Tennessee Realtor State Practice Exam

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To prevent commingling and mistakenly using funds from one income property for another, what should a Tennessee broker do?

Use a single escrow account for all properties
Establish a separate escrow account for each property
Keep funds in a personal bank account
Limit transactions to cash only

The correct answer is: Establish a separate escrow account for each property

To prevent commingling of funds and ensuring that funds from one income property are not mistakenly used for another, a Tennessee broker should establish a separate escrow account for each property. This practice is essential in maintaining clear and organized financial records, helping to avoid confusion and potential legal issues that can arise from improper handling of funds. By using separate accounts, the broker can easily track the financial activity related to each specific property, facilitating accurate accounting and reducing the risk of errors. This approach provides transparency not only for the broker but also for clients and other stakeholders involved in property transactions, reinforcing trust and compliance with state regulations regarding the handling of client funds.