Tennessee Realtor State Practice Exam

Who is responsible for holding escrow or trust money in Tennessee?

1. Real estate agents

2. Mortgage lenders

3. Principal brokers

4. Real estate companies

The correct answer is: Principal brokers

In Tennessee, the responsibility for holding escrow or trust money is designated to principal brokers. This means that when transactions take place involving earnest money or trust funds, it is the principal broker's duty to oversee and manage these funds. This responsibility ensures that funds are handled properly and in compliance with state regulations, safeguarding the interests of all parties involved in a real estate transaction. Principal brokers are licensed individuals who operate and manage real estate firms. They must follow strict guidelines to ensure the proper handling of escrow accounts, including keeping accurate records and ensuring that the funds are only disbursed in accordance with the terms of the contract. While real estate agents, mortgage lenders, and real estate companies play important roles in the buying and selling process, they do not have the authority to hold escrow or trust money in Tennessee. Instead, their functions may involve facilitating transactions, advising clients, or providing financing, but the legal obligation to manage trust funds lies specifically with the principal broker.