Free Tennessee Real Estate Practice Exam

Q1.The Tennessee Real Estate Commission (TREC) requires that an affiliate broker may only practice real estate under which of the following conditions?

• A.As long as the affiliate broker has passed the state exam within the past two years, even without a principal broker affiliation
• B.Only while affiliated with and working under the supervision of a licensed principal broker
• C.Independently, provided the affiliate broker has at least three years of experience
• D.Under the supervision of any licensed broker, including an affiliate broker who holds an upgraded license

Q2.Under the Fair Housing Act, which of the following is NOT a protected class at the federal level?

• A.Race
• B.Religion
• C.Sexual orientation
• D.National origin

Q3.A broker is audited and the auditor requests the transaction file for a sale that closed 18 months ago. Under RESPA's recordkeeping requirements, which document from that file must the broker retain and for how long?

• A.The HUD-1 or Closing Disclosure must be retained by the settlement agent for five years, but the broker's own business records related to the transaction should be kept per state law, which typically mirrors RESPA's five-year minimum.
• B.RESPA imposes no retention obligation on brokers; only lenders and title companies are covered entities under RESPA's recordkeeping rules.
• C.The broker must retain all transaction documents, including the purchase agreement and commission disbursement records, for a minimum of three years under RESPA's Section 10 escrow requirements.
• D.RESPA requires brokers to retain affiliated business arrangement disclosure forms for two years from the date of referral, and all other transaction records for one year.

Q4.Under Tennessee law governing broker record-keeping, for how long must a Tennessee-licensed principal broker retain all transaction-related documents, including contracts, closing statements, and correspondence, after the conclusion of a real estate transaction?

• A.One year from the date of closing or termination of the transaction
• B.Three years from the date of closing or termination of the transaction
• C.Five years from the date of closing or termination of the transaction
• D.Seven years from the date of closing or termination of the transaction

Q5.A property was the site of a methamphetamine laboratory that was properly remediated according to state standards. The current seller was never involved in the drug activity and purchased the property after remediation was completed. What is the seller's disclosure obligation regarding this information?

• A.No disclosure required since the property was properly remediated
• B.Must disclose as it may affect the property's value or desirability
• C.Must disclose only if specifically asked by the buyer
• D.Disclosure prohibited as it would constitute housing discrimination

Q6.A broker's office manager mistakenly shreds all transaction files for closings that occurred exactly three years ago, believing the retention period has been satisfied. The broker later learns that one of those transactions is the subject of a fair lending complaint filed with HUD six months after closing. Which statement BEST describes the broker's legal exposure resulting from the document destruction?

• A.The broker has no exposure because the files were destroyed in good faith pursuant to a written records-retention policy, and good faith is a complete defense under the Fair Housing Act.
• B.The broker's exposure is limited to a RESPA Section 8 violation because destroying settlement-related documents triggers automatic penalties under that statute.
• C.The destruction of records potentially relevant to a pending or foreseeable fair housing complaint may constitute spoliation of evidence, undermining the broker's defense, and could support an inference of discriminatory intent; the broker may also face enhanced penalties if HUD or a court finds the destruction was not in good faith.
• D.The broker must immediately notify the EPA because transaction records are considered environmental documents subject to CERCLA's document retention mandates.

Q7.A Tennessee affiliate broker advertises a property stating it is 'the best-priced home in Nashville' without any factual data to support the claim. Under Tennessee law, this type of statement is BEST classified as:

• A.Puffery, which is always permissible in Tennessee real estate advertising.
• B.A misleading advertisement that may violate the Tennessee Real Estate Broker License Act and subject the licensee to disciplinary action by TREC.
• C.A permitted comparative market analysis statement that requires no substantiation.
• D.A legally protected opinion under the First Amendment, so TREC has no jurisdiction.

Q8.Which of the following duties does a Tennessee licensee acting as a FACILITATOR owe to the parties in a transaction?

• A.Undivided loyalty and confidentiality to both parties equally
• B.Obedience to all lawful instructions given by either party
• C.Honest and fair dealing and disclosure of material facts
• D.Fiduciary duties identical to those owed to a client

Q9.Under the Tennessee Time-Share Act, a purchaser who buys a time-share interest has the right to cancel the contract within how many calendar days after signing?

• A.3 calendar days
• B.5 calendar days
• C.10 calendar days
• D.30 calendar days

Q10.A managing broker instructs her agents to market a new luxury condominium development using social media ads that are geographically targeted to zip codes with median household incomes above $150,000. The targeting algorithm the broker uses has the documented effect of excluding zip codes that are predominantly Hispanic and Black, even though the ads contain no explicitly discriminatory language. Which legal doctrine most directly applies to the broker's liability under the Fair Housing Act?

• A.Disparate impact liability, because facially neutral marketing practices that produce a discriminatory effect on protected classes violate the Fair Housing Act even without discriminatory intent, as affirmed in Texas Department of Housing and Community Affairs v. Inclusive Communities Project.
• B.Disparate treatment liability only, because the Fair Housing Act's advertising provisions under Section 3604(c) require proof of intentional discriminatory statements or notices to establish a violation.
• C.The broker has no FHA exposure because income is not a protected class under the Fair Housing Act, and targeting by income-correlated zip codes is a lawful business practice.
• D.The broker is insulated from liability because algorithmic targeting decisions are made by the technology platform, not the broker, and the FHA does not impose vicarious liability on advertisers for third-party algorithmic outputs.

Q11.A real estate agent refuses to show homes in certain neighborhoods to minority clients, claiming those areas 'wouldn't be a good fit.' This practice is known as:

• A.Steering
• B.Redlining
• C.Blockbusting
• D.Price fixing

Q12.Under the Truth-in-Lending Act (TILA), lenders must disclose which key information to borrowers?

• A.Property tax amounts only
• B.Neighborhood crime statistics
• C.Previous owners' payment history
• D.Annual Percentage Rate (APR) and finance charges

Q13.Which federal statute governs the HUD investigation and complaint process for fair housing violations?

• A.42 U.S.C. § 3604
• B.42 U.S.C. § 3610
• C.24 C.F.R. § 100.600
• D.A.R.S. § 41-1463

Q14.Under RESPA's Integrated Disclosure Rule, if a borrower requests changes that require a new 3-day waiting period, which document must be revised?

• A.Closing Disclosure only
• B.Loan Estimate only
• C.Both Loan Estimate and Closing Disclosure
• D.Good Faith Estimate

Q15.Under Tennessee law, a licensed affiliate broker who is employed by a property management company receives security deposits from residential tenants. Where must these funds be deposited?

• A.In a separate federally insured trust or escrow account maintained by the principal broker, distinct from the brokerage's operating funds
• B.In the property management company's general operating account, provided the deposits are tracked in a separate ledger
• C.In the affiliate broker's personal bank account until they are forwarded to the property owner within 30 days
• D.In any interest-bearing account designated by the property owner in the management agreement