Tennessee Real Estate Exam Practice Question
Where may a rental security deposit OR earnest-money deposit be kept by an affiliate broker?
Correct Answer: C
Rationale: Option C is the only choice that complies with legal and ethical standards, as all funds held for others, including security and earnest-money deposits, must be held in a trust or escrow account to ensure proper management and protection of those funds.
Option A is incorrect because keeping these deposits in the affiliate broker's personal account violates regulations designed to protect clients' money.
Option B misrepresents the handling of deposits; while rent can be sent to the owner, all deposits should be secured in a trust or escrow account, not the operating account.
Option D is misleading, as operating accounts are not designed to safeguard client funds, thus failing to meet legal requirements for deposit management.
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