Tennessee Real Estate Exam Practice Question
A broker's trust account shows Client A negative $1000 and Client B positive $2000. Is this permissible?
Correct Answer: B
Rationale: Maintaining a broker's trust account requires strict adherence to legal standards, ensuring that client funds are handled appropriately. Option B highlights that having a negative balance for Client A indicates a violation of real estate license law, as it reflects mismanagement of client funds.
Option A is incorrect; having a negative balance is not permissible, regardless of other clients' positive balances. Option C is misleading; while trust accounts must comply with banking regulations, the specific issue here pertains to real estate law. Option D is also wrong, as it assumes future actions without guaranteeing compliance in the present, which is unacceptable.
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