TN Real Estate common mistakes
TN Real Estate · Understand the traps and how to avoid them.
On an agency question, the candidate labels a buyer who has only toured homes with a licensee as the licensee's 'client' and applies fiduciary duties, even though no brokerage agreement was signed.
Everyday customer service feels like representation, and candidates conflate the statutory categories of client and customer with general helpfulness.
What to do instead
Before answering, identify whether a written brokerage agreement creates representation; if not, treat the party as a customer and do not apply fiduciary duties such as loyalty or obedience beyond required disclosures.
The candidate answers that a transaction broker is the same as a dual agent and therefore owes the same fiduciary duties to both parties.
The terms sound interchangeable, and both involve helping two sides of a deal.
What to do instead
Separate the categories: a transaction broker is a non-agency facilitator who owes honesty and fairness but not fiduciary loyalty; dual agency is representation of both parties and requires the disclosures and consents Tennessee rules demand. Read the answer choices for the brokerage-relationship label.
When a seller changes the price on a buyer's offer and signs it, the candidate treats the original contract as accepted and enforceable.
A signed counteroffer looks like a completed deal, and candidates skip the sequence of offer, rejection, and new offer.
What to do instead
Trace the sequence: a counteroffer is a rejection of the original offer plus a new offer; it is not binding until the original offeror accepts it and communicates acceptance. Check all signatures and delivery before calling it a contract.
The candidate treats an oral agreement to sell Tennessee real estate as enforceable because the buyer paid earnest money or took possession, and uses 'void' and 'voidable' interchangeably.
Part-performance stories feel equitable, and the two legal-effect labels are easy to blur.
What to do instead
Anchor on the statute of frauds: contracts for the sale of land must be written and signed by the party to be charged. Categorize no-legal-effect as void and rescindable-by-one-party as voidable; apply the legal label before evaluating equitable arguments.
The candidate says a license to use a neighbor's driveway is an easement that binds later owners, or reverses dominant and servient estates.
Both are rights to use another's land, and 'dominant' and 'servient' are easy to flip under time pressure.
What to do instead
Classify the right: an easement is a nonpossessory interest that can run with the land; a license is a revocable personal privilege. The dominant estate benefits; the servient estate bears the burden. Match the fact pattern to that pair.
The candidate states that under a Tennessee deed of trust the lender-beneficiary holds legal title and the borrower has no title until payoff, or uses 'mortgage' and 'deed of trust' as identical.
Lien-theory and title-theory terminology gets compressed, and exam choices often use both instruments.
What to do instead
For a deed of trust, place legal title in the trustee, equitable title in the borrower, and the debt-beneficiary interest in the lender; foreclosure is a trustee's sale. Treat a mortgage as a different security instrument and read which one the fact pattern names.
The candidate adjusts comparable sales in the same direction as the comparable's superiority-for example, adding value because the comparable has a pool the subject lacks.
The comparable's feature is mentally added to the subject, so the adjustment feels intuitive but is backward.
What to do instead
Always adjust the comparable toward the subject: if the comparable is superior, subtract; if inferior, add. State the direction in words before doing arithmetic, and check with matched-pair logic.
The candidate treats steering a buyer toward a neighborhood based on race, religion, family status, or national origin as acceptable customer service, or uses protected-class language in an advertisement.
The behavior can feel like helpful matching, and candidates focus on intent rather than discriminatory effect and advertising rules.
What to do instead
Apply Fair Housing Act and Tennessee Human Rights Act protected classes to every showing, advertisement, and statement; show all qualified properties and avoid words or descriptions that signal a preference. Intent is not the test.
The candidate approves a payment from a title company or lender to a broker for merely sending a client, treating it as a lawful marketing fee.
Referral arrangements are common in sales, and the label 'marketing' obscures that no settlement service was performed.
What to do instead
Under RESPA Section 8, fees for referrals of settlement services are prohibited; payments must be for bona fide goods or services actually performed and not a split of a referral. Ask what service was performed and whether the fee was disclosed.
The candidate allows earnest money to be deposited into the broker's operating account temporarily or disburses it before the deposit clears, and treats trust-account recordkeeping as optional.
The funds seem small or short-term, and candidates underestimate the Commission's escrow and reconciliation requirements.
What to do instead
Use the broker's trust or escrow account for funds belonging to others, keep transaction-level records, do not commingle personal or brokerage operating funds, and do not disburse until funds clear and the contract or closing authorizes it. Review Tennessee Real Estate Commission trust-account rules.