Free Tennessee State Law Practice Test — LicenseIQ

Question 1

Two brokers agree not to cooperate with a discount brokerage in order to drive it out of business. This is:

Accepted Answer

Agreeing with competitors to refuse to deal with another business is an illegal group boycott.

Question 2

Which person is exempt from Tennessee real estate licensing?

Accepted Answer

Section 62-13-104(a)(1)(B) exempts an attorney-in-fact under a duly executed and recorded power of attorney. The others perform brokerage acts for others for compensation, and the multi-owner property manager does not fit the resident manager exemption, which is limited to the property where the manager works.

Question 3

Which activity may an unlicensed assistant generally perform?

Accepted Answer

Unlicensed staff may perform clerical tasks like typing licensee-prepared ads, but may not compose ads, negotiate or show property.

Question 4

A commercial broker is owed future lease commissions and the building is sold. The broker can enforce the fee against the new owner only if

Accepted Answer

Section 62-13-502 permits enforcement against a subsequent owner who had notice before acquiring title, and §62-13-503(g) states the part does not create a lien.

Question 5

Under Tennessee law, how many acts of brokerage for another, for compensation, are needed before a person is deemed a broker who must be licensed?

Accepted Answer

Section 62-13-103 provides that performing or offering to perform any single act defined in the Act, for consideration, makes a person a broker or affiliate broker, and a single unlicensed act is a violation.

Question 6

The disclosure or disclaimer statement must be delivered

Accepted Answer

Section 66-5-203 requires delivery prior to acceptance of the purchase contract, meaning before full execution by all parties.

Question 7

An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

Accepted Answer

Conditioning one service on the purchase of another is a tying arrangement prohibited by antitrust law.

Question 8

A licensee owns part of a home inspection company and recommends it to a buyer. The licensee must

Accepted Answer

Section 62-13-403(7)(B) bars recommending services of a person or entity in which the licensee has an interest without timely disclosure to the party receiving the recommendation.

Question 9

A home sells for $400,000 with a 5% total commission. What is the total commission?

Accepted Answer

$400,000 x 0.05 = $20,000.

Question 10

A licensee in good standing who was not retired has let the license stay expired for more than two years. Under §62-13-319, the licensee may reactivate by paying the penalty and

Accepted Answer

Section 62-13-319 provides that a licensee in good standing whose license has been expired more than two years, and who was not temporarily retired, may reactivate by paying the penalty and completing an approved 30-hour CE course.

Question 11

A resident manager is exempt from licensing in Tennessee when the manager

Accepted Answer

Section 62-13-104(a)(1)(E) exempts a resident manager for a broker or owner, or a broker's employee, who manages an apartment building, duplex or residential complex with duties limited to supervision, showing, leasing and collecting deposits and rents from that property. Managing many owners' homes is brokerage.

Question 12

A party asks a licensee for information about market conditions. Under §62-13-403, the licensee must provide timely and accurate market information

Accepted Answer

Section 62-13-403(5) requires disclosure of market conditions that might affect the transaction only when the information is available through public records and is requested by a party.

Question 13

When an owner dies with no will and no heirs, the property passes to the state through:

Accepted Answer

Escheat transfers ownerless property to the state when there is no will and no heirs.

Question 14

Under the Truth in Lending Act (Regulation Z), which phrase in an ad is a 'trigger term' requiring full credit disclosures?

Accepted Answer

Specific terms like the down payment amount, number or amount of payments, finance charge or repayment period trigger full disclosure (including APR). General statements do not.

Question 15

A licensee's advertising must generally:

Accepted Answer

Ads must identify the licensed broker/brokerage; salespersons cannot advertise under only their own name.

Question 16

A Tennessee seller may provide a disclaimer statement instead of a disclosure statement only if

Accepted Answer

Section 66-5-202 permits the disclaimer, under which the buyer takes the property as is, only where the purchaser waives the required disclosure; otherwise the disclosure statement must be given.

Question 17

After TREC notifies a licensee of a complaint, how long does the licensee have to file a written answer?

Accepted Answer

Section 62-13-313 gives the accused licensee 10 days to answer in writing, with a copy to the complainant. Sixty days is the deadline for reporting a criminal conviction, a different rule.

Question 18

Under an open listing, the seller owes a commission to:

Accepted Answer

Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.

Question 19

A salesperson earns $6,000 on a $150,000 sale. What was the commission rate?

Accepted Answer

Rate = commission / sale price = $6,000 / $150,000 = 0.04 = 4%.

Question 20

A licensee representing the seller who learns the buyer will pay more than the offer must:

Accepted Answer

Loyalty and disclosure require the seller's agent to share material information that benefits the client. The agent owes the buyer-customer no confidentiality.

Question 21

In a life estate, the person who receives the property when the life tenant dies is the:

Accepted Answer

The life tenant has a present interest; the remainderman holds a future interest. If the property returns to the grantor, it is a reversion.

Question 22

Which is the most common and desirable way a real estate sales contract terminates?

Accepted Answer

Contracts ideally end by performance. They can also end by mutual agreement, impossibility, operation of law, or breach.

Question 23

A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

Accepted Answer

Specific performance compels the breaching party to perform; it is available because land is unique. The buyer could alternatively seek monetary damages.

Question 24

On the $20,000 commission above, the listing broker keeps 50% and pays 50% to the buyer's broker. How much does the buyer's broker receive?

Accepted Answer

$20,000 x 0.50 = $10,000 to the buyer's broker.

Question 25

When competing brokerages agree to charge the same commission rate, they commit:

Accepted Answer

Agreeing on commissions among competitors is illegal price fixing under the Sherman Antitrust Act; commissions must be set independently and are always negotiable.

Tennessee real estate state law practice test

1. Two brokers agree not to cooperate with a discount brokerage in order to drive it out of business. This is:

2. Which person is exempt from Tennessee real estate licensing?

3. Which activity may an unlicensed assistant generally perform?

4. A commercial broker is owed future lease commissions and the building is sold. The broker can enforce the fee against the new owner only if

5. Under Tennessee law, how many acts of brokerage for another, for compensation, are needed before a person is deemed a broker who must be licensed?

6. The disclosure or disclaimer statement must be delivered

7. An agent tells a buyer he will show homes only if the buyer uses the agent's brother as mortgage broker. This is an illegal:

8. A licensee owns part of a home inspection company and recommends it to a buyer. The licensee must

9. A home sells for $400,000 with a 5% total commission. What is the total commission?

10. A licensee in good standing who was not retired has let the license stay expired for more than two years. Under §62-13-319, the licensee may reactivate by paying the penalty and

11. A resident manager is exempt from licensing in Tennessee when the manager

12. A party asks a licensee for information about market conditions. Under §62-13-403, the licensee must provide timely and accurate market information

13. When an owner dies with no will and no heirs, the property passes to the state through:

14. Under the Truth in Lending Act (Regulation Z), which phrase in an ad is a 'trigger term' requiring full credit disclosures?

15. A licensee's advertising must generally:

16. A Tennessee seller may provide a disclaimer statement instead of a disclosure statement only if

17. After TREC notifies a licensee of a complaint, how long does the licensee have to file a written answer?

18. Under an open listing, the seller owes a commission to:

19. A salesperson earns $6,000 on a $150,000 sale. What was the commission rate?

20. A licensee representing the seller who learns the buyer will pay more than the offer must:

21. In a life estate, the person who receives the property when the life tenant dies is the:

22. Which is the most common and desirable way a real estate sales contract terminates?

23. A seller refuses to close on a valid contract. Because each parcel of real estate is unique, the buyer may sue to force the sale through:

24. On the $20,000 commission above, the listing broker keeps 50% and pays 50% to the buyer's broker. How much does the buyer's broker receive?

25. When competing brokerages agree to charge the same commission rate, they commit:

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