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Exam topics · Tennessee

Tennessee license law on the state exam

The Commission's authority, advertising rules, trust account handling, and the violations that produce discipline. This is the section that fails people.

Why this section is hard

The state portion is memorization with no partial credit. Candidates who spend all their study time on national principles walk out having passed one portion and failed the other.

What the Commission does

The Tennessee Real Estate Commission licenses and regulates licensees and education providers, sets education requirements, investigates complaints, and imposes discipline. It does not set commission rates, resolve private contract disputes, or practice law.

Advertising rules

Advertising is one of the most common sources of discipline because it is public and easy to prove.

  • —All advertising must include the firm name as registered with the Commission.
  • —A licensee may not advertise property without the owner's authorization.
  • —Team and personal branding cannot obscure or overshadow the firm name.
  • —Anything that misleads about your role, license status, or the property is a violation.

Trust accounts and earnest money

Funds belonging to others go into the firm's escrow or trust account, on the timeline the rules require, and never into an operating or personal account. Commingling and conversion are among the fastest routes to losing a license — and only the principal broker is ultimately accountable for the account.

Discipline and grounds for action

Common grounds include misrepresentation, failing to disclose adverse facts, acting outside the scope of your license, mishandling funds, unlicensed practice, and failing to complete required education. Sanctions range from a reprimand to civil penalties, suspension, and revocation.

Traps that cost points

Assuming the Commission can force a refund in a contract dispute.

The Commission disciplines licensees. Contract remedies are a court matter.

Depositing earnest money into the operating account 'just for a day.'

That is commingling regardless of duration or intent.

Running a personal ad with only your team name and phone number.

The registered firm name must appear in the advertisement.

Common questions

Who is responsible for the firm's trust account?

The principal broker. Supervision and accounting responsibility ultimately sits with them, regardless of who made the deposit.

Does the Commission set commission rates?

No. Commissions are negotiable between the client and the firm, and any suggestion that rates are set is a serious problem.

How much of the exam is Tennessee law?

The state portion is a separate, scored section you must pass on its own. Treat it as half the exam, not an afterthought.

Practice it, don't reread it.

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