Tennessee Real Estate License Exam Practice Question
How should a rental property security deposit be handled upon receipt by the broker?
Correct Answer: C
Rationale: Upon receipt, a rental property security deposit must be deposited in an escrow or trustee account (Option C). This ensures the funds are kept separate from the broker's operating funds, protecting both the tenant's and landlord's interests.
Option A is incorrect, as not all jurisdictions require security deposits to be placed in interest-bearing accounts. Option B is also incorrect because while a non-interest bearing account may be permissible, it does not fulfill the requirement for proper handling of security deposits in escrow. Option D is inappropriate, as security deposits should not be applied to rental payments but held as security against potential damages or unpaid rent.
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