Tennessee Real Estate Exam Practice Question
How should a rental-property security deposit be handled upon receipt by the broker?
Correct Answer: C
Rationale: When a broker receives a rental-property security deposit, it is essential to ensure the funds are handled appropriately to protect both the tenant and landlord.
Option C is correct as security deposits must be placed in an escrow or trustee account, safeguarding the funds until the lease concludes. This method maintains transparency and ensures that the money is not misused.
Option A is incorrect because while interest-bearing accounts can be used, they are not mandatory in all jurisdictions.
Option B is wrong as non-interest-bearing accounts do not provide the same level of protection and accountability.
Option D is incorrect since security deposits should not be applied to rental payments; they are intended to cover potential damages or unpaid rent at the lease's end.
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