Tennessee Real Estate Practice Exam
(Free Questions & Answers)

Explanation

The Tennessee Real Estate Commission (TREC) is the state agency responsible for licensing and regulating real estate licensees in Tennessee.

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Tennessee law requires agency disclosure to be provided to a buyer before any substantive discussion about real property, so they understand who the broker represents.

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Earnest money demonstrates the buyer's good faith and becomes part of the consideration for the contract. It is typically applied toward the purchase price or closing costs at settlement.

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The Federal Reserve influences interest rates primarily by adjusting the federal funds rate—the rate at which banks lend to each other overnight. Changes in this rate affect mortgage rates throughout the economy.

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Tennessee, like most non-community property states, follows common law (separate property) principles. Property owned individually before or during marriage (unless titled jointly) belongs to the individual spouse.

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The income approach is most appropriate for income-producing properties such as apartment complexes, office buildings, and commercial properties. It estimates value based on the property's ability to generate income.

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Redlining is the illegal practice of refusing to make loans, provide insurance, or offer other financial services in certain geographic areas based on the racial or ethnic composition of those neighborhoods.

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Tennessee is an attorney state where real estate closings are commonly conducted by a licensed attorney or a title company. Attorneys handle title examination and closing procedures.

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Commission = $265,000 × 0.055 = $14,575. To solve this, multiply the relevant values: $265,000 at 5.5%.. The correct answer is $14,575.. This is a common calculation on the Tennessee real estate exam.

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Radon is a colorless, odorless gas produced by the decay of uranium in soil and rock. It enters buildings through cracks in foundations, floors, and walls. Tennessee has areas with elevated radon levels, particularly in East Tennessee.

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A variance allows a property owner to use or develop land in a way that deviates from the strict letter of the zoning ordinance, typically because of unique physical characteristics of the property that create an undue hardship if the code is strictly applied.

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In Tennessee, property management activities — including leasing, renting, and collecting rent for others — constitute acts requiring a real estate license. A property manager must be licensed and affiliated with a principal broker.

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Tennessee uses the term 'affiliate broker' for entry-level licensees rather than 'salesperson.' An affiliate broker must work under a supervising principal broker.

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Without a buyer representation agreement, an affiliate broker working with a buyer is typically a subagent of the seller (the listing broker's principal). This means the broker's duties run to the seller, not the buyer.

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A contingency clause makes the contract conditional on a specified event occurring (e.g., loan approval, satisfactory inspection). If the condition is not met, the buyer may terminate the contract and typically recover their earnest money.

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PMI protects the lender if the borrower defaults. It is typically required on conventional loans when the LTV exceeds 80% (down payment is less than 20%). PMI can be cancelled once equity reaches 20%.

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Condominium owners hold fee simple title to their individual unit and an undivided interest in the common elements (hallways, lobby, grounds) as tenants in common with all other unit owners.

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A CMA is prepared by a real estate licensee (not a licensed appraiser) to help clients understand the market value of a property. It uses recent comparable sales to estimate a likely selling price but is not an appraisal.

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The Fair Housing Act requires landlords to allow persons with disabilities to make reasonable modifications to accommodate their disability, at the tenant's own expense. Refusing such a request is a Fair Housing violation.

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Lis pendens (Latin: 'suit pending') is a notice recorded in public records that a lawsuit has been filed that may affect title to or ownership of the property. It warns potential buyers and lenders of the pending litigation.

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January through September = 9 months. Daily tax rate = $3,600 ÷ 360 = $10/day. 9 months × 30 days = 270 days. Seller's share = 270 × $10 = $2,700.

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TDEC administers Tennessee's environmental regulatory programs, including hazardous waste management, water quality, air quality, and cleanup of contaminated sites. Real estate professionals should be aware of TDEC's role regarding environmental hazards.

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A nonconforming use (or legal nonconforming use) existed lawfully before current zoning regulations were enacted. It is typically allowed to continue but cannot be expanded, and if abandoned for a specified period, the right to continue it may be lost.

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The URLTA applies in Tennessee counties with a population of 75,000 or more. In smaller counties, the common law governs landlord-tenant relationships unless the parties' lease provides otherwise.

Explanation

Tennessee requires 90 hours of pre-license education to become an affiliate broker. This includes courses in real estate principles, Tennessee license law, and contract law.