Unit 26 Exam

Question 1

Determine whether each of the following is considered a violation of the license law that can result in disciplinary action.

A)
Making a willful and substantial misrepresentation

B)
Charging an undisclosed commission for a principal

C)
Engaging in the unauthorized practice of law

D)
Failing to preserve records for ten years

E)
Having a high price for a property

Answer 1

Violation = A,B,C

No Violation = E,F

Question 2

The purpose and mission of the Commission is to protect the public.

Answer 2

True

Question 3

The purpose and mission of the Commission is to protect the public.

Answer 3

False

Question 4

Match the following: Hearing will still be held, Registered mail, TREC, Before the date of the scheduled hearing, Ten days, Tennessee Administrative Procedures Act

A)
Person or entity who sets time and place of hearing

B)
How notices are usually sent and received between TREC, the accused, and the complainant

C)
Action taken if licensee fails to appear at a hearing

D)
Allows for the possibility of appeal of TREC decision at a hearing

E)
Time period TREC must receive a request for continuance of a hearing

F)
Licensee’s response time to TREC when notified of a complaint

Answer 4

Hearing will still be held = C

Registered mail = B

TREC = A

Before the date of the scheduled hearing = E

Ten days = F

Tennessee Administrative Procedures Act = D

Question 5

The time and place for a disciplinary hearing are set by the licensee.

Answer 5

False

Question 6

When a licensee is notified by TREC of a complaint filed against the licensee, the licensee must respond to the Commission with an answer to the complaint within 10 days.

Answer 6

True

Question 7

Match the following: Majority, Placed on inactive status, Six, Voided, One thousand dollars, Returned to TREC

A)
Commission vote necessary to reinstate a license revoked by the court

B)
Commission vote necessary to revoke a license

C)
Disposition of a revoked license

D)
Maximum per day per violation civil penalty

E)
Effect on brokerage agreements if firm license is revoked

F)
Effect on affiliate’s license if the broker’s license is revoked

Answer 7

Majority = B

Placed on inactive status = F

Six = A

Voided = E

One thousand dollars = D

Returned to TREC = C

Question 8

Should a licensee obtain a listing and the firm license is revoked with no one to take over the business, the listing is considered void.

Answer 8

True

Question 9

Should a broker’s license be revoked, all affiliated licenses under the broker are considered to be void.

Answer 9

False

Question 10

Match the following: Rice Insurance Agency, Maximum award per defense under E&O, Two years, Errors and omissions insurance, Maximum deductible per award under E&O, None

A)
Licensees must obtain before activating a real estate license

B)
Renewable term for E&O insurance

C)
Requirement that Tennessee licensees be bonded.

D)
$100,000

E)
State-endorsed E&O insurance vendor

F)
$1,000

Answer 10

Rice Insurance Agency = E

Maximum award per defense under E&O = D

Two years = B

Errors and omissions insurance = A

Maximum deductible per award under E&O = F

None = C

Question 11

Licensees are NOT covered by E&O insurance when listing or selling their own personal residence.

Answer 11

False

Question 12

E&O insurance does NOT cover the sale of a property built or developed by the licensee.

Answer 12

True

Question 13

Because Tennessee now has errors and omissions insurance, the Education and Recovery Account has been terminated.

Answer 13

False

Question 14

Errors and omissions insurance must be carried whether a license is active, inactive, or retired.

Answer 14

False

Question 15

If it is discovered that a licensee failed to timely renew E&O insurance, TREC will immediately revoke the licensee’s real estate license.

Answer 15

False

Question 16

Which of the following would subject a licensee to discipline?

A)
Preserving records of real estate transactions for longer than three years
B)
Failing to give a copy of a signed document to the signor upon signing
C)
Timely accounting for trust fund deposits
D)
Using the term REALTOR® when authorized to do so

Answer 16

Explanation
The answer is failing to give a copy of a signed document to the signor upon signing. It is a violation of license law to use or promote the use of any real estate listing agreement form, real estate sales contract form, or offer to purchase real estate form that fails to specify a definite termination date.

Question 17

Jolene falsified information on her real estate license application. In this case, TREC has the authority to

A)
have Jolene imprisoned.
B)
send Jolene back to her country of national origin.
C)
modify the information on the application.
D)
refuse a license to Jolene.

Answer 17

Explanation
The answer is refuse a license to Jolene. If TREC determines that a violation has occurred, it has the authority to reprimand, suspend, or revoke an existing license or to refuse a license to the applicant.

Question 18

Should a firm license be revoked, the status of the brokerage agreements between the affiliated licensees and the firm is

A)
extended.
B)
inactive.
C)
retired.
D)
void.

Answer 18

Explanation
The answer is void. The firm owns the contracts. Thus, all brokerage agreements become void if no other broker can be found to take over responsibility for the office and to conduct business. If the firm license is revoked, the firm is out of business.

Question 19

For TREC to revoke a license, the necessary vote is

A)
a majority vote.
B)
six or more commissioners voting to revoke the license.
C)
nine.
D)
nine plus the vote of the executive director.

Answer 19

Explanation
The answer is a majority vote. For TREC to revoke or suspend a license takes a majority vote as long as there are enough commissioners present to establish a quorum.

Question 20

The maximum civil penalty that TREC may impose on unlicensed persons per violation per day is

A)
$3,000.
B)
$2,000.
C)
$1,000.
D)
$4,000.

Answer 20

Explanation
The answer is $1,000. As of 1998, TREC can punish unlicensed persons. TREC may impose a $50–$1,000 fine per transaction per day. Each day of a continued violation constitutes a new violation.

Question 21

Allegations of inappropriate activity are communicated from TREC to the accused licensee by

A)
registered mail.
B)
phone call.
C)
regular mail.
D)
email.

Answer 21

Explanation
The answer is registered mail. All communications regarding allegations of a licensee’s inappropriate activity are communicated between TREC, the consumer, and the licensee by registered mail.

Question 22

Once a licensee is notified of an allegation of inappropriate activity, the licensee must respond to TREC with an answer to the allegation within

A)
30 days.
B)
60 days.
C)
2 weeks.
D)
10 days.

Answer 22

Explanation

The answer is 10 days. The licensee must respond to TREC within 10 days of the date on the postmark on TREC’s letter.

Question 23

The state-endorsed provider of E&O will defend a licensee

A)
up to three times per license period.
B)
once a year.
C)
twice per license period.
D)
up to three times in any coverage period.

Answer 23

Explanation
The answer is up to three times in any coverage period. Coverage periods run from January 1 of odd years through December 31 of even years. Rice’s attorneys will defend licensees up to three times in any one coverage period.

Question 24

If TREC determines there is no reason to conduct a hearing resulting from an allegation against a licensee,

A)
TREC will still hold a hearing if the complainant requests it.
B)
a letter is sent to each party and the case is closed.
C)
the complainant will have to pay a civil penalty of $1,000.
D)
TREC will still hold a hearing if the accused requests it.

Answer 24

Explanation
The answer is a letter is sent to each party and the case is closed. If TREC determines that there was no probable cause that warrants discipline, a letter is sent and the case is closed.

Question 25

A licensee has to pay back three times the amount of an illegal commission received under

A)
three times a fine.
B)
triple fine.
C)
thrice fined.
D)
treble damages.

Answer 25

Explanation
The answer is treble damages. It is a monetary amount mandated by TREC or the courts that someone practicing real estate without a license must pay back three times the amount of an illegal commission received.

Question 26

Should a hearing determine that a licensee continued to practice real estate after his license expired, TREC could assess a civil penalty against the licensee of up to

A)
a one-time fee of $10,000.
B)
$2,500 per day.
C)
$1,000 per day.
D)
$500 per day.

Answer 26

Explanation
The answer is $1,000 per day. TREC may assess a civil penalty not to exceed $1,000 per violation per day; each day constitutes a new violation.

Question 27

What is the status of the licenses of the affiliated licensees if the broker’s license is revoked?

A)
They are placed on inactive status.
B)
They remain active and the licensees may continue to do business as usual.
C)
They are placed on temporary retirement status.
D)
They are also revoked.

Answer 27

Explanation
The answer is they are placed on inactive status. The revocation of the broker’s (brokerage) license automatically places on inactive status the license of every licensee employed by the broker by virtue of their employment. These licensees may return to real estate activities only when hired by another managing broker or when another broker is brought in as principal, or managing, broker.

Question 28

Regarding E&O coverage for the firm,

A)
E&O coverage is not required, but bonding is.
B)
E&O coverage is not required.
C)
the amount of coverage is determined by the number of affiliated licensees.
D)
the minimum coverage must be at least $1,000,000.

Answer 28

Explanation
The answer is E&O coverage is not required. It is not mandatory that a person who has been issued a firm license obtain errors and omissions insurance in the name of the firm.

Question 29

The status of a license that requires errors and omissions insurance coverage is

A)
retired.
B)
active.
C)
inactive.
D)
expired.

Answer 29

Explanation
The answer is active. Any licensee whose real estate license is active must carry errors and omissions insurance in Tennessee. Those who place a license in inactive or retired status are not required to be covered.

Question 30

To appeal a conclusion by TREC as a result of a hearing, a licensee can rely on what state act?

A)
Fair Housing Act
B)
Tennessee Real Estate Broker License Act of 1973
C)
Americans With Disabilities Act
D)
Tennessee Administrative Procedures Act

Answer 30

Explanation
The answer is Tennessee Administrative Procedures Act. Judicial review of the Commission’s action may be sought through the Tennessee Administrative Procedures Act.

Question 31

Testimony in a hearing is MOST often taken by

A)
deposition.
B)
video tape.
C)
audio tape.
D)
text message.

Answer 31

Explanation
The answer is deposition. Testimony may be taken by deposition, compelling any involved party to appear and depose in the same manner as witnesses are compelled to appear and testify in civil cases.

Question 32

TREC will NOT hold a hearing if the allegation is

A)
actions that are improper or fraudulent.
B)
misleading and untruthful advertising.
C)
a commission dispute between brokers of different firms.
D)
pleading nolo contendere in court.

Answer 32

Explanation
The answer is a commission dispute between brokers of different firms. Commission rules do not authorize the Commission to consider or conduct hearings involving disputes over fees or commissions between cooperating brokers, salespersons, and other brokers.

Question 33

TREC requires all active licensees to obtain

A)
E&O insurance.
B)
residential insurance.
C)
property management insurance.
D)
commercial insurance.

Answer 33

Explanation
The answer is E&O insurance. Tennessee law does not require that licensees be bonded, but all active licensees are required to obtain E&O insurance.

Question 34

Witnesses who fail to cooperate with a TREC hearing may be found guilty of

A)
commingling.
B)
obstruction of justice.
C)
contempt of court.
D)
fraud.

Answer 34

Explanation

The answer is contempt of court. Witnesses who fail to cooperate may be found guilty of contempt of court.

Question 35

Which of the following is a violation under license law that could result in disciplinary action against a broker?

A)
Depositing money promptly in the escrow account
B)
Failing to exercise adequate supervision over the affiliated licensees
C)
Carrying errors and omissions insurance on the firm
D)
Depositing commission checks in the business operating account

Answer 35

Explanation
The answer is failing to exercise adequate supervision over the affiliated licensees. Brokers could have their licenses revoked, suspended, or downgraded for failing to exercise adequate supervision over the activities of their affiliates. The other activity mentioned in license law is failing to complete administrative measures in a timely manner regarding the transfer or termination of affiliated licensees.

Question 36

Which of the following is TRUE regarding E&O coverage for the firm?

A)
The minimum coverage must be at least $1,000,000.
B)
The amount of coverage is determined by the number of affiliated licensees.
C)
E&O coverage is not required, but bonding is.
D)
E&O coverage is not required.

Answer 36

Explanation
The answer is E&O coverage is not required. It is not mandatory that a person who has been issued a firm license obtain errors and omissions insurance in the name of the firm.