Tennessee Realtor State Practice Exam

What must Tennessee brokers do before accepting a trust account?

1. Obtain permission from clients

2. Register the account with the state

3. Notify the local real estate board

4. Establish a written policy

The correct answer is: Establish a written policy

Before a Tennessee broker can accept a trust account, it is essential for them to establish a written policy regarding the handling of client funds. This policy outlines the procedures and standards that the broker will adhere to in managing trust accounts, ensuring accountability and compliance with state regulations. By having a documented policy, brokers can effectively communicate their practices to clients and staff, providing clarity on how client funds will be safeguarded and utilized. Moreover, a written policy is crucial in promoting transparency and trust in the broker-client relationship. It allows for consistent practices that align with legal obligations and industry standards, reducing the risk of mismanagement of funds. In Tennessee, maintaining explicit guidelines regarding the use and oversight of trust accounts is necessary for regulatory compliance and helps protect both the broker and the clients they serve. The other options, while potentially relevant in some contexts, do not reflect the core requirement related to establishing a trust account. For instance, while obtaining permission from clients is important for maintaining ethical standards, it is not specifically mandated before accepting a trust account. Similarly, registering the account with the state can vary depending on the specifics of the account and is not a universal requirement, nor is notifying the local real estate board a necessary step in the establishment of a trust account.