Tennessee Real Estate License Exam Practice Question
A broker maintains a Property Management Trust (Escrow) Account which has the clients' funds in it. The broker's accounting records show that Client A has a negative $1,000 balance in it whereas Client B has a $2,000 balance in their account.
Correct Answer: B
Rationale: Maintaining a negative balance in a client's account violates real estate license laws, which require that client funds be held in trust and accurately accounted for. This ensures that all clients' funds are safeguarded and accessible.
Option A misinterprets the trust account's purpose; even if other clients' funds exist, each client's account must be individually balanced.
Option C is incorrect as this situation primarily pertains to real estate regulations rather than federal banking laws.
Option D is misleading; it does not justify the negative balance, as funds must be available at all times for each client.
Unlock All Questions
Subscribe to Premium for full access to all practice questions, detailed rationales, and performance tracking.
Subscribe Now