION LODGING SERVICE SHALL BE REQUIRED TO HAVE A VACATION LODGING SERVICE FIRM LICENSE BUT SHALL NOT BE REQUIRED TO HAVE A LICENSED REAL ESTATE BROKER SUPERVISING THE BUSINESS. Subsection (a)(2) exempts such services from the rest of the chapter, but not from subsection (b).

A buyer wants to drop out of a purchase. A friend agrees to buy on the same terms, and the seller agrees to take the friend and release the first buyer completely. What is this?

1. A novation. ✓
2. An assignment.
3. A rescission.
4. An option.

Why: DRE Reference Book ch. 6: NOVATION IS THE SUBSTITUTION BY AGREEMENT OF A NEW OBLIGATION FOR AN EXISTING ONE, WITH INTENT TO EXTINGUISH THE LATTER, and may bring in a new party. By contrast an assignor who merely assigns stays liable unless the other party releases him.

An affiliate demands her release, but she has moved and her principal broker cannot find her to hand back her license. What may he do with it?

1. Keep the license on file until she calls.
2. Destroy the license and note it on file.
3. Hold the release until she is located.
4. Return the license to the Commission. ✓

Why: Rule 1260-02-.02(5): UPON DEMAND BY A LICENSEE FOR HIS RELEASE FROM A FIRM, IT SHALL BE PROMPTLY GRANTED BY THE PRINCIPAL BROKER AND THE PRINCIPAL BROKER SHALL RETURN THE LICENSE TO THE LICENSEE. IF THE LICENSEE CANNOT BE LOCATED THEN THE PRINCIPAL BROKER MAY RETURN THE LICENSE TO THE COMMISSION.

Townships are counted east or west of a principal meridian in columns. What is such a column called?

1. A tier, an east-west strip six miles wide.
2. A range, a north-south strip six miles wide. ✓
3. A section, a square one mile on each side.
4. A guide meridian, run at 24-mile intervals.

Why: DRE Reference Book ch. 27 (Glossary), RANGE: A STRIP OR COLUMN OF LAND SIX MILES WIDE, DETERMINED BY A GOVERNMENT SURVEY, RUNNING IN A NORTH-SOUTH DIRECTION, LYING EAST OR WEST OF A PRINCIPAL MERIDIAN. Townships are counted north or south of a base line; a square of 36 sections is a township.

Every required party completes and signs the lead disclosure attachment for a 1955 house. The seller's materials go to the buyer's attorney, who is paid solely by the buyer and never passes them on. Are the seller and listing agent responsible for that failure?

1. Yes; the seller must deliver the materials to the buyer in person.
2. Yes; the listing agent must confirm the buyer actually got them.
3. No, but only because the buyer later waived the inspection.
4. No, since all required parties completed and signed the attachment. ✓

Why: 40 CFR 745.113(d): THE SELLER, LESSOR, OR AGENT SHALL NOT BE RESPONSIBLE FOR THE FAILURE OF A PURCHASER'S OR LESSEE'S LEGAL REPRESENTATIVE (WHERE SUCH REPRESENTATIVE RECEIVES ALL COMPENSATION FROM THE PURCHASER OR LESSEE) TO TRANSMIT DISCLOSURE MATERIALS TO THE PURCHASER OR LESSEE, PROVIDED THAT ALL REQUIRED PARTIES HAVE COMPLETED AND SIGNED THE NECESSARY CERTIFICATION AND ACKNOWLEDGMENT LANGUAGE. No waiver is needed for that protection.

A time-share ad calls the project's golf course "reserved for owners," but the public may also play there. How does Tennessee law treat the ad?

1. As allowed, if owners get first tee times.
2. As allowed, since owners do use the course.
3. As barred, since the public has a right of use. ✓
4. As barred only if the course charges fees.

Why: Tenn. Code 66-32-132(10): no ad shall MISREPRESENT OR IMPLY THAT A FACILITY OR SERVICE IS AVAILABLE FOR THE EXCLUSIVE USE OF PURCHASERS OR OWNERS IF A PUBLIC RIGHT OF ACCESS OR OF USE OF THE FACILITY OR SERVICE EXISTS.

When a seller signs a purchase contract, her title is clouded by a judgment lien that she plans to pay off from the sale proceeds at closing. The buyer says the contract fails because title was not clear when signed. Is he right?

1. Yes; a seller must hold merchantable title on the day she signs.
2. Yes, unless the lien was disclosed to him in writing beforehand.
3. No; title need be merchantable only when she must convey it. ✓
4. No; a buyer must take whatever title the seller has at closing.

Why: DRE Reference Book ch. 6: A BUYER IS ALWAYS ENTITLED TO RECEIVE A MERCHANTABLE TITLE ... THIS DOES NOT MEAN THAT TITLE NEEDS TO BE MERCHANTABLE AT THE TIME THE ORIGINAL AGREEMENT WAS EXECUTED. IT ONLY MEANS THAT TITLE NEEDS TO BE MERCHANTABLE AT THE TIME IT BECOMES THE DUTY OF THE SELLER TO CONVEY THE TITLE.

Several brokers agree among themselves to refuse to show listings of a new discount brokerage or to cooperate with it on any sale. What is this agreement?

1. A lawful choice each broker is entitled to make alone
2. A group boycott, a conspiracy in restraint of trade ✓
3. A tie-in, forcing clients to buy a second service
4. A lawful rule, so long as the MLS itself adopts it

Why: 15 U.S.C. 1 makes illegal every contract, combination or conspiracy in restraint of trade. An agreement among competitors to refuse jointly to deal with another competitor restrains trade in the same way as an agreement on price; what each broker could lawfully decide alone becomes unlawful when they agree to do it together.

A released affiliate broker has not yet had her new affiliation processed by the Commission. May she show property meanwhile?

1. Yes, if her new principal broker has agreed to it.
2. Yes, for 10 days.
3. No, not until it is processed. ✓
4. Yes, but only for the buyers she already represents.

Why: Rule 1260-02-.02(2): THE LICENSEE SHALL NOT ENGAGE IN ANY ACTIVITIES DEFINED IN § 62-13-102 UNTIL A CHANGE OF AFFILIATION IS RECEIVED AND PROCESSED BY THE COMMISSION.

An affiliate's online request to transfer to a new firm is submitted without the required payment. How does the Commission treat her?

1. Validly transferred, with the fee billed to the new firm later.
2. Not validly transferred; she goes into broker release status. ✓
3. Validly transferred, if she pays the fee within ten days.
4. Still affiliated with her old firm until the fee is paid.

Why: Rule 1260-02-.02(3)(b): IF THE ELECTRONIC SUBMISSION IS NOT COMPLETE, DOES NOT HAVE AN ELECTRONIC SIGNATURE, OR PAYMENT HAS NOT BEEN RECEIVED THEN THE TRANSFER SHALL NOT BE CONSIDERED BY THE COMMISSION TO BE A VALID TRANSFER AND THE AFFILIATED LICENSEE WILL BE PLACED INTO BROKER RELEASE STATUS.

Under Tennessee law, a person who starts a suit whose judgment may be collected from the recovery account must notify the Commission in writing within how many days?

1. 15 days.
2. 30 days. ✓
3. 60 days.
4. 90 days.

Why: Tenn. Code 62-13-208(e): WHEN ANY AGGRIEVED PERSON COMMENCES ACTION FOR A JUDGMENT THAT MAY RESULT IN COLLECTION FROM THE ACCOUNT, THE PERSON SHALL PROMPTLY NOTIFY THE COMMISSION TO THIS EFFECT IN WRITING WITHIN THIRTY (30) DAYS OF COMMENCEMENT OF THE ACTION; under 62-13-208(j) failure to comply waives the person's rights.

A state takes a family's land for a new highway. What measure of just compensation do most courts apply?

1. Assessed value on the tax roll
2. The owner's original price
3. Replacement cost of the house
4. Fair market value ✓

Why: Reference Book chapter 17 says the federal Constitution requires just compensation for a taking, that the main issue in condemnation is its amount, and that most courts have ruled that fair market value is just compensation. Chapter 27 ties the right to be paid to the Fifth Amendment.

A lease lets the tenant end it early by written notice sent by certified mail at least 90 days before any lease anniversary. One hundred days ahead, the tenant simply phones the landlord to say it is leaving. Is the lease ended?

1. Yes; the landlord had actual notice more than 90 days ahead.
2. Yes, because any clear notice given in time is always enough.
3. No, as a lease can be ended early only by mutual agreement.
4. No; the option must be exercised strictly as the lease says. ✓

Why: DRE Reference Book ch. 9 (Exercise of option to terminate): A LEASE MAY PROVIDE THAT IT IS TERMINABLE AT THE ELECTION OF A PARTICULAR PARTY ... SUCH OPTIONS TO TERMINATE MAY BE EXERCISED ONLY BY THE DELIVERY OF NOTICE FROM THE TERMINATING PARTY TO THE OTHER IN STRICT ACCORDANCE WITH THE TERMS AND PROVISIONS SPECIFIED IN THE LEASE. A phone call is not the written, mailed notice the lease requires.

Under Regulation Z, may a for-profit mortgage broker's advertisement describe its loan officers as "mortgage counselors"?

1. No; the term is barred for for-profit mortgage brokers. ✓
2. Yes, if the officers hold a state loan originator license.
3. Yes, as long as the ad also states an annual percentage rate.
4. No, unless the ad is for a government-insured loan program.

Why: 12 CFR 1026.24(i)(6): prohibited in ads for credit secured by a dwelling is USING THE TERM “COUNSELOR” IN AN ADVERTISEMENT TO REFER TO A FOR-PROFIT MORTGAGE BROKER OR MORTGAGE CREDITOR, ITS EMPLOYEES, OR PERSONS WORKING FOR THE BROKER OR CREDITOR.

Ava, Ben and Cal hold title as joint tenants. Ava sells her interest to Dee. How is title then held?

1. Ben and Cal stay joint tenants as to two-thirds; Dee holds one-third in common ✓
2. All four become tenants in common, each holding an equal one-quarter
3. Dee steps into Ava's place and becomes a joint tenant with Ben and Cal
4. The sale is void, since joint tenants cannot convey without consent

Why: Reference Book chapter 5 gives this example: if A, B and C are joint tenants and A conveys to D, B and C continue as joint tenants as to a two-thirds interest and D owns one-third as a tenant in common. Dee cannot be a joint tenant because she did not acquire at the same time by the same conveyance, and a joint tenant may sever by conveying without the others' consent.

A traveler rents a hotel room for a week. Housekeeping enters daily, and the hotel may move her to another room. Is she a tenant under landlord-tenant law?

1. Yes; any stay of a week or more creates a tenancy for years.
2. Yes, a periodic tenancy from week to week, as she pays weekly.
3. No, because a tenancy needs a lease of more than one month.
4. No; she lacks the exclusive possession that a tenant holds. ✓

Why: DRE Reference Book ch. 9: THE DISTINGUISHING FEATURE OF A LEASEHOLD INTEREST IS THE RIGHT TO EXCLUSIVE POSSESSION AND USE OF REAL PROPERTY ... HOTEL GUESTS, LICENSEES AND EMPLOYEES ... SINCE NONE OF THESE HAS AN EXCLUSIVE RIGHT TO POSSESSION, THEY ARE NOT GOVERNED BY THE LAWS REGULATING THE RELATIONSHIP OF LANDLORD AND TENANT.

A relocation company demands a referral fee from a listing agent with no reasonable cause for it. How does Tennessee law treat the demand?

1. It is lawful, as referral fees are customary in moves.
2. It is lawful if the agent's broker agrees to pay it.
3. It is unlawful only if the demand is made in writing.
4. It is unlawful to solicit a fee without reasonable cause. ✓

Why: Tenn. Code 62-13-603(a)(1): IT IS UNLAWFUL FOR ANY PERSON OR ENTITY TO ... SOLICIT OR REQUEST A REFERRAL FEE FROM A REAL ESTATE LICENSEE WITHOUT REASONABLE CAUSE. The form of the demand and the broker's willingness to pay do not make it lawful.

A licensee wants to offer a free television to anyone who lists with her. What must the offer include?

1. Only an oral promise, made at the listing appointment.
2. Firm approval and a signed, detailed writing. ✓
3. Approval by the Commission and a posted cash bond.
4. Nothing; gifts to clients are wholly unregulated.

Why: Rule 1260-02-.33(1): a gift or prize may be offered as an inducement ONLY IF THE OFFER IS MADE UNDER THE SPONSORSHIP AND WITH THE APPROVAL OF THE FIRM ... AND IN WRITING, SIGNED BY THE LICENSEE, WITH DISCLOSURE OF ALL PERTINENT DETAILS, including specifications, fair market value, time and place of delivery, and any requirements.

A borrower choosing between two adjustable-rate mortgages wants to limit her exposure to rising rates. Which features should she look for?

1. A high margin, which keeps each later rate adjustment small
2. A payment option, so she may pay less whenever rates rise
3. Negative amortization, which holds her payment level for life
4. A low margin, reasonable rate caps and a less volatile index ✓

Why: Reference Book chapter 12 states that ARM borrowers share the risk of rising rates and should minimize their exposure by selecting programs with low margins and reasonable caps on rate changes, and that choosing a less volatile index also matters. It warns that negative amortization and payment options have proven troubling, leading to payment shock and balances above value.

A licensee wants to offer a prize to anyone who lists with her. Besides putting it in writing, what must she have?

1. The Commission's advance approval.
2. A surety bond covering the prize.
3. Her firm's approval. ✓
4. The seller's written consent.

Why: Rule 1260-02-.33(1): A LICENSEE MAY OFFER A GIFT, PRIZE, OR OTHER VALUABLE CONSIDERATION AS AN INDUCEMENT ... ONLY IF THE OFFER IS MADE: (A) UNDER THE SPONSORSHIP AND WITH THE APPROVAL OF THE FIRM WITH WHOM THE LICENSEE IS AFFILIATED; AND (B) IN WRITING.

Why does an appraiser analyze each site in a neighborhood separately?

1. Zoning rules change from one lot to the next
2. Sites are seldom uniform in size and shape ✓
3. Only vacant sites can have a market value
4. Recording law requires a report on each site

Why: Reference Book chapter 15 explains that since sites in a neighborhood are not usually uniform in size, shape and other physical and economic characteristics, some are superior to others, so each site should be analyzed separately.

In an exchange of investment properties, the other party takes over the $50,000 mortgage on the property the investor gives up. How is that assumption treated under the like-kind exchange rules?

1. As like-kind property received, and so ignored.
2. As a cut in the value of the property given up.
3. As a loss she may deduct in the year of exchange.
4. As money received by the investor in the exchange. ✓

Why: 26 U.S.C. 1031(d): WHERE AS PART OF THE CONSIDERATION TO THE TAXPAYER ANOTHER PARTY TO THE EXCHANGE ASSUMED ... A LIABILITY OF THE TAXPAYER, SUCH ASSUMPTION SHALL BE CONSIDERED AS MONEY RECEIVED BY THE TAXPAYER ON THE EXCHANGE.

A landlord and tenant have a five-year lease. The landlord dies in year two, and the lease says nothing about death. What happens to the lease?

1. It ends at once, and the tenant must vacate within 30 days.
2. It continues; a fixed-term lease does not end on a party's death. ✓
3. It converts to a month-to-month tenancy with the heirs.
4. It ends at the end of the current year of the term.

Why: DRE Reference Book ch. 9: IN THE ABSENCE OF A PROVISION TO THE CONTRARY CONTAINED IN THE LEASE, A LEASE FOR A FIXED TERM IS NOT TERMINABLE OR TERMINATED UPON THE DEATH OF EITHER PARTY.

A licensee buys her own E&O policy instead of joining the Commission's group policy. What must it match, at a minimum?

1. Only the minimum set by her principal broker.
2. The group policy's terms, limits and deductible. ✓
3. Any policy sold by a Tennessee insurer.
4. Half the group policy's coverage limits.

Why: Rule 1260-01-.15(4): ANY INDEPENDENTLY OBTAINED ERRORS AND OMISSIONS INSURANCE POLICY SHALL, AT A MINIMUM, BE ISSUED UPON THE SAME TERMS AND CONDITIONS AS THE POLICY OBTAINED BY THE TENNESSEE REAL ESTATE COMMISSION ... INCLUDING ... THE LIMITS OF COVERAGE, THE PERMISSIBLE DEDUCTIBLE, THE PERMISSIBLE EXEMPTIONS AND THE TERM OF THE POLICY.

Unless the agent's agreement expressly restricts it, an agent given the power to sell and convey a principal's real property also has the power to do what?

1. Lease the property until a buyer can be found.
2. Borrow against the property to cover sale costs.
3. Sign the buyer's loan papers as a co-borrower.
4. Give the usual covenants of warranty in the deed. ✓

Why: DRE Reference Book ch. 10: AN AGENT WHO IS GIVEN THE POWER TO SELL AND CONVEY REAL PROPERTY FOR A PRINCIPAL ALSO POSSESSES THE POWER TO GIVE THE USUAL COVENANTS OF WARRANTY UNLESS THERE ARE EXPRESS RESTRICTIONS IN THIS REGARD IN THE AGENT'S AGREEMENT WITH THE PRINCIPAL. Leasing and borrowing are separate acts the power to sell does not reach.

Once a sale contract has been made, does a broker's agency to sell the property give him authority to modify the contract?

1. No; an agency to sell does not include modifying the contract. ✓
2. Yes; an agent to sell may adjust any term that helps it close.
3. Yes, as long as the new date falls within thirty days of the old.
4. Yes, if the buyer pays the broker a separate fee for the change.

Why: DRE Reference Book ch. 10: AN AGENCY TO SELL THE PROPERTY DOES NOT CARRY WITH IT THE AUTHORITY TO MODIFY OR CANCEL THE CONTRACT OF SALE AFTER IT HAS BEEN MADE.

A firm's ad shows only its national franchise name, with no firm name. How does the rule classify it?

1. As false, misleading or deceptive advertising. ✓
2. As proper, since the franchise is well known.
3. As proper, if the franchise phone number is shown.
4. As a matter for the franchisor, not the Commission.

Why: Rule 1260-02-.12(3)(f)1: false, misleading and deceptive advertising includes ANY LICENSEE ADVERTISING THAT INCLUDES ONLY THE FRANCHISE NAME WITHOUT INCLUDING THE FIRM NAME.

A seller knows the result of a percolation test on the lot that the Department of Environment and Conservation accepted. What must the seller do?

1. Disclose it only if the buyer asks first.
2. Give it to the buyer at the closing table.
3. Nothing; soil tests are the buyer's job.
4. Disclose the result before contracting. ✓

Why: Tenn. Code 66-5-212(a): THE SELLER SHALL, PRIOR TO ENTERING INTO A CONTRACT WITH A BUYER, DISCLOSE IN THE CONTRACT ITSELF OR IN WRITING, INCLUDING ACKNOWLEDGEMENT OF RECEIPT, THE PRESENCE OF ANY KNOWN EXTERIOR INJECTION WELL AND THE RESULTS OF ANY KNOWN PERCOLATION TEST OR SOIL ABSORPTION RATE PERFORMED ON THE PROPERTY THAT IS DETERMINED OR ACCEPTED BY THE DEPARTMENT OF ENVIRONMENT AND CONSERVATION.

Four rental applicants each claim protection because of a handicap. Under the Fair Housing Act definition, which one is NOT covered?

1. An applicant who has a record of a past mental illness.
2. An applicant a landlord wrongly believes has a heart condition.
3. An applicant whose arthritis limits her ability to walk far.
4. An applicant who currently uses an illegal controlled drug. ✓

Why: 42 U.S.C. 3602(h): handicap means a substantially limiting impairment, (2) A RECORD OF HAVING SUCH AN IMPAIRMENT, OR (3) BEING REGARDED AS HAVING SUCH AN IMPAIRMENT, BUT SUCH TERM DOES NOT INCLUDE CURRENT, ILLEGAL USE OF OR ADDICTION TO A CONTROLLED SUBSTANCE. The other three fit one of the three prongs.

A 1960 building has studio apartments in which the living area is not separated from the sleeping area. No child under 6 lives, or is expected to live, in the studio being leased. Does the lead disclosure rule apply?

1. Yes; every unit in a pre-1978 building is covered.
2. No; the rule covers only sales, never any leases.
3. No; a 0-bedroom dwelling is not target housing then. ✓
4. Yes, unless the lease runs for less than one year.

Why: 40 CFR 745.103: TARGET HOUSING MEANS ANY HOUSING CONSTRUCTED PRIOR TO 1978, EXCEPT ... ANY 0-BEDROOM DWELLING (UNLESS ANY CHILD WHO IS LESS THAN 6 YEARS OF AGE RESIDES OR IS EXPECTED TO RESIDE IN SUCH HOUSING); a 0-BEDROOM DWELLING includes EFFICIENCIES, STUDIO APARTMENTS.

A team at a Tennessee firm advertises itself as "Smith Realty Associates." Why is this a problem?

1. Team names may not contain any licensee's surname.
2. It implies brokerage separate from the firm. ✓
3. Only the principal broker may pick a team's name.
4. It is not a problem if the firm name also appears.

Why: Rule 1260-02-.12(3)(f)2: misleading advertising includes a team advertising with terms such as 'REAL ESTATE,' ... 'REALTY,' 'COMPANY,' ... 'ASSOCIATES,' OR OTHER SIMILAR TERMS THAT WOULD LEAD THE PUBLIC TO BELIEVE THAT THOSE LICENSEES ARE OFFERING REAL ESTATE BROKERAGE SERVICES INDEPENDENT OF THE FIRM AND PRINCIPAL BROKER.

A seller dies one month into a 90-day listing, before any buyer is found. The broker argues that its right to a commission keeps the listing alive. Is the broker right?

1. Yes; the listing binds the estate for its full term
2. Yes, if the broker had already spent money on marketing
3. No, but the listing revives when the estate is probated
4. No; the right to a commission is not such an interest ✓

Why: Reference Book chapter 10 states that a broker's right to earn a commission under a listing is not an interest that precludes termination by the death, incapacity or revocation of the principal, even where the listing gives the broker a particular time to perform. The principal's death ends the agency.

A seller signs an unconditional acceptance of an offer, then says she secretly never meant to sell. Is she bound?

1. No; there was no true meeting of the minds
2. No, if she proves her intent with a witness
3. Yes, but only if the buyer has paid a deposit
4. Yes; consent is judged by outward expression ✓

Why: Reference Book chapter 6 states that the parties are bound only by their apparent intentions as outwardly manifested by words or acts. Courts cannot read minds, and secret or unexpressed intentions are immaterial, so there need not be a true meeting of the minds.

A client asks a broker to structure a sale in a way the broker suspects may be a crime. What should the broker do?

1. Proceed, as the client bears any risk
2. Obtain legal advice before going ahead ✓
3. Report the client to the licensing body
4. Proceed if the client signs a waiver

Why: Reference Book chapter 11 advises that if there is doubt as to whether a transaction involves a crime, a licensee should obtain legal advice. A broker who goes ahead cannot shift the risk to the client, and a waiver does not make an unlawful act lawful.

A buyer has no agent of her own. Which licensee has the duty to inform her of her rights and obligations under the residential disclosure law?

1. No licensee; the duty is the seller's.
2. The owner's licensee dealing with her. ✓
3. The closing attorney handling the sale.
4. The home inspector she hires later.

Why: Tenn. Code 66-5-206: IF THE PURCHASER IS NOT REPRESENTED BY A LICENSEE, THE REAL ESTATE LICENSEE REPRESENTING AN OWNER OF RESIDENTIAL REAL ESTATE AND DEALING WITH THE PURCHASER HAS A DUTY TO INFORM EACH SUCH PURCHASER OF THE PURCHASER'S RIGHTS AND OBLIGATIONS UNDER THIS PART.

An office tower would be the most profitable use a site could physically support, but the zoning allows only single-family homes. Which highest and best use test does the tower fail?

1. Legally permissible. ✓
2. Physically possible.
3. Economically feasible.
4. Most productive use.

Why: Reference Book chapter 15 gives the four tests: the use must be (1) legally permissible, (2) physically possible, (3) economically feasible and (4) the most productive use. The site can hold the tower and it would be profitable, but zoning forbids it, so it fails the first test and cannot be the highest and best use.

When an affiliate broker changes firms, whom does the Act make responsible for seeing that the completed change form and fee are promptly sent to the Commission?

1. The principal broker she is leaving.
2. The principal broker she is joining.
3. The affiliate broker who is moving. ✓
4. The two principal brokers jointly.

Why: Tenn. Code 62-13-310(a): THE AFFILIATE BROKER SHALL ASSURE THAT THE COMPLETED FORM AND FEE ARE PROMPTLY TRANSMITTED. The departing broker must sign and date the form at once, but the duty to see it and the fee sent falls on the affiliate.

A seller never provided the required disclosure statement. May the buyer terminate the purchase contract for that reason alone?

1. Yes, at any time before the closing.
2. No, but other actions remain open. ✓
3. Yes, within 3 days of learning of it.
4. Only if a licensee was involved.

Why: T.C.A. 66-5-203(b): FAILURE TO PROVIDE THE DISCLOSURE OR DISCLAIMER STATEMENT REQUIRED BY THIS PART SHALL NOT PERMIT A PURCHASER TO TERMINATE A REAL ESTATE PURCHASE CONTRACT; HOWEVER, A PURCHASER SHALL NOT BE RESTRICTED ... FROM BRINGING SUCH OTHER ACTIONS AT LAW OR IN EQUITY.

A firm moves its office. Within what time must the principal broker notify the Commission in writing?

1. 3 days.
2. 10 days. ✓
3. 15 days.
4. 45 days.

Why: T.C.A. 62-13-309(a)(3): within ten days after relocating an office, the principal broker must notify the Commission in writing of the new address and pay the applicable fee.

An administrative law judge rules that a licensed real estate broker discriminated in the course of her business. What must HUD then do about her license?

1. Suspend her license itself for a period of up to one year.
2. Send the order to her licensing agency, recommending discipline. ✓
3. Nothing, as discipline of licensees is left wholly to the states.
4. Revoke her license at once if the civil penalty exceeds $10,000.

Why: 42 U.S.C. 3612(g)(5): for a practice in A BUSINESS SUBJECT TO A LICENSING OR REGULATION BY A GOVERNMENTAL AGENCY, THE SECRETARY SHALL, NOT LATER THAN 30 DAYS AFTER ... SUCH ORDER ... (A) SEND COPIES OF THE FINDINGS OF FACT, CONCLUSIONS OF LAW, AND THE ORDER, TO THAT GOVERNMENTAL AGENCY; AND (B) RECOMMEND ... APPROPRIATE DISCIPLINARY ACTION (INCLUDING, WHERE APPROPRIATE, THE SUSPENSION OR REVOCATION OF THE LICENSE OF THE RESPONDENT). HUD recommends; the agency acts.

A signed purchase contract leaves the property description entirely blank. May oral testimony be used in court to supply the missing description?

1. Yes; oral evidence may fill in any term the writing omits.
2. Yes, if the broker testifies to the parcel the parties meant.
3. No; oral evidence may identify a description, not supply one. ✓
4. No, since oral evidence is never admissible about property.

Why: DRE Reference Book ch. 6: ORAL EVIDENCE MAY BE USED IN COURT FOR THE PURPOSE OF IDENTIFYING THE DESCRIPTION, BUT NOT FOR THE PURPOSE OF ASCERTAINING AND LOCATING A MISSING DESCRIPTION OR ONE THAT IS TOO UNCERTAIN TO BE IDENTIFIED.

In general, what is the purpose of a tenant's security deposit?

1. It pays the landlord's own costs of ordinary wear.
2. It is the landlord's own fee for signing the lease.
3. It secures the tenant's performance of the lease. ✓
4. It funds the landlord's insurance on the building.

Why: DRE Reference Book ch. 9: A SECURITY DEPOSIT SECURES A TENANT'S PERFORMANCE OF LEASE OBLIGATIONS. IT CONSTITUTES ASSURANCE TO THE LANDLORD THAT ... TO THE EXTENT OF THE SECURITY DEPOSIT, THE TENANT'S MONETARY OBLIGATIONS WILL BE SATISFIED, and it IS HELD BY THE LANDLORD FOR THE BENEFIT OF THE DEPOSITING TENANT.