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Copyright 2015 Tennessee Real Estate Education Foundation 1

2015-2016

Residential TREC Core Course

Handout

Developed by the

Tennessee Real Estate Educational Foundation in cooperation with

the

Tennessee Association of Realtors®

Participant Guide


Residential Core Course for 2015-2016 I. TREC Law, Rule, Policy Update

a. Laws and Rules Violations

b. E & O Suspension and Penalty Fees

c. A.G. Opinion – Exemptions to licensure

d. Fingerprinting

II. Principle Broker Supervision

(T.C.A. §§ 62-13-312; 62-13-310; Rule 1260-1-.04 -.06)

a. Unlicensed Branch Office

b. Advertising

c. Earnest Money/Security/Trust Deposit

d. New Mandatory Real Estate Firm Audit

III. Agency

T.C.A. § 62-13-401-406; Rule 1260-02-.08; .11; 36

IV. Contracts

V. Disclosures

T.C.A. § 66-5-201-202; 212; 213

VI. Advertising

a. Licensees who hold themselves out as a group or similar entity

within a firm

b. Internet

c. False, misleading or deceptive

d. Signs on Property

e. Guarantees, Claims and Offers; Gifts and Prizes

VI. Property Management

a. Escrow Account Setup

b. TREC Requirements

VIII. Commercial and Leasing Terminology

a. Amendment T.C.A. § 62-13-501-502

b. Net

c. Triple Net

d. Gross; Modified Gross

e. CAM


Course Introduction and Learning Objectives

Course Overview

This course will provide students with a review of several significant issues facing

Tennessee brokers and licensees. Students will be provided with practice in solving the

kinds of problems that plague daily practice in residential real estate.

The course also addresses important legal issues, including agency law and the rules

and regulations of the Tennessee Real Estate Commission.

Learning Objectives

Upon completion of this course, students will be able to:

1. Recognize common violations of TN License Law and/or TREC Rules, and what

to do about them.

2. Identify new changes to the TN License Law and or TREC Rules.

3. Recognize what E&O insurance does and doesn’t cover.

4. Identify violations of Tennessee’s agency law, including teams, disclosures and

what should be done to avoid them.

5. Identify common violations of advertising rules, including advertising of teams,

and how to avoid them.

6. Recognize common problems and issues with residential contracts and how to

avoid or resolve them successfully.

7. Correctly identify issues that arise in the practice of residential property

management including escrow account rules and other TREC requirements, and

how to avoid the most common problems.

8. Understand the TREC Laws concerning property disclosures or disclaimers and

the time frame of providing the statements to the purchasers and owners.

9. Recognize the TN License Laws and/or Rules concerning PB Supervision

including Branch Offices, exemptions to licensure, advertising, Earnest

Money/Security/Trust Deposits and new Mandatory Real Estate Firm Audit


Section I: TREC Law, Rule Policy Update

Why is it important to understand TREC Rules? All licensees in the state of Tennessee must adhere to TREC Rules. Failure to do so can result in

fines, penalties and even loss of license.

Are TREC Rules the same as Tennessee law? TREC Rules are promulgated to provide more detailed guidelines for the day-to-day activities of

licensees. They’re authorized by and consistent with the requirements of Tennessee law. The

Tennessee Real Estate Commission enforces both the license law and rules. Remember that, as a

licensee, you are responsible for adhering to both the law and TREC Rules.

What should I do if I don’t understand a certain requirement of TREC Rules? You can always contact TREC for clarification. Their website provides a link to frequently asked

questions: http://www.tn.gov/regboards/trec/documents/FAQ.pdf or you can reach them by phone

(toll free) at 1-800-342-4031.

In addition, as a member of the Tennessee Association of Realtors, you may always email TAR’s

Legal Hotline attorneys for clarification on any legal or ethical issues at [email protected].

Always put Hot Line Question in the subject line of the email and include (in the email) your full

name, firm name, your firm telephone number, your cell phone number, broker’s name, broker’s

email address, firm fax number, and local association.

TREC DISCIPLINARY ACTIONS AT A GLANCE (DURING THE PERIOD OF JANUARY – JUNE 2015)

TOTAL NUMBER OF INDIVIDUALS DISCIPLINED 59

FINES RANGING FROM $50 TO $269,420 TOTALED = $370,895


MOST VIOLATED LAW OR RULES: In Order of Number of Complaints

o Failure to timely complete required education

o Failure to maintain Errors and Omissions insurance

o Advertising violation

Agent’s name larger than the firm name

Failure to list firm name and telephone number conspicuously on each page of website

Misleading and untruthful advertising

Failure to disclose all details on the face of such offer or advertisement

o Failure to adequately supervise activities of affiliates

o Failure to respond to a complaint filed with the Commission

o Failing, within a reasonable time, to account for or to remit moneys belonging to others

o Making substantial and willful misrepresentation

o Failing to adequately supervise advertising activities of affiliates

o Engaging in unlicensed activity

o Failure to Notify Commission of conviction enumerated within chapter within 60 days of

conviction

o An affiliate’s acceptance of a commission from someone other than the broker with whom they

are affiliated

o Failure to be loyal to the interests of the client

o Failure to timely disburse or interplead earnest money

o Violation of the gifts and prizes rule

o Failure to complete and obtain a signed written disclosure of agency status form

o When a licensee terminates his/her affiliation with a firm, he/she shall neither take nor use any

property listings secured through the firm

o Failing to furnish a copy of a listing, sale, lease or other contract relevant to a real estate

transaction to all signatories of the contract at the time of execution

o Conducting business with an expired real estate firm license

o Unlicensed vacation lodging service

o Unlicensed property management


Failure to Timely Complete Education

T.C.A. § 62-13-303 Qualifications – Prerequisites for Licensing- Education

(g) Every two (2) years, as a requisite for the reissuance of an affiliate broker’s license originally issued on or after July 1, 1980, the affiliate broker shall furnish certification of satisfactory completion

of sixteen (16) classroom hours in real estate courses at a school, college or university approved by the

commission.

(h) Within a period of three (3) years from the date of issuance of an original broker's license, the

licensee shall, as a requisite for the reissuance of the license, furnish certification of satisfactory

completion of an additional one hundred twenty (120) classroom hours in real estate at any school,

college or university approved by the commission. Beginning with the license period immediately

following the license period in which the licensee completes the one hundred twenty (120) hours of

education specified in this subsection (h), the licensee of a broker's license originally issued after

January 1, 2005, every two (2) years shall furnish certification of satisfactory completion of sixteen

(16) classroom hours in real estate courses at any school, college or university approved by the

commission as a requisite for the reissuance of the license.

(i) The commission shall, at least six (6) months prior to the deadline for furnishing the certification

required by subsections (g) and (h), notify each licensee from whom the certification has not been

received.

Need to Verify Your Education?

Enter your license number + Click Real Estate Broker/Affil/TS + Search + Detail Box


Failure to Maintain Errors and Omission (E&O) Insurance

The renewal date on TREC’s Group Insurance Policy through Rice Insurance Services Company is

January 1, 2017.

When does the renewal need to be paid to Rice so as not to be considered late?

1. January 1, 2017 or December 31, 2016?

However the licensee may enroll through December 31, 2016 with no administrative penalty.

If no renewal has been received by January 1, 2017, the penalties include suspension and:

1. After thirty-one (31) days but less than one hundred twenty (120) days - not more than $500.00

2. After 120 days but less than 1 year, $500.00 plus additional penalty fee of $100.00 per month for

months 6-12

3. A license suspended for more than 1 year shall be automatically revoked.

1260-01-.16 Lapsed Errors and Omissions Insurance (1) Licensees Who Fail to Maintain Errors & Omissions (E&O) Insurance

(a) Penalty fees for Reinstatement of a Suspended License: Any licensee whose license is suspended

for more than thirty (30) days pursuant to T.C.A. § 62-13-112 for failure to maintain E&O insurance

must provide proof of insurance that complies with the required terms and conditions of coverage to

the Commission and must pay the following applicable penalty fee in order to reinstate the license:

1. For a license suspended due to a lapse in E&O coverage for more than thirty (30) days

but within one hundred twenty (120) days:

(i) Two Hundred Dollars ($200.00) if the licensee's insurance carrier back-dated the

licensee's E&O insurance policy to indicate continuous coverage; or

(ii) Four Hundred Dollars ($400.00) if the licensee's insurance carrier did not back- date

the licensee's E&O insurance policy to indicate continuous coverage.

2. For a license suspended due to a lapse in E&O coverage for more than one hundred

twenty (120) days but less than six (6) months, a Five Hundred Dollar ($500.00) penalty fee.

3. For a license suspended due to a lapse in E&O coverage for six (6) months up to one

(1) year, a Five Hundred Dollar ($500.00) penalty fee plus a penalty fee of One Hundred Dollars

($1 00.00) per month, or portion thereof, for months six (6) through twelve (12).


(b) Conditions for Reissuance of a Revoked License: Upon revocation of a license pursuant to T.C.A.

§ 62-13-112 for failure to maintain E&O insurance, any individual seeking reissuance of such license

shall:

1. Reapply for licensure, including payment of all fees for such application;

2. Pay the penalty fees outlined in subparagraph (a) above.

3. Pass all required examinations for licensure, unless the Commission waives such

examinations; and

4. Meet any current education requirements for licensure, unless the Commission waives such

education requirements.

(2) Principal Brokers of Licensees Who Fail to Maintain E&O Insurance:

(a) A principal broker shall ensure, at all times, that all licensees affiliated with that principal broker

shall hold E&O insurance as required by law. A failure to do so shall constitute failing to exercise

adequate supervision over the activities of a licensed affiliated broker.

(b) For any principal broker who has an affiliated licensee whose license is suspended pursuant to

T.C.A. § 62-13-112 for failure to maintain E&O insurance, there shall be no penalty to the principal

broker if either of the following two (2) circumstances occur within thirty (30) days of that affiliated

licensee's license suspension:

1. The affiliated licensee has provided proof of insurance, which complies with the

required terms and conditions of coverage to the Commission; or

2. The principal broker releases that affiliated licensee whose license is suspended for

failure to maintain E&O insurance.

(c) After the aforementioned thirty (30) day period, if the affiliated licensee has neither provided the

required proof of insurance nor been released by the principal broker, the Commission authorizes a

formal hearing on the matter of the principal broker's failure to exercise adequate supervision over an

affiliated licensee who failed to maintain E&O insurance but also authorizes that a consent order

shall be sent to the principal broker, offering that principal broker the opportunity to settle the matter

informally, thereby making formal hearing proceedings unnecessary, according to the following

schedule:

1. Notwithstanding the provisions of Tenn. Comp. R. & Regs. 1260-02-.32, if the principal

broker's affiliated licensee reinstates his or her license, or the principal broker releases the

affiliated licensee, more than thirty (30) days after suspension but within one hundred twenty (120)

days after suspension, the consent order shall contain the following civil penalties: (i) Two

Hundred Dollars ($200.00) if the affiliated licensee's insurance carrier back-dated the licensee's

E&O insurance policy to indicate continuous coverage; or (ii) Four Hundred Dollars ($400.00)

if the affiliated licensee's insurance carrier did not back-date the licensee's E&O insurance

policy to indicate continuous coverage.


2. If the principal broker's affiliated licensee reinstates his or her license, or the principal

broker releases the affiliated licensee, more than one hundred twenty (120) days after

suspension, the consent order referenced in this subparagraph (c) above shall contain a civil penalty

of one thousand dollars ($1,000.00).

3. Where a principal broker does not accept any authorized consent order for failure to

supervise an affiliated licensee's E&O insurance, the hearing shall be held before an administrative

law judge sitting alone, pursuant to the Uniform Administrative Procedures Act, compiled at title 4,

chapter5.

4. Nothing in this rule shall be construed as limiting the Commission's authority to:

(i) Authorize a consent order in a different amount than listed herein;

(ii) Seek any other legal discipline - including revocation or suspension of a license - for a

failure to supervise an affiliated licensee's E&O insurance;

(iii) Review an initial order under the Uniform Administrative Procedures Act; or

(iv) Not seek discipline against a principal broker for failure to supervise an affiliated

broker's maintenance of E&O insurance if the Commission determines that such discipline is

not appropriate under the facts of that matter.

And Not Everything Is Covered By E&O…

Errors and Omissions Coverage Implications When Listing or Selling Your Own

Property- Prepared by Rice Insurance Services Company, LLC June 19, 2013

The TREC’s group policy now automatically included an endorsement that makes the

policy to apply to the sale or listing of the licensee’s primary residence with certain

conditions.

Additionally, licensees who purchase insurance through the TREC’s group policy can

also purchase an optional endorsement that make the policy apply to the sale or listing

of residential property owned by the licensee: the licensee’s spouse; or an entity,

corporation, partnership or trust owned or controlled by the licensee or his/her spouse

with certain conditions.

The full statement from Rice Insurance Services Company, LLC, can be found in the

Appendices in the back of the booklet on pages 5-6.


An Affiliate’s Acceptance of a Commission from Someone Other than the Broker

with Whom They Are Affiliated Example 1: An affiliate licensee advertises “$1,000 Bonus to the Selling Agent”.

Is this language in an advertisement legal or illegal?

You as a licensee sell the advertised property, who will receive the $1,000 and how will you get

paid?

Example 2: You are part of a team where all team members are under the Team Leader. The Team Leader

assigns you a buyer and you make the sale.

When the sale closes and the commission check comes into the Broker, how will the agent’s portion

of the sale be distributed?

Example 3:

You show property to a couple for two weeks. On Tuesday of week three, you receive a phone call

from the husband who asks if you can come out to the parking lot of your office. You go out to

meet him and he says, “I need to tell you something. You explained about FSBO listings, but my

dad contacted a FSBO and we went and looked at it and have made an offer…BT we want to give

you this $3000 check for your time showing us property.”

Can you accept the check?

Failing to Furnish a Copy of a Listing, Sale, Lease or other Contract Relevant to a

Real Estate Transaction to all Signatories of the Contract at the Time of Execution.


Example 1: Sellers Jane and John listed their house with Agent Mark of XYZ REALTORS. After

several weeks of showings but no feed back from Agent Mark, sellers Jane and John began

to wonder if Agent Mark was putting his best effort in marketing their home. So they talked

to a friend who had just sold their home and the friend asked, “When does your listing

expire?” Jane responds that she doesn’t know. The friend asked her to check her listing

agreement that they signed. Jane says she never got a copy of the listing agreement.

What do you see that Agent Mark did wrong, if anything?

Example 2: Agent Brittany writes an offer for her buyers after multiple discussions on the offering price.

Agent Brittany leaves to present the offer to the listing agent without leaving a copy with her

buyers.

What issues do you see with Agent Brittany leaving without giving her buyers a copy of the

offer?

Example 3:

Agent Angie lists a house with 10 acres and forgets to bring an extra copy of the paperwork

so that she can leave a copy with the seller. Agent Angie tells the seller she will drop the

copies off within two hours.

What, if anything, has Agent Angie done wrong?

What are some options (to comply with the statute and Code of Ethics concerning copies)

Agent Angie has?


AG Opinion – Exemptions to licensure

On March 6, 2014 the Office of the Attorney General issued Opinion No. 14-27 concerning questions

about Exemptions from the Real Estate Broker License Act.

1. Does the exemption from licensure under the Tennessee Real Estate Broker License Act

of 1973 provided to “corporation, foreign or domestic” in Tenn. Code Ann. 62-13-104(a)(1)(F)

apply to a limited liability company?

2. If an individual who is a member of an entity (Corp) that qualifies for the

exemption under Tenn. Code Ann. 62-13-104(a)(1)(F) has the primary responsibility of

performing activities on behalf of such entity for which a license is otherwise required under

Tenn. Code Ann. 62-13-102(4)(A) or (B), does it matter for purposes of the exemption whether the

individual’s compensation is dependent upon or directly related to the value of the real estate as to

which the actions are performed?

3. If an individual performs activities for which a license is required under Tenn. Code Ann.

62-13-102(4)(A) or (B) on behalf of an entity that qualifies for the exemption under Tenn. Code Ann.

62-13-104(a091)(F) but not perform such activities as a vocation does the exemption apply to that

person if his or her compensation is based on a distribution of profits to the owners of the entity

from the in the entity or some other calculation not directly related to the sale or rental of the

property.


Fingerprint THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE amended

TAC Section 62-13-303 – Qualifications – Prerequisites for Licensing

Effective January 1, 2014 by adding the following:

Section 1. (l) (1) The commission shall require all applicants for initial licensure issued under this

chapter on or after January 1, 2014, to submit a complete and legible set of fingerprints on a

form prescribed by the commission or in such electronic format as the commission may require to the

commission or to the Tennessee Bureau of Investigation for the purpose of obtaining a criminal

background check from the Tennessee Bureau of Investigation and the Federal Bureau of

Investigation.

(2) The commission shall refuse to issue a license to an applicant for initial

licensure who does not comply with subdivision

(3) The commission shall conduct a criminal background check of each applicant

Rule 1260-01-17 Fingerprinting

1. Any initial applicant who is required to submit a complete and legible set of fingerprints for

the purpose of obtaining a criminal background check pursuant to T.C.A. § 62-13-303 shall

submit said fingerprints in an electronic format.

The full content of T.C.A. § 62-13-303 and Rule 1260-01-.17 can be found in the

Appendices.


Section II: PB Supervision

Rule 1260-02-.03 Offices

a. Unlicensed Branch Office

One of the violations discussed under Section 1 TREC Rules, Regulations and Updates was operating

an unlicensed Branch Office.

Can you name some examples of an Unlicensed Branch Office?

1.

2.

Can you name some examples of offices that are exempt from the requirement for a branch

office license?

1.

2.

b. Advertising

One of the multiple violations previously discussed was the failure of the Broker to adequately

supervise the advertising activities of their affiliates.

T.C.A. § 62-13-312. DISCIPLINE – REFUSAL, REVOCATION OR SUSPENSION OF

LICENSE – DOWNGRADING OF LICENSEE

c. Trust Money/Security/Trust Deposit

There were two multiple violations related to Trust Money:

1. Failing, within a reasonable time to account for or to remit moneys belonging to others.

2. Failure to timely disburse or interplead earnest money.

On October 18, 2015 the rule, Deposits and trust Money is Amended by deleting the name and text of

the rule in its entirety and substituting instead the following language so that as amended, the name

and rule shall read:

1260-2-.09. Managing Escrow or Trustee Accounts

(1) Definitions: for purposes of this rule, the following definitions are


applicable:

(a) "Commingling" is defined as the act of a licensee maintaining funds

belonging to others in the same bank account that contains his or her

personal or business funds.

(b) "Trust money" is defined as either of the following:

1. Money belonging to others received by a licensee who is acting

as an agent or facilitator in a real estate transaction; or

2. Any money held by a licensee who acts as the temporary

custodian of funds belonging to others.

A real estate company has the required separate Earnest Money Account for the purpose of holding

any funds, which may be received as deposits. The company also has a property management

company.

How many separate accounts to handle deposits must the company have?

Can the earnest money account be in an interest bearing account and if so are there any guidelines?

Is there a timeline on disbursing the earnest money?

d. New Mandatory Real Estate Firm Audit

Under the new Mandatory Broker Audit the first Audit Forms went out by mail in May 2014 to

approximately 200 Principal Brokers. Audit form responses are to be returned completed with

supporting documentation within 30 days of date of audit cover letter. TREC will have an auditor on

site to look over audits. The plans are to ultimately send out 400 Mandatory Broker Audit packages

each month.

Audit Form cover letters which advise the principal broker that failure to return the completed Audit

Form, with all attachments/exhibits in the proper time frame shall result in disciplinary action by the

Commission including civil penalties of up to $1,000.00 per violation and that along with the civil

penalty the Audit Form must be completed.

(Source: TREC Meeting Minutes June & July 2014)

HOT LINE: Agent Has Established a LLC? QUESTION: If an agent has established a LLC, do we make their commission checks payable to the

LLC or to the agent?


Section III: Agency Law

Even though Tennessee’s Agency Law has been in effect since January 1, 1996, it is

still often violated or at least misunderstood…

A. Let’s Review Things Every Licensee Should Know:

1. An agency relationship in Tennessee is not implied or created by a licensee’s actions,

behavior or even his/her statements. It cannot be created accidentally.

2. A licensee is always a facilitator by default and remains a facilitator until a bilateral written

agency agreement has been negotiated with a consumer and signed by both parties.

3. A licensee’s delivery of a written disclosure, or confirmation of agency status, saying that

he/she is an agent does not make the licensee an agent. [A unilateral disclosure is not a

bilateral agreement.]

4. Tennessee’s agency law supersedes what is known as the common law of agency.

5. A traditional (non-designated) agency relationship obligates everyone in the office to an

agency relationship with that buyer or seller.

6. Designated agency establishes an agency relationship between only one real estate licensee

in the office (to the exclusion of everyone else in the office, including the managing broker)

and a buyer or seller.

7. An office policy of designated agency from the outset – in all transactions (whether in-

house or not) – is a common and perfectly legitimate agency office policy in Tennessee.

8. Every change in agency status during the course of working with a consumer must be fully

disclosed to the consumer at the time status is changed and should be documented, even if the

consumer gave prior consent to changes of status should they occur.

9. An agency relationship is not required in order for a licensee to receive a commission; a

facilitator may usually receive a commission as easily as a buyer’s agent. [The listing agent’s

payment of a commission to a selling agent compensates the selling agent for procuring a

willing and able buyer, not for his/her agency representation of the buyer.]

10. Every real estate office in Tennessee should have a written agency office policy.

11. Sub agency is still legal in Tennessee but is rarely offered. In actual practice, a subagent

generally has little or no true allegiance or loyalty to the client or client’s best interests.

12. Dual agency is still legal in Tennessee (if it is fully disclosed to both parties and both

parties consent to it). Disclosed dual agency, however, is rarely practiced. Most legal experts

still believe that it greatly increases legal liability for both the licensee and his/her firm and the

potential for complaints to the Tennessee Real Estate Commission.


B. (Unfortunately) Common Problems…

1. Disclosing Too Much

2. Disclosing Too Little

3. Putting Commission Above Honesty and Duty

4. Trying To Serve Two “Masters”

Consider the following case:

One of the agents in my office sold a historic home once in downtown Franklin. She was

under a buyer agency agreement with buyers to whom she showed the house. While they were

home “sleeping on it” and trying to decide how much to offer, she sold it to someone in her

neighborhood. She had mentioned the home to them at a cocktail party the same night that she

showed the home to her clients. She took the neighbors to see the home the next morning and

wrote and negotiated the offer the next morning. She never told her buyer clients the truth.

When they called to say they were ready to write the offer, she responded, “I’m sorry but that

home has sold.”

How SHOULD this agent have handled things?

5. Trying To Wear Two Hats at the Same Time

Some people STILL believe that you can be a seller’s agent (the listing agent) and a

facilitator for the buyer at the same time.


C. A Case Study To Consider… Who Does What?

Angie Jones with Full Service Realty was excited to have an appointment at her office with a

wonderful couple, Bob and Linda Stills, referred to her by one of her preferred vendors. On

the phone, Bob and Linda had shared that they had sold their home, were pre-qualified with

a lender, and were ready to move at any time, once they found the perfect home.

Angie was well prepared and had a wonderful presentation and materials to educate the

Stills as to the process of purchasing a home in a new town and community. The Stills were

so impressed with Angie’s professionalism and knowledge that they eagerly signed a Buyer

Representative Agreement to work exclusively with Angie as their designated buyer’s agent.

Angie set up about 10 homes to view on a lovely Saturday in October. By 3:00 p.m. the Stills

had narrowed their choice down to 2 different homes. When Angie called the listing agent

on each of these properties to see what she could learn about their status and availability,

she noticed – in the REALTOR® remarks on MLS – that the agent representing the home

that appeared to be the buyer’s first choice was directing her instead to call the seller.

Concerned about this, she called the listing agent Jay James anyway to see what were the

circumstances surrounding this property. Jay informed her that he only took limited

service listings for a flat fee to put them in MLS. Other than that, the seller was the one she

needed to work with.

Feeling very apprehensive, Angie called the seller to ask for the Property Condition

Disclosure and the lead-based paint disclosure prior to submitting a contract. The sellers

informed her that they didn’t have such forms and asked her to bring them over when she

had the offer.

Angie wrote up the offer for her buyers and presented it to the sellers. The sellers asked

Angie to help them write a counter offer and finalize all the paperwork. After explaining

carefully her role as fiduciary to Bob and Linda Stills, the sellers were very concerned about

who would represent them. Angie asked if their agent, Jay, had explained agency and his

role in this sale with them. She also asked them if they had signed a waiver of minimum

services as prescribed by Tennessee’s agency law. They said that Jay had not explained any

of this to them and had not heard of these things.

What should Angie do at this point to represent her buyer in purchasing this home?

Has she done anything improper up to this point?

What should Jay have done when he listed the property?

Has there been a violation of Tennessee Law or the REALTOR® Code of Ethics?

What does Tennessee’s Agency Law actually require??


Case 2: Who is the Buyer Agent?

Buyer Agent Jane shows a buyer another agent’s listing (Listing Agent Joe).

The Buyers are interested in LA Joe’s listing.

Buyer Agent Sally calls LA Joe to set up a showing. LA Joe tells BA Sally that the buyer has

already seen the property with BA Jane. BA Sally tells LA Joe that she has already talked with

BA Jane and has worked things out.

BA Jane drives by the property and sees buyer looking at property with BA Sally. BA Jane

pulls into the driveway and inquires what is going on.

FACTS: There is no contract between ANY agent and the buyer. BA Sally never contacted BA

Jane prior to showing property.

What are your thoughts?

Is there a signed agreement?

Is it Exclusive or Non-Exclusive Agreement?

What Now?

Agency Getting caught between one’s duties to a client (buyer or seller) and the

need or desire to do the “right thing” can be frustrating!

A. Obeying Lawful (But) Inappropriate Instructions From a Client

B. Taking (Perhaps Unfair) Advantage of a FSBO

Consider the following case…

An agent sold a FSBO for at least $25,000 under market value. The agent felt the conflict of her

duty of “honesty and loyalty” to her buyer client with her desire to be fair to the seller. She

tried to resolve her conflicted feelings by convincing the homeowner to hire an agent. The seller,

however, was very rude and let her know that he didn’t need an agent and didn’t think anyone

else did. The agent’s buyer-client resold the home a couple of years later and made a

substantial amount of money since he had $25,000 of built-in equity.

Did the agent do the right thing?

Is there anything the agent did NOT do that you would have done?


C. Another Type of Conflict from the TAR Hot Line…

QUESTION: I am a real estate agent representing my client as the designated agent for the buyer.

The seller’s closing attorney contacted my buyer by letter and stated in that letter that the buyers

should have their real estate agent use the seller’s closing attorney to close the property and stated that,

if the buyers did indeed use the seller’s closing attorney, their office would reduce the closing fees.

What should I do?

ANSWER:

T.C.A. § 62-13-403: Duty owed to all parties.

A licensee who provides real estate services in a real estate transaction shall owe all parties to the

transaction the following duties, except as provided otherwise by § 62-13-405, in addition to other

duties specifically set forth in this chapter or the rules of the commission:

(1) Diligently exercise reasonable skill and care in providing services to all parties to the

transaction;

(2) Disclose to each party to the transaction any adverse facts of which the licensee has actual

notice or knowledge;

(3) Maintain for each party to a transaction the confidentiality of any information obtained by a

licensee prior to disclosure to all parties of a written agency or subagency agreement entered into by

the licensee to represent either or both of the parties in a transaction. This duty of confidentiality

extends to any information that the party would reasonably expect to be held in confidence, except

for information that the party has authorized for disclosure, information required to be disclosed

under this part and information otherwise required to be disclosed pursuant to this chapter. This duty

survives both the subsequent establishment of an agency relationship and the closing of the

transaction;

(4) Provide services to each party to the transaction with honesty and good faith;

(5) Disclose to each party to the transaction timely and accurate information regarding market

conditions that might affect the transaction only when the information is available through public

records and when the information is requested by a party.

(6) Timely account for trust fund deposits and all other property received from any party to the

transaction; and

(7) (A) Not engage in self-dealing nor act on behalf of licensee's immediate family or on behalf of

any other individual, organization or business entity in which the licensee has a personal interest

without prior disclosure of the interest and the timely written consent of all parties to the transaction;

and

(B) Not recommend to any party to the transaction the use of services of another individual,

organization or business entity in which the licensee has an interest or from whom the licensee may

receive a referral fee or other compensation for the referral, other than referrals to other licensees to

provide real estate services under this chapter, without timely disclosing to the party who receives the

referral the licensee's interest in the referral or the fact that a referral fee may be received.


T.C.A. § 62-13-404 Duty owed to licensee’s client

Any licensee who acts as an agent in a transaction regulated by the Tennessee Real Estate

Broker License Act of 1973 owes to such licensee’s client in that transaction the following

duties to:

(1) Obey all lawful instructions of the client when such instructions are within the scope of

the agency agreement between licensee and licensee’s client;

(2) Be loyal to the interests of the client. A licensee must place the interests of the client

before all others in negotiation of a transaction and in other activities, except where such

loyalty duty would violate licensee’s duties to a customer under § 62-13-402 or a licensee’s

duties to another client in a dual agency; and

(3) (A) Unless the following duties are specifically and individually waived, in writing by a

client, a licensee shall assist the client by:

(i) Scheduling all property showings on behalf of the client;

(ii) Receiving all offers and counter offers and forwarding them promptly

(iii) to the client;

(iv) Answering any questions that the client may have in negotiation of a

(v) successful purchase agreement within the scope of the licensee’s expertise;

and

(vi) Advising the client as to whatever forms, procedures and steps are needed

after execution of the purchase agreement for a successful closing of the

transaction.

(B) Upon waiver of any of the duties in subdivision (3)(A), a consumer shall be

advised in writing by the consumer’s agent that the consumer may not expect or seek

assistance from any other licensees in the transaction for the performance of the duties in

subdivision (3)(A).

NOTES:


D. Let’s Double-Check Our Agency IQ…

1. How is an agency relationship created?

2. Which party (or parties) does a Facilitator represent?

3. What is your relationship with a buyer to whom you are showing properties prior to

executing a Buyer Agency Agreement?

4. You represent the seller as the listing agent. An unrepresented buyer wants you to

draft an offer for them. Do you have to change agency status?

5. Your listing agreement includes the seller’s consent to allow you to default to

Facilitator status if an unrepresented buyer comes along. If this happens, do

you need to notify the seller?

6. Do you automatically become a Facilitator by selling your listing to an

unrepresented buyer?

7. Is it okay to let an unrepresented buyer assume you represent them as long as you

haven’t said it directly?

8. You must use designated agency for in-house listings. True of False?

9. If you use traditional agency as office policy at the outset of agency relationships,

an agency relationship exists between you and all the clients of all members of

your firm. True or False?

10. When two licensees in the same firm are representing the buyer and seller as

designated agents for their respective clients, what is the status of the managing broker?

11. Assume your office uses traditional (non-designated) agency as office policy.

You take a buyer client to view a home listed by another agent in your office. Is

there a conflict?


12. There’s no real difference between traditional and designated buyer and seller agency. a.

True

b. False

13. Designated agency is only used for in-house transactions.

a. True

b. False

14. “Facilitator” and “Transaction Broker” mean the same thing.

a. True

b. False

15. Traditional agency creates an agency relationship between a client and every agent within a

firm.

a. True

b. False

16. Which of the following applies to designated agency?

a. It creates an agency relationship between the client and ALL the agents in the

office.

b. It can only be used in in-house transactions.

c. It requires an agent to keep clients’ information confidential from other agents in

the office.

17. You must be either a disclosed dual agent or a facilitator to receive “both sides” of the

commission in a transaction.

a. True

b. False

18. If the office operates as a designated agency office, they may keep all files in a central area for all

to access? Source TAR Digest, August 19, 2014 Hotline Questions

a. True

b. False

19. In a team situation, the only one who needs to sign a buyer’s agency or listing agreement is the

one who actually obtained the client.

a. True

b. False

20. An Agency Disclosure Form is the same as a Buyer’s Agency Agreement.

a. True

b. False


21. If a couple comes in to your Open House, should they declare that they are working with an agent

or is it your obligation to ask?

a. True

b. False

Section III: Contracts

CHANGES TO THE NUMBERING OF TAR FORMS

The TAR Forms Committees looked at the various forms which are offered to its members and

determined that they could be made a bit more user friendly. One of the main issues which members

have is quickly finding the form to suit their particular needs. When TAR began providing forms to its

members a little over fifteen years ago, there were far fewer forms than there are today. Early in the

forms’ history, a numbering system was developed where in similar forms were grouped together in a

numerical sequence, preceded with an “F”. However, over the years, new forms have been introduced

and others have been deleted from the form library. As a result, the numerical sequence is no longer

indicative of where a form might be found. In addition, commercial forms are located sporadically

throughout the numbering system rather than being grouped together.

Both the residential and the commercial forms committees decided to introduce a new numbering

sequence to make using the TAR forms a bit easier for its members. There will be two different sets

of forms – one for residential forms (which will include residential, lots and lands, and farms) and will

begin with the letters “RF”. The other will be for commercial forms and will begin with the letters

“CF”.

Within both the residential and commercial forms, the individual forms will then be organized within

one of seven different categories, depending upon the forms’ use. The different categories are:

• 100 Series. This series includes the agency forms and agreements between a real estate

firm and its clients/customers such as listing agreements, buyer’s representation agreements,

terminate of agency agreements, and agreements to show property.

• 200 Series. This includes disclosures made by the client/customer. Documents in this

series include property condition disclosure forms, impact fees/adequate facilities tax

disclosures, lead based paint disclosures, etc.

• 300 Series. This series includes disclosures from the real estate firm to clients and

customers. Documents in this series include confirmation of agency status, disclaimer

notices, personal interest disclosures, referral for services, etc.

• 400 Series. This series contains contracts between parties in a real estate transaction.

Documents in this series include the purchase and sale agreements, lease agreements,

confidentiality agreements, earnest money disbursement and release agreements, etc.

• 500 Series. This series includes exhibits to contracts.


• 600 Series. This series contains addenda, amendments, counter offers, notifications, etc.

This includes back up agreements, right to continue to market property forms, FHA/VA

addenda, counter offers, amendments, repair/replacement forms, final inspection

documents, notifications, multiple offer disclosures, etc.

• 700 Series. This series is comprised of miscellaneous documents. It includes things such

as referral agreements, compensation agreements, interpleader documents, information

sheets, etc.

Within each series of numbers, forms are assigned a three digit number and grouped together

with similar forms. For example, the standard listing agreements have numbers in the low 100s. The

lot/land listing agreements have numbers in the 130s. Buyer’s representation agreements are in the

140s. In addition, documents, which are the same for both residential and commercial, have the same

three-digit number. For example, the standard purchase and sale agreement for residential property is

form RF 401 and for commercial property, it is CF 401. This should make things much easier for

those practitioners who engage in both residential and commercial transactions. While there will be a

learning curve, the committees believe that this new system will make things much easier to locate

needed forms and will allow enough flexibility so that additional forms can be added without altering

the numbering system for years to come.

In the Appendix, you will find several charts, which list both the old and new numbers for the

residential and commercial forms. If you have any questions concerning the forms themselves or the

new numbering system, please contact the TAR Legal Hotline at (800) 899-5297 or via email at

[email protected].

mailto:[email protected]


Notice- This verbiage will be included in the footer of every page

of all TAR forms. Anytime you use Transaction Desk, Forms on

the Fly OR any authorized third party vendor a user

authentication process will take place. If authorized, your name

will be digitally inputted into the provided field. See footer

example below-

RED FLAGS -

Any forms provided with a blank field will be considered

unauthorized use.

Any form provided with a handwritten name in the field will

be considered unauthorized use.

Any forms that appear manipulated or tampered will be

considered unauthorized use.

Federal Copyright infringements carry severe penalties and

court costs. TAR will actively pursue violators.

Activities: Choose the appropriate form and series number used

in the different situations presented and record the form number

below.

Activity 1 - Disclosures made by clients and/or customers

Activity 2 - Agency and Agreements between firms and its clients and/or

customers.

Activity 3 - Addenda, amendments, counter-offers and notifications.


A. The What and When: 1. The TAR Purchase and Sale Agreement (RF401) states: “the term day(s) used throughout

this Agreement shall be deemed to be calendar day(s) ending at 11:59 p.m. local time unless otherwise

specified in this Agreement. Local time shall be determined by the location of the Property. In the

event a performance deadline, other than the Closing Date, Date of Possession, Completion of

Repair Deadline (Repair/Replacement Amendment), and Offer Expiration date, occurs on a

Saturday, Sunday or legal holiday, the performance deadline shall be extended to the next

following business day. Holidays as used herein are those days’ deemed federal holidays

pursuant to 5 U.S.C. 6103. In calculating any time period under this Agreement, the commencement

date shall be the day following the initial date (e.g. Binding Agreement Date).”

Example: The Buyer must make their loan application and pay for credit report within three

(3) days after the binding agreement date. So, if the binding agreement date is Thursday, then

Friday is Day 1, Saturday is Day 2, Sunday is Day 3. That means the Buyer needs to have

made the loan application and pay for the credit report before 11:59 p.m. on Sunday. However,

since the deadline is on a Sunday, and it is not a drop dead date, the Buyer has until Monday

at 11:59 p.m.

(The TAR Purchase and Sale Agreement (RF401) defines when the Binding Agreement Date

will be: “This instrument shall become a “Binding Agreement” on the date (“Binding

Agreement Date”) the last offeror, or licensee of last offeror, receives notice of offeree’s

acceptance. Notice of acceptance of the final offer was received on day of _, at

(time) by (name).” The date should be filled in by the last offeror (the person to

receive the acceptance of the final counter offer or their agent). This will allow the agent to

add the date on which it was actually received. All timelines will start on the next day for

purposes of calculating days.

2. Preprinted Deadlines: Preprinted deadlines are just as important as those you write in! If

it’s in the contract, it must be done by the date specified. Failing to meet deadlines may

constitute a breach. An agent that allows a deadline to pass unnoticed may have a complaint

filed against them with TREC and/or the local board as well as possibly facing a lawsuit.

It is imperative to discuss the pre-printed deadlines in the TAR Purchase and Sale Agreement

(RF401) with buyer clients BEFORE submitting an offer. If, for any reason, they will be

unable to meet a required pre-printed deadline, this should be noted clearly BEFORE an offer

is made or counteroffer is submitted. For seller clients, you must discuss pre-printed deadlines

and filled in dates. If for any reason, they will be unable to meet a required date or deadline,

this should be noted clearly in a counteroffer.

Failure to meet a contractual deadline may result in a breach of contract, forfeiture of

earnest money, unenforceable performance and, in some cases, liability for civil

damages.


When a preprinted deadline needs to be changed, you should first check to see if the issue is

addressed by another TAR form. If not, the EXACT verbiage should be copied with only the

number of days for performance changed. By altering the verbiage within the attorney-

approved Purchase and Sale Agreement (RF401), you could end up making the party’s

performance unenforceable.

3. TAR offers the Purchase and Sale Agreement Checklist (RF704) to assist licensees in

meeting contractual deadlines.

4. The TAR Notification (RF656) form serves as a notification form for all notices required in

the Purchase and Sale Agreement (RF401). This form assists licensees in creating a paper trail

of their compliance.

5. You must be aware of your client’s options in the case of the other party’s failure to meet

a specific deadline, perform a required action and/or deliver a required notice.

6. Default: In the event that any party exercises its right to terminate due to the default of the

other pursuant to the terms of this Agreement, the terminating party retains the right to pursue any

and all legal rights and remedies against the defaulting party following termination.

Exercise: What Happens Next??

For the following situations, explain what might happen next, including the parties’ options.

1. The RF401 states that the buyer will deliver a check for $5000 earnest money to the

listing agent no later than 2 days after BAD. At the end of the third day, the listing

agent has not received the check.

2. The seller receives an offer from a buyer and immediately counters which the seller’s

agent delivers the counter to the buyer’s agent. The buyer’s agent sends a text to the seller’s

agent that the buyer has accepted the counteroffer but the buyer had not yet signed the

counteroffer. The seller received a second offer, which he promptly signed and the seller’s

agent delivered back to the second buyer’s agent. The seller’s agent then notified the first

buyer’s agent that they had accepted an offer from another buyer. The first buyer and the

buyer’s agent demand that they had valid contract first with the text notification.


3. The buyer has checked the box that the Financing Contingency is Waived but has

checked the box that the Agreement IS CONTINGENT upon the appraisal.

4. Binding Agreement Date was edited from provided to received.

Remember, the B.A.D. starts all time frames or deadlines in the contract.


B. Inspections and Repairs:

“Inspections” includes ALL inspections and reports related to the condition of the property.

The termite inspection is included and if the buyer waives the inspections, they could “except”

the termite inspection or any other specific inspection to add it back in by inserting the

“exception” in the Special Stipulations paragraph. Big Point: The “exception” field is no

longer provided. If the box is checked, ALL INSPECTIONS are waived.

Big Point: Included is a Resolution Period, which allows the Buyer and Seller to mutually

agree upon a certain number of days to resolve repairs and replacements.

F4 – Repair/Replacement Proposal – is for negotiation purposes only and is not to be included as

part of the Purchase and Sale Agreement. It does not go to the lender unless requested by the

lender. There can be an unlimited amount of proposals between the Buyer and Seller. The

RF654 is signed only by the party making the proposal. The seller might want to see full report

but it the seller’s responsibility to request. If they do not meet a mutual written resolution in the

agreed upon time frame, the Agreement is terminated or they have the option to extend the

Resolution Period through a mutually agreed upon Amendment. In any event the parties agree

to negotiate repairs in good faith. (This means the Seller must respond to the list. He does not

have to agree to fix anything, but he cannot simply remain silent. Failure to respond at all

could give the buyer a claim for breach of contract and failure to act in good faith).

RF655 – Once the buyer and seller agree on what items will be repaired or replaced, then the

final agreement shall be submitted on the RF655 with both parties’ signatures. It then

becomes an amendment to the RF401 and will go to the lender.

Costs associated with Inspections and Repairs! All inspections are performed at the expense

of the buyer unless otherwise specified in the Special Stipulations area (the termite inspection

costs are NOW the responsibility of the Buyer). Buyers and Sellers should negotiate any

needed repair costs using the Buyer Inspection Contingency Removal/Notification (RF654) or

the Repair Counter Proposal (RF655) form. There is a key exception – buyers who are

receiving VA loans. Government regulations will not allow buyers with VA loans to pay for

termite inspections. Therefore, TAR recommends using form RF625, the VA/FHA

Addendum. This form states that the buyer will order the inspection, but the seller will be

responsible for paying for it either at or before closing.

Home Inspectors are licensed and regulated by a regulatory board of the Tennessee

Department of Commerce & Insurance. Tenn. Code Ann. §62-6-301(5) defines a home

inspector as “any person who is licensed under this part as a home inspector and who engages

in the business of performing home inspections and writing home inspection reports.” Clients

and customers should be encouraged to use a licensed home inspector. Although buyers may

inspect the property themselves, this may not carry the same weight in the eyes of the seller as

a report from a licensed home inspector.

When purchasing properties offered, “as is,” buyers are still entitled to make any and all

desired inspections – they can and should do so! Buyers may still attempt to negotiate any

needed repairs. Buyers may cancel the contract based on any items disapproved in the


inspection report or any defects disclosed by the seller. Purchasing a property “as is” does not

limit a buyer’s options under the TAR Purchase and Sale Agreement (RF401), although, in

practice, an “as is” Seller may be less likely to complete or negotiate needed repairs.

Sellers offering a property “as is” are still required to fully disclose any property defects of

which they have knowledge via the Tennessee Residential Property Condition Disclosure

(RF201), unless exempt. It is especially important that Sellers answer honestly when a buyer

inquires about a specific issue, i.e. plumbing or wiring. In practice, Sellers may offer a

property “as is” because they don’t wish to make any repairs or because they are unaware of

what problems may exist. Offering a property “as is” does not obligate buyers to accept the

property “as is” until they’ve completed all desired evaluations and inspections.

It is important to familiarize yourself with lender requirements in your area related to

appraisals and inspections. Know what lenders expect to receive before they order the

required items for the loan obligations. . If a lender needs the appraisal and/or inspection

report before ordering loan documents, the deadlines included in the RF401 should allow for

this to happen to avoid putting the buyer at risk for breach. The parties may also wish to

include in the special stipulations that the appraisal and/or inspection report must be obtained

on or before a specific date. . Buyers should be advised to stay in regular contact with the

Lender to ensure their obligations are fulfilled. Lenders should be made aware of the

contractual deadlines for the loan obligation.

In Tennessee, a wood destroying insect infestation inspection report is a warranty for 90 days

of the accuracy of any representations made in the report. After 90 days, a new report must be

obtained to reduce the liability for the parties involved.

Workshop: Inspections and Repairs

Students will workshop the following situations, using the RF401 and other related forms, if applicable.

Scenario 1:

The buyer is making an offer contingent on inspections. They are willing to pay for the inspection,

which they expect to have completed within 10 days. If repairs are needed, they are willing to

negotiate with the seller. How would you address this in the offer?

Scenario 2:

The buyers obtain an inspection report identifying needed replacement of the HVAC system,

estimated at $2500. They want the seller to replace the system before they will proceed with the

transaction. How would you proceed if you represent the buyer?

Scenario 3: You represent the seller. The buyer requests repairs to the roof, estimated at $1500. The seller is

willing to pay no more than $500 towards the needed repairs. How would you proceed?


C. Special Stipulations:

The preprinted portions of the Purchase and Sale Agreement (RF401) have been approved by

the TAR forms committee and TAR attorneys.

Handwritten provisions prevail! When you write something in the special stipulations section,

it should be consistent with the rest of the TAR Purchase and Sale Agreement (RF401).

Whenever possible, use the same verbiage included in the preprinted portion, referencing the

specific line number(s), only changing what is absolutely necessary!

Before writing something into the special stipulations section, you should FIRST check to

make sure the issue is not addressed by another TAR form.

NEVER include phrases such as TBD, actual costs, negotiable, etc. Always be as specific as

possible, especially when it comes to dates, amounts and actions required of either party. If

you do not, then the contract may not be enforceable.

The Special Stipulations Library (RF707) exists to assist you in addressing items in this

section.

If you’re using the special stipulations section to write in a contingency, there is likely another

more appropriate TAR form.

The special stipulations section can be appropriately used to make simple changes to a

preprinted item, such as a required deadline, if the line number is referenced and exact

verbiage reprinted, with only the number of days changed.

The special stipulations section should NEVER be used to write a new contract.

Skill Practice: Special Stipulations

Students should divide into groups to address the following list of scenarios. In your groups,

decide whether the item should be addressed in the special stipulations section and, if so, how. If

the item should NOT be addressed in this section, identify how it would be addressed by an

alternative form or section of the RF401. Choose a representative, who should be prepared to

share the group’s answers with the entire class.

1. The buyer’s lender will not order the appraisal until 5 days after application.

2. The seller is willing to pay for the buyer’s document preparation and attorney’s fees, up

to $500.


3. The buyer wants the seller to have the exterior of the home pressure washed prior to

closing.

4. The buyer is purchasing a foreclosed home. The bank (seller) has agreed to allow the

buyer to replace three broken windows prior to closing.

5. The buyer would like to have the home inspected for radon.

6. The contract is contingent on the sale of the buyer’s existing home in Florida.

7. The buyer is obtaining an FHA loan. The seller has agreed to pay $3000 towards their

closing costs, or provide them with a credit in the event it exceeds the allowable amount.


8. Exercise: Stipulation Identification

Tear out the “Yes”/”No” sheet of paper in your handout and fold it in half. As the instructor reads

through the following list of items, identify whether the item might appropriately be addressed in the

special stipulations section. Students will answer by displaying “Yes” or “No”.

1. The buyer is obtaining a VA loan.

2. The buyer wants to change the number of days required to submit their loan application.

3. The buyer’s offer is contingent on the sale of their existing home.

4. The buyer wants the seller to make sure the house is swept clean and free of debris.

5. The buyer wants the seller to replace the damaged front door.

6. The property includes a large parcel of land and the buyer wants to make the offer

contingent on a survey.

7. The buyer wants to make the contract contingent on a test of the exterior injection well.

8. The home is located behind another existing home and the driveway runs alongside the

front neighbor’s property (although it is a part of the saleable property.) The buyer wants

assurance their access won’t be obstructed.

9. The buyer wants to make the sale contingent on their ability to have the property rezoned.


D. A Final Case Study To Consider…

Chad, an agent with Community Real Estate, was very excited to work with a new buyer

that he had met at an open house. In order to be well prepared, he met Eric at the office to

discuss the buying process and identify Eric’s housing needs. After talking with Eric and

Eric’s lender, Chad realized that he would need to structure an offer with the seller paying

the buyers’ closing costs.

After looking for a month, Eric found the “perfect” home. Chad wrote the offer with a

purchase price to be $215,000, sale to include the washer, dryer, refrigerator. He also

included a phrase on lines 85-86 of the Purchase and Sale Agreement that the “seller was to

credit the buyer $5000 towards closing costs, pre-paids, and non-allowables including the title

policy.” He submitted the offer to the seller’s agent Jane, at Get with it Realty, with a time

limit of the next day at 5:00 p.m.

At 4:00 p.m. the next day, Chad received a counteroffer #1 from the seller, and it stated:

“Sales price to be $220,000 with no credit towards closing costs.”

Chad called Eric and after careful consideration, countered immediately with the following:

“Sales price to be $221,000.”

Chad emailed the last counter over to Jane. When she showed it to the seller, he was thrilled

to see the higher sales price and checked that he accepted it. Jane then bound the contract

and notified Chad that the deal was done.

During the inspection period, Chad and Jane were talking and it came up that the seller was

paying closing costs. Jane said “Oh no, we countered that out of the deal.” Chad then

shared that when he sent the last counter over with only the higher price, leaving off that the

seller said no closing costs, all terms reverted to the original offer.

Was Chad correct in not restating the request for closings costs on his last counter?? What should

Jane have done when she received Chad’s last counter to protect her seller? Who carries the

liability for the Seller’s $5,000 loss?


Which Form Do I Use?

Issue Form Lead based paint was found and

removed from the basement of a

seller’s home

RF209 (LBP), RF201 (TRPCD)

The seller knows the roof has a minor

leak.

RF201 (TRPCD)

The buyer has agreed to waive their

right to the seller’s property

disclosure.

RF204 (TRPCD Disclaimer)

The seller added a room to the read of

the house without a permit.

RF201 (TRPCD), RF208 IF exceeds

permit

The home has four bedrooms but the

seller admits the septic permit only

allows for three.

RF201 (TRPCD), RF208 Sewage

Permit Disclosure

During periods of heavy rain, the

backyard tends to have a great deal of

standing water.

RF201 (TRPCD)

The home was previously treated for

radon.

RF201 (TRPCD)

The seller just replaced the

refrigerator, which is included in the

sale.

RF401 (Offer to Purchase)

The seller’s home was previously

treated twice for termite damage.

RF201 (TRPCD)

A neighbor’s fence encroached two

feet onto the left side of the seller’s

property but they have refused to

move it.

RF201 (TRPCD)

The buyer is considering waiving their

right to an inspection.

RF204 (RPC Disclaimer)

The seller’s property contains an

exterior Injection well, which is in

working order.

RF205 (Exterior Well Notification),

F201 (TRPCD), RF203 (RPC

Exemption) or RF204 (RPC

Disclaimer)


Section V: Disclosures

T.C.A. § 66-5-201; 202; 212; 213

1. When should the RF201 (Tennessee Residential Property Condition Disclosure Form) be

provided to potential buyers for their exclusive use?

2. What protects the Real Estate Licensee from the representations of the seller on the Property

Condition Disclosure Form?

3. When may the Property Disclaimer Statement be used allowing the seller to make no

representations or warranties as to the condition of the property?

4. When listing a home that is rural or on a large tract of land that is not on sewer or water,

what disclosures are required from the seller?

5. Are there any additional disclosures required for a property that is located in a PUD?


New Disclosure Law July 1, 2015

The new statute states:

(c)(1) In addition to any other disclosure required by this part, the seller shall, prior to entering into a

contract with a buyer, disclose in the contract or in writing, including acknowledgment of receipt, the

presence of a known sink hole on the property.

(2) For purposes of this section, “sink hole”:

(i) means a subterranean void created by the dissolution of limestone or dolostone strata resulting from

groundwater erosion, causing a surface subsidence of soil, sediment, or rock; and

(ii) is indicated through the contour lines on the property’s recorded plat map.

(Tenn. Code Ann. 66-5-212(c))

HOT LINE: July 21, 2015

QUESTION: With regard to the new sinkhole disclosure form:

1. If a seller listed their property prior to July 2, should we have them complete a new property

disclosure form or should the buyer’s agent request an update?

2. On land/lot contracts, will this new disclosure be added to the existing form, or is it necessary?

ANSWER: The disclosure is required for any contract entered into on or after July 1st. If you have

listings which were not under contract as of July 1st, you have several options. You can have the seller

complete a new disclosure, disclaimer or exemption (all of the forms have the required language).

Another option would be to simply amend the original disclosure. Finally, you can counter any offer

you receive to disclose the existence of any known sinkholes.

We would recommend simply having the sellers make a new disclosure. This will require the sellers to

affirmatively address the question by selecting “yes”, “no” or “unknown”. Additionally, it

demonstrates that you posed the question to the sellers.

As for your second question, the sinkhole disclosure is only required on residential transactions (of 1-4

units). They are not required on vacant land sales. This is just like the disclosures which were required

several years ago for exterior injections wells, PUDs, etc.

[SOURCE: TAR’s Legal & Ethics Hot Line Attorneys]


General Risk-Reduction Tips

Be sure sellers understand the serious legal pitfalls of withholding material information

about their home from prospective buyers.

Never make statements that predict the future—”This property is sure to appreciate.” “You

will never have any water problems here.” You open yourself up to charges of

misrepresentation if your prediction is wrong.

When in doubt as to whether a disclosure is required, go ahead and reveal whatever you

know.

When in doubt about anything concerning the property, say, “I don’t know.” Then

investigate until you do.

It is prudent to recommend that buyers consider a home inspection by a licensed home

inspector or by an expert who is skilled in evaluating and diagnosing any specific property

conditions that are of particular concern. Examples of such experts include a lead-based-

paint or asbestos-testing company, a soil or structural engineer, or an architect.

If the buyer declines your advice to obtain a recommended inspection or evaluation, make a

note of that decision in your file, and send the buyer a note documenting the event.

Recommend a thorough home inspection. Home inspectors are required to be licensed in

Tennessee.

Another “line of defense” is a home warranty purchased by or on behalf of the buyer. These

policies are a form of inexpensive insurance that can protect the buyer and you if the buyer

finds undetected or unknown defects after the sale closes and takes legal action.

—Some of the ideas in this section were adapted from “Just Say ‘I Don’t Know,’” by Robert

N. Bass, Today’s Buyers’ Rep, March 1998. Mr. Bass, a Phoenix, Arizona broker defense

attorney, can be reached at [email protected].

TIP #1:

TIP #2:

TIP #3:

TIP #4:


Section VI: Advertising Issues

Effective October 18, 2015 TREC Advertising rules will change:

TREC Rule 1260-2-.12 Advertising

(1) All advertising, regardless of its nature and the medium in which it appears, which promotes either

a licensee or the sale or lease of real property, shall conform to the requirements of this rule. The term

"advertising," for purposes of this rule, in addition to traditional print, radio, and television advertising,

also includes, but is not limited to, sources of communication available to the public such as signs,

flyers, letterheads, e-mail signatures, websites, social media communications, and video or audio

recordings transmitted through internet or broadcast streaming. Advertising does not include

promotional materials that advertise a licensee such as hats, pens, notepads, t-shirts, name tags,

business cards, and the sponsorship of charitable and community events.

(2) For purposes of this rule, the term "firm name" shall mean either of the following:

(a) The entire name of the real estate firm as licensed with the Commission; or

(b) The d/b/a name, if applicable, of the real estate firm as licensed with the Commission.

(3) General Principals.

(a) No licensee shall advertise to sell, purchase, exchange, rent, or lease property in a manner

indicating that the licensee is not engaged in the real estate business.

(b) All advertising shall be under the direct supervision of the principal broker and shall list the firm

name and telephone number as listed on file with the Commission. With regard to the size and

visibility of the firm name and firm telephone number, all of the following shall apply:

1. The firm name must be the most prominent name featured within the advertising, whether it be by

print or other media; and

2. The firm's telephone number shall be the same size or larger than the telephone number of any

individual licensee or group of licensees.

(c) Any advertising which refers to an individual licensee must list that individual licensee's name as

licensed with the Commission.

(d) No licensee shall post a sign in any location advertising property for sale, purchase, exchange, rent

or lease, without written authorization from the owner of the advertised property or the owner's agent.

(e) No licensee shall advertise property listed by another licensee without written authorization from

the property owner. Written authorization must be evidenced by a statement on the listing agreement

or any other written statement signed by the owner.

(f) No licensee shall advertise in a false, misleading, or deceptive manner.

False, misleading, and/or deceptive advertising includes, but is not limited to, the following:

1. Any licensee advertising that includes only the franchise name without including the firm name;

2. Licensees who hold themselves out as a team, group, or similar entity within a firm who advertise

themselves utilizing terms such as "Real Estate," "Real Estate Brokerage," "Realty," "Company,"

"Corporation," "LLC," "Corp.," "Inc.," "Associates," or similar terms that would lead the public to

believe that those licensees are offering real estate brokerage services independent of the firm and

principal broker;

3. Any webpage that contains a link to an unlicensed entity's website where said entity is engaged in

activities which require licensure by the Commission.


(4) Advertising for Franchise or Cooperative Advertising Groups

(a) Any licensee using a franchise trade name or advertising as a member of a cooperative group shall

clearly and unmistakably indicate in the advertisement his name, broker or firm name and firm

telephone number (all as registered with the Tennessee Real Estate Commission) adjacent to any

specific properties advertised for sale or lease in any media.

(b) Any licensee using a franchise trade name or advertising as a member of a cooperative group,

when advertising other than specific properties for sale or lease, shall cause the following legend to

appear in the advertisement in a manner reasonably calculated to attract the attention of the public:

"Each [Franchise Trade Name or Cooperative Group] Office is Independently Owned and Operated."

(c) Any licensee using a franchise trade name on business cards, contracts, or other documents relating

to real estate transaction shall clearly and unmistakably indicate thereon:

1. his name and firm telephone number (as registered with the Commission); and

2. the fact that his office is independently owned and operated.

(5) Internet Advertising: In addition to all other advertising guidelines within this rule, the following

requirements shall also apply with respect to internet advertising by licensees, including, but not

limited to, social media:

(a) The listing firm name and firm telephone number listed on file with the Commission must

conspicuously appear on each page of the website.

(b) Each page of website which displays listings from an outside database of available properties must

include a statement that some or all of the listings may not belong to the firm whose website is being

visited.

(c) Listing information must be kept current and accurate. This requirement shall apply to "First

Generation" advertising as it is placed by the licensee and does not refer to such advertising that may

be syndicated or aggregated advertising of the original by third parties outside of the licensee's control

and ability to monitor.

(6) Guarantees, Claims and Offers

(a) Unsubstantiated selling claims and misleading statements or inferences are strictly prohibited.

(b) Any offer, guaranty, warranty or the like, made to induce an individual to enter into an agency

relationship or contract, must be made in writing and must disclose all pertinent details on the face of

such offer or advertisement.

Advertising as a Team (Licensees who hold themselves out as group or similar

entity within a firm):

A HOT LINE QUESTION: “I am trying to find the section in the Official Manual of The

Tennessee Real Estate Commission that deals with teams within a Real Estate company.

Could you tell me where to find it?

Effective October 18, 2015: TREC Rule 1260-2-.41. Licensees Who Hold Themselves out as a Team, Group, or Similar

Entity within a Firm.

(1) Licensees who hold themselves out as a team, group, or similar entity within a firm must be

affiliated with the same licensed firm and shall not establish a physical location for said team, group,

or similar entity within a firm that is separate from the physical location of record of the firm with

which they are affiliated.


(2) No licensees who hold themselves out as a team, group, or similar entity within a firm shall receive

compensation from anyone other than their principal broker for the performance of any acts specified

in T.C.A. Title 62, Chapter 13.

(3) The principal broker shall not delegate his or her supervisory responsibilities to any licensees who

hold themselves out as a team, group, or similar entity within a firm, as the principal broker remains

ultimately responsible for oversight of all licensees within the principal broker's firm.

(4) No licensees who hold themselves out as a team, group, or similar entity within a firm shall

represent themselves as a separate entity from the licensed firm.

(5) No licensees who hold themselves out as a team, group, or similar entity within a firm shall

designate members as designated firm agents, as this remains a responsibility of the licensed firm's

principal broker.

Internet What information must be displayed on Internet websites?

a. Agent’s name and phone number

b. Company name and phone

c. Current and accurate information

d. Statement that some of the listings may not belong to the firm

e. All of the above

False, misleading or deceptive

1. Radio

2. Craigslist

3. Ad Offers & Guarantees

4. Pointer Signs

5. Signs and Billboards

If these signs were in Tennessee, would they be legal or not? (see next page)


What problems do you see with this sign if it was advertising a company and agent in

Tennessee?

6. “Car Wraps”

7. Web Pages

8. Violations of Regulation Z

9. Others?


Gifts, Prizes, Offers – What Is Allowed and What Isn’t

According to Tenn. Code Ann. 62-13-302(b), “A real estate licensee shall not give or pay cash

rebates, cash gifts or cash prizes in conjunction with any real estate transaction. As part of the

Tennessee Real Estate Commission’s general rulemaking authority the commission may

regulate the practices of real estate licensees in regard to gifts, prizes or rebates that are not

otherwise prohibited by law.” Any refund or rebate of all or part of the commission to a buyer or

seller would fall into this category. However, you can agree to reduce your commission.

You can give non-licensees a gift in order to induce them to do business with you. Please note that the

gift must be as an inducement for THEM (not their friends, family members, etc., which would

make it a referral fee) to do business with you. If you wish to proceed in doing this, you will have to

follow the gifts and prizes rule. This falls under TREC Rule 1260-2-.33. It states:

Pursuant to the statute above, this gift CANNOT take the form of cash. You may give gift cards,

but they cannot be convertible into cash. In addition, you cannot offer to pay closing costs for your

client.

One final word of caution, TREC has rules (TREC Rule 1260-2-.12) which interprets the offers of

gifts or prizes. It states:

(5) Guarantees, Claims and Offers

(a) Unsubstantiated selling claims and misleading statements or inferences are strictly

prohibited.

(b) Any offer, guaranty, warranty or the like, made to induce an individual to enter into an

agency relationship or contract, must be made in writing and must disclose all pertinent details

on the face of such offer or advertisement.

Therefore, if you are advertising your gift, you will need to disclose all the pertinent details in

the ad itself.


Section VII: Property Management

Property Management has now become a new sideline in a lot of firms, especially

for listings that simply haven’t sold in a long time.

A. A TAR Hot Line Inquiry…

QUESTION: I want to start a residential property management division in my company and

I’m trying to find the necessary forms, etc., so that I can begin. Where should I look?

ANSWER: Property management is very different than regular residential sales.

B. Common Issues and Challenges…

1. People not knowing if the Landlord & Tenant Act applies to their area and not

knowing what it is or how to work with it.

2. The first and most important thing for a property manager and owner to have is the

Management Agreement. The agreement creates the general agency relationship between

the owner and the property manager; it defines the duties and responsibilities of each party.

3. Proper handling of security deposits under requirements of the Landlord & Tenant Act.

4. The Property Manager should generate monthly reports showing income and

expenses for each property.


5. Owners who can’t afford or are unwilling to maintain their property.

6. Owners who want to screen tenants with the agent.

7. The worst thing from a legal standpoint is eviction of a tenant.


Section VIII. Commercial Updates and Lease Terminology

T.C.A. § 62-13-501-502 (2013)

A Broker License and Affiliate Broker License as defined in T.C.A. § 62-13-102 allows a licensee to

sell both Residential and Commercial Real Estate. However, the actual practices are very different. A

licensee who practices mostly residential may have the opportunity to assist a buyer or a seller in a

commercial transaction and should become familiar with T.C.A. §62-13-501 – 505. The best option

may be for the Residential Licensee refer the buyer or seller to a Commercial Licensee and receive a

referral fee.

1. What properties are considered Commercial?

2. How is the payment of commercial commissions different than residential commissions?

3. What happens to a Commercial commission, rental or fee that was earned but not paid in full if the

property is sold to a subsequent owner?


a. Definition of 'Net Lease'

A provision that requires the tenant to pay a portion or all of the taxes, fees and maintenance

costs for the property in addition to rent. Net lease requirements are most commonly used

with commercial real estate. There are three primary types of net leases: single (net),

double (net-net) and triple (net-net-net).

Also referred to as a closed-end lease.

Property owners use net leases in order to shift the burden of managing taxes, insurance and

fees to the tenant, and may charge less rent as a result. Though potential tenants may not have to pay

as much rent they are still required to pay taxes and fees regardless of how well their business

performs, making this an added risk.

b. Triple Net Lease

A lease agreement that designates the lessee (the tenant) as being solely responsible for all of the costs

relating to the asset being leased in addition to the rent fee applied under the lease. The structure of

this type of lease requires the lessee to pay for net real estate taxes on the leased asset, net building

insurance and net common area maintenance. The lessee has to pay the net amount of three types of

costs, which is how this term got its name.

This type of lease can also be referred to as a “net-net-net lease” or a hell or high water lease.”

For example, if a property owner leases out a building to a business using a triple net lease, the tenant

will be responsible for paying the building’s property taxes, building insurance and the cost of any

maintenance or repairs the building may require during the term of the lease.

Because the tenant is covering these costs (which would otherwise be the responsibility of the property

owner), the rent charged in the triple net lease is generally lower than the rent charged in a standard

lease agreement.

c. Gross Lease

A type of commercial lease where the landlord pays for the building property taxes, insurance and

maintenance. A gross lease can be modified in a number of ways to best meet the needs of a particular

building’s tenants (for example, a gross lease may or may not require the tenant to pay utility bills).

Modified Gross Lease

A type of real estate rental agreement where the tenant pays base rent at the lease’s inception but in

subsequent years pays the base plus a proportional share of some of the other costs associated with the

property, such as property taxes, utilities, insurance and maintenance. For example, under a modified

gross lease, a property’s tenants might be required to pay their proportional share of an office tower’s

heating expense. A modified gross lease falls somewhere between a gross lease and a net lease.

Which expenses the tenant is responsible for can vary significantly from property to property, so a


prospective tenant must ensure that a modified gross lease clearly defines which expenses are the

tenant’s responsibilities.

d. CAM – Chartered Asset Manager

A professional designation offered by the American Academy of Financial Management (AAFM).

The prerequisites for the Chartered Asset Manager (CAM) program are three years or more of

financial planning experience in asset management and financial planning, and an AAFM-approved

degree or other approved program.

The AAFM is a worldwide institution that offers candidates certification to improve their knowledge

and credentials in financial management.

Definitions: investopedia.com


APPENDICES

TREC Law and Rule Changes Effective 2013 -2014

62-13-112. ERRORS AND OMISSIONS INSURANCE was amended to include the following:

(j) (1) If a licensee fails to obtain, maintain or renew the licensee's errors and omissions insurance

which meets or exceeds the minimum requirements established by the commission and provide proof

of compliance to the commission if such proof is required by subsection (g), then the licensee's license

shall be suspended.

(2) The commission shall send notification of the license suspension by regular mail:

(A) To the licensee at the last known business address and home address of the licensee as

registered with the commission; and

(B) To the licensee's broker at the broker's address as registered with the commission.

(3) While a license is suspended pursuant to this section, the licensee shall not engage in activities

which require a license under this chapter, nor will the license be renewed or a new license issued.

Any license suspended pursuant to this section shall remain suspended until the licensee establishes, to

the satisfaction of the commission, compliance with this section.

(4) The licensee may, upon written notice to the commission, request a formal hearing on any license

suspended pursuant to this section.

(k) (1) A license suspended pursuant to this section shall be reinstated if, within thirty (30) days of

suspension, the licensee provides proof of insurance that complies with the required terms and

conditions of coverage to the commission without the payment of any fee.

(2) A license suspended pursuant to this section shall be reinstated if, on or after thirty-one (31) days

of suspension, the licensee provides proof of insurance that complies with the required terms and

conditions of coverage to the commission and the licensee pays:

(A) For a license suspended more than thirty (30) days but less than one hundred twenty (120)

days, a penalty fee of not more than five hundred dollars ($500); or

(B) For a license suspended for more than one hundred twenty (120) days but less than one (1)

year, a penalty fee of five hundred dollars ($500), plus an additional penalty fee of not more than one

hundred dollars ($100) per month for months six through twelve (6-12).

(l) (1) A license suspended more than one (1) year pursuant to this section shall be automatically

revoked without any further action by the commission.

(2) The commission shall send notification of the license revocation by regular mail:

(A) To the licensee at the last known business address and home address of the licensee as

registered with the commission; and


(B) To the licensee's broker at the broker's address as registered with the commission.

(3) The licensee may, upon written notice to the commission, request a formal hearing on any license

revoked pursuant to this section.

(4) Upon revocation of license, any individual seeking reissuance of such license shall reapply for

licensure and pay the penalty fees in subsection (k); provided, however, that the commission may, in

its discretion:

(A) Waive reexamination or additional education requirements for such an applicant; or

(B) Reinstate a license subject to the applicant's compliance with such reasonable conditions as the

commission may prescribe, including, but not limited to, payment of a penalty fee, in addition to the

penalty fee provided in subdivision (k)(2)(B), of not more than one hundred dollars ($100) per month,

or any portion thereof, from the time of revocation.

(m) Notwithstanding subsections (k) and (l), if the licensee proves to the commission that the license

suspension or revocation pursuant to subsections (k) or (l) was in error and that the licensee obtained,

maintained or renewed the licensee's errors and omissions insurance as required by this section, then

the commission shall immediately reinstate the license to the date of suspension.

July 1, 2013

1260-01-.16 Lapsed Errors and Omissions Insurance

Licensees Who Fail to Maintain Errors & Omissions (E&O) Insurance

1. (a) Penalty fees for Reinstatement of a Suspended License: Any licensee whose license is

suspended for more than thirty (30) days pursuant to T.C.A. § 62-13-112 for failure to maintain

E&O insurance must provide proof of insurance that complies with the required terms and

conditions of coverage to the Commission and must pay the following applicable penalty fee in

order to reinstate the license:

1. For a license suspended due to a lapse in E&O coverage for more than thirty (30) days

but within one hundred twenty (120) days:

1. (i) Two Hundred Dollars ($200.00) if the licensee’s insurance carrier

back- dated the licensee’s E&O insurance policy to indicate continuous

coverage; or

2. (ii) Four Hundred Dollars ($400.00) if the licensee’s insurance carrier

did not back-date the licensee’s E&O insurance policy to indicate continuous

coverage.

1. For a license suspended due to a lapse in E&O coverage for more than one

hundred twenty (120) days but less than six (6) months, a Five Hundred Dollar

($500.00) penalty fee;

2. For a license suspended due to a lapse in E&O coverage for six (6) months up to

one (1) year, a Five Hundred Dollar ($500.00) penalty fee plus a penalty fee of One


Hundred Dollars ($100.00) per month, or portion thereof, for months six (6) through

twelve (12).

2. (b) Conditions for Reissuance of a Revoked License: Upon revocation of a license

pursuant to T.C.A. § 62-13-112 for failure to maintain E&O insurance, any individual seeking

reissuance of such license shall:

1. Reapply for licensure, including payment of all fees for such application;

2. Pay the penalty fees outlined in subparagraph (a) above;

3. Pass all required examinations for licensure, unless the Commission waives

such examinations; and

4. Meet any current education requirements for licensure, unless the Commission

waives such education requirements.

Principal Brokers of Licensees Who Fail to Maintain E&O Insurance:

(a) A principal broker shall ensure, at all times, that all licensees affiliated with that principal broker

shall hold E&O insurance as required by law. A failure to do so shall constitute failing to exercise

adequate supervision over the activities of a licensed affiliated broker.

(b) For any principal broker who has an affiliated licensee whose license is suspended pursuant to

T.C.A. § 62-13-112 for failure to maintain E&O insurance, there shall be no penalty to the principal

broker if either of the following two (2) circumstances occur within thirty (30) days of that affiliated

licensee’s license suspension:

1. The affiliated licensee has provided proof of insurance which complies with the

required terms and conditions of coverage to the Commission; or

2. The principal broker releases that affiliated licensee whose license is suspended

for failure to maintain E&O insurance.

3. (c) After the aforementioned thirty (30) day period, if the affiliated licensee has

neither provided the required proof of insurance nor been released by the principal

broker, the Commission authorizes a formal hearing on the matter of the principal

broker’s failure to exercise adequate supervision over an affiliated licensee who failed

to maintain E&O insurance but also authorizes that a consent order shall be sent to the

principal broker, offering that principal broker the opportunity to settle the matter

informally, thereby making formal hearing proceedings unnecessary, according to the

following schedule:

4. Notwithstanding the provisions of Tenn. Comp. R. & Regs. 1260-02-.32, if the

principal broker’s affiliated licensee reinstates his or her license, or the principal broker

releases the affiliated licensee, more than thirty (30) days after suspension but within

one hundred twenty (120) days after suspension, the consent order shall contain the

following civil penalties:

1. (i) Two Hundred Dollars ($200.00) if the affiliated licensee’s insurance

carrier back-dated the licensee’s E&O insurance policy to indicate continuous

coverage; or

2. (ii) Four Hundred Dollars ($400.00) if the affiliated licensee’s insurance

carrier did not back-date the licensee’s E&O insurance policy to indicate

continuous coverage. If the principal broker’s affiliated licensee reinstates his


or her license, or the principal broker releases the affiliated licensee, more than

one hundred twenty (120) days after suspension, the consent order referenced in

this subparagraph (c) above shall contain a civil penalty of Five Hundred

Dollars ($500.00).

3. Where a principal broker does not accept any authorized consent order

for failure to supervise an affiliated licensee’s E&O insurance, the hearing shall

be held before an administrative law judge sitting alone, pursuant to the

Uniform Administrative Procedures Act, compiled at title 4, chapter 5.

5. Nothing in this rule shall be construed as limiting the Commission’s authority

to:

1. Authorize a consent order in a different amount than listed herein;

2. Seek any other legal discipline – including revocation or suspension of

a license – for a failure to supervise an affiliated licensee’s E&O insurance;

3. Review an initial order under the Uniform Administrative Procedures

Act; or

4. Not seek discipline against a principal broker for failure to supervise an

affiliated broker’s maintenance of E&O insurance if the Commission

determines that such discipline is not appropriate under the facts of that matter.

May, 2014 (Revised)

1260-1-.15 ERRORS AND OMISSIONS INSURANCE COVERAGE It shall be a requirement for an active licensee to carry errors and omissions insurance to cover all

activities contemplated under the Tennessee Real Estate Broker License Act unless the Commission is

unable to obtain coverage pursuant to T.C.A. §62-13-112(g) which would void the requirement of

coverage under the applicable contract period.

(1) A licensee who places his license in an inactive or retired status is not required to carry errors

and omissions insurance until such time as his license is activated.

(2) New licensees, licensees who activate their license from an inactive or retired status, and

licensees who reinstate their license from an expired status at a time other than the beginning of the

licensing period shall pay a prorated premium in accordance with a schedule provided by the insurance

provider.

(3) The Commission shall perform random audits to assure that licensees have met the requirements of

this rule.

(4) Any independently obtained errors and omissions insurance policy shall, at a minimum, be issued

upon the same terms and conditions as the policy obtained by the Tennessee Real Estate Commission

pursuant to T.C.A. § 62-13-112, including, but not limited to, the limits of coverage, the permissible

deductible, the permissible exemptions and the term of the policy.


Errors and Omissions Coverage Implications When Listing or Selling Your Own Property Prepared by Rice Insurance Services Company, LLC

June 19, 2013

Many real estate errors and omissions (E&O) policies exclude coverage for claims involving property

owned by the insured or someone connected to the insured. Historically, the Tennessee Real Estate

Commission’s (TREC's) E & O group policy excluded coverage for claims relating to property in

which any of the following had more than a 25% interest: an insured, insured’s spouse; or any entity,

partnership, or trust in which the insured or insured’s spouse owned or controlled more than a 25%

ownership or financial interest. The reason for this fairly standard exclusion is that the owner of the

property may benefit from any negligence in the property’s listing and sale. For example, a claim was

made under TREC’s group policy against a licensee who sold property she owned. The buyers alleged

misrepresentation of the condition of the fireplace, plumbing, and electrical system. As the seller of

the property, the licensee benefited by receiving a higher price than the buyer believed was justified,

given the true condition of the property.

However, because many licensee list and sell their own homes, the TREC’s group policy now

automatically included an endorsement that makes the policy apply to the sale or listing of the

licensee’s primary residence (a residential property of 2 units or less, which serves as the licensee’s

principal residence), provided the following conditions are met:

1. prior to closing, a written home inspection was ordered and a copy provided to

the buyer;

2. prior to closing, if required by law, a seller disclosure form was signed by the

licensee and the buyer;

3. prior to closing, the licensee’s ownership interest was disclosed and

acknowledged by the buyer;

4. a state or local board approved sales contract was used; and

5. the sale or listing is performed under and subject to the real estate license laws

of Tennessee.

Additionally, licensees who purchase insurance through the TREC’s group policy can also purchase an

optional endorsement that make the policy apply to the sale or listing of residential property (a single

family residence or multi-family residences with 4 units or less) owned by the licensee: the licensee’s

spouse; or a entity, corporation, partnership or trust owned or controlled by the licensee or his/her

spouse. The following conditions must be satisfied for the optional personal interest endorsement to

apply:

1. the residential property was owned for at least one hundred eighty (180) days by

the licensee, the licensee’s spouse, or any entity, corporation, partnership, or trust in

which the licensee or licensee’s spouse has or had a financial or ownership interest;

2. the property was not constructed or developed by the licensee; the licensee’s

spouse; or any entity, corporation, partnership, or trust in which the licensee or

licensee’s spouse has or had a financial or ownership interest;

3. prior to closing, a home warranty was purchased by or for the buyer;

4. prior to closing, if required by law, a seller disclosure form was signed by the

buyer;


5. prior to closing, the ownership or financial interest of the licensee and licensee’s

spouse in the residential property was disclosed to and acknowledged by the buyer;

6. a licensed inspector who was not related to or affiliated with the licensee issued

a written home inspection report that the buyer acknowledged prior to closing;

7. a state or local board approved standard sales contract was used;

8. the sale or listing was performed under and subject to applicable real estate

license law; and

9. prior to the effective date of this endorsement, no insured had a basis to believe

that any negligent act, error or omission, r related negligent act, error, or omission

might reasonably be expected to be the basis of a claim against the insured.

The TREC’s group policy does not provide coverage for property developed or constructed by any of

the following: an insured; insured’s spouse; or any entity, partnership, or trust in which the insured or

insured’s spouse is not impacted by the automatic primary residence endorsement or the optional

residential personal interest endorsement. Licensees who develop or construct (or who have a spouse

or entity that develops or constructs property) may be interested in purchasing insurance that applies to

their development and construction activities, as these are unlikely to be covered under their real estate

licensee E & O insurance.

Residential Personal Interest Coverage Endorsement - $50.00.

Appraisal Endorsement - $180.00.

Property Management Endorsement - $100.00.

62-13-303. Qualifications -- Prerequisites for licensing. Effective on January 1, 2014 is amended

by adding:

(l) (1) The commission shall require all applicants for initial licensure issued under this chapter,

including, but not limited to, a time-share license, on or after January 1, 2014, to submit a complete

and legible set of fingerprints on a form prescribed by the commission or in such electronic format as

the commission may require, to the commission or to the Tennessee Bureau of Investigation for the

purpose of obtaining a criminal background check from the Tennessee Bureau of Investigation and the

Federal Bureau of Investigation.

(2) The commission shall refuse to issue a license to an applicant for initial licensure who does not

comply with subdivision (l)(1); provided, that a licensee who requests to renew an existing license

issued under this chapter, or obtain a broker license after being licensed as an affiliate broker, shall not

be required to submit a set of fingerprints pursuant to this subsection (l).

(3) The commission shall conduct a criminal background check of each applicant described in

subdivision (l)(1) by using information:

(A) Provided by the applicant under this subsection (l); and

(B) Made available to the commission by the Tennessee bureau of investigation, the federal bureau

of investigation and any other criminal justice agency.


(4) The commission may:

(A) Enter into an agreement with the Tennessee bureau of investigation to administer a criminal

background check required under this subsection (l); and

(B) Authorize the Tennessee bureau of investigation to collect from the applicant the costs

incurred by the department in conducting the criminal background check.

1260-01-17 Fingerprinting

1. Any initial applicant who is required to submit a complete and legible set of

fingerprints for the purpose of obtaining a criminal background check pursuant to T.C.A. § 62-

13-303 shall submit said fingerprints in an electronic format.

1. An initial applicant shall be deemed to have supplied the required set of

fingerprints if that applicant causes a private company contracted by the State to

electronically transmit that applicant’s classifiable prints directly to the TBI and FBI to

forward an electronic report based on that applicant’s fingerprints to the Commission.

2. All sets of classifiable fingerprints required by this rule shall be furnished at the

expense of the applicant.

3. The applicant shall make the arrangements for the processing of his or her

fingerprints with the company contracted by the State to provide electronic

fingerprinting services directly and shall be responsible for the payment of any fees

associated with processing of fingerprints to the respective agent authorized by the TBI

and FBI.

4. Applicants shall in all cases be responsible for paying application fees for

licensure as established by the Commission.

5. In addition to new applicants for a broker, affiliate broker, time-share

salesperson, or acquisition agent license, the following are considered “initial

applicants” for purposes of this rule and, therefore, are required to submit fingerprints

in an electronic format for the purpose of obtaining a criminal background check:

1. Any former licensee who must reapply in order to obtain reissuance of

his or her license; and

2. Any person who previously held an affiliate broker license but no longer

holds said license at the time such person applies for a broker license. This does

not include any person who has an affiliate broker license which is inactive or

retired at the time of application for a broker license.

2. In the event that an applicant furnishes unclassifiable fingerprints or fingerprints which

are unclassifiable in nature, the Commission may refuse to issue the requested license.

1. For the purposes of this rule, “unclassifiable prints” means that the electronic

scan or the print of the person’s fingerprints cannot be read, and therefore cannot be

used to identify the person.

2. Should an applicant’s fingerprints be rejected by the TBI or FBI, the applicant

shall pay any fees assessed by the TBI or FBI for resubmission.


Advertising Interpretation- July 2013 the Commissioners interpreted TCA 62-13-310(b)

“Licensees may not post signs on any property advertising themselves as real estate as real estate

agents unless the firm’s name appears thereon in letters the same size or larger than those

spelling out the name of the licensee” as the agent name cannot be any larger than the smallest

font of the company name on any sign which is on property (including billboards). This includes

signs advertising agents, but not specific property.

TREC Discipline December 2013: It is a clear violation to advertise – in print OR online OR in signage – under a “team” name without

also giving your firm name and the firm’s telephone number.

Policy on Online Transfers of Firm Affiliation: 2013 CPS-001

The Commission with the assistance of the Department of Commerce and Insurance has

developed an address to process online transfers: https://apps.tn.gov/ciupdates.

(3) When a licensee terminates his affiliation with a firm, he shall neither take nor use any property

listings secured through the firm, unless specifically authorized by the principal broker.

(4) Upon demand by a licensee for his release from a firm, it shall be promptly granted by the

principal broker and the principal broker shall return the license to the licensee. If the licensee cannot

be located then the principal broker may return the license to the Commission.

(5) If the principal broker is deceased or physically unable to sign the release, or refuses to sign a

release, the licensee requesting termination of affiliation must submit to the Commission a notarized

Affidavit for Release.

(6) If the affiliated licensee is deceased or physically unable to sign a release, or refuses to sign a

release, the principal broker requesting termination of affiliation must submit to the Commission a

completed TREC Form 1.

1260-02-.38 DEATH OR EXTENDED ABSENCE OF PRINCIPAL BROKER (1) The Commission must be notified within ten (10) days of the death, resignation,

termination or incapacity of a principal broker. In the event of an unexplained extended

absence of a principal broker, the Commission must be notified within a reasonable time

period. At the time of notification, a plan must be submitted which addresses the continuation

of operations without a principal broker.

(2) The Commission may, in its discretion, based on the merits and circumstances of each

case, permit a real estate firm to continue operating without a principal broker for a period of

time not to exceed thirty (30) days from the date of death, resignation, termination, or

incapacity of a principal broker, subject to conditions imposed by the Commission.

(3) If, within the aforementioned thirty (30) day period, a real estate firm contacts the

Commission demonstrating compliance with their initial approved plan and circumstances

which require additional time to continue operating without a principal broker, the executive

director shall have the authority to grant a thirty (30) day extension to the period originally

allowed by the Commission. In the event that a thirty (30) day extension is granted, a new

principal broker must be in place no later than the sixty-first (61st) day from the date of death,

resignation, termination, or incapacity of a principal broker.

Effective March 3, 2013.


Policy Statement 2013-CPS-002 REINSTATEMENT OF AN EXPIRED LICENSE The Tennessee Real Estate Commission adopts this policy for the renewal of a license more than sixty

(60) days after expiration date of the license, as authorized by TCA 62-13-319.

Requirements for Reinstatement:

1. Expired License due to Health or Medical Problems If a licensee fails to renew a license because of personal or family health issues, that licensee must

provide a signed doctor’s statement attesting to the nature ad length of the illness. The licensee must

also submit a statement explaining the lapse. This personal statement must be signed by the person

seeking reinstatement. Renewal fees must be paid but late fees will not be assessed.

Information submitted will become public record unless prohibited by law.

2. Expired License due to Failure to Comply with Prerequisite to Licensure: Continuing

Education, Errors and Omissions Insurance, Renewal Fees If a licensee fails to obtain sixteen (16) hours of continuing education within the renewal period, fails

to maintain or provide proof of Errors and Omissions Insurance, or fails to pay a renewal fee before

the expiration of the license must sign a Consent Order Agreeing to comply with the following

requirements:

1. Provide proof of compliance with all prerequisites or conditions, including payment of

the renewal fee;

2. Penalties:

a) For a license expired more than sixty (60) days, but less than one hundred

twenty (120); Pay a penalty fee of fifty dollars ($50.00) per 30-day period, or portion

thereof, from the time the license expires;

b) For a license expired more than one hundred twenty (120) days but less than

one (1) year; Pay an additional penalty fee of one hundred fifty dollars ($150.00) per

30-day period, or portion thereof, beginning on the one hundred twenty-first (121st)

day; and

3. Conditions:

a) Attend one (1) regularly scheduled two-day meeting of the Tennessee Real

Estate Commission within six (6) moths of the date of the Consent Order.

Licensees will receive eight (8) hours of continuing education credit for

attending this meeting; OR

b) In lieu of attending a meeting, pay a civil penalty of seven hundred fifty

dollars ($750.00), to be paid within thirty (30) days of the date of the Consent

Order.

If the licensee seeking reinstatement executes a Consent Order but fails to complete any one of the

requirements, an additional civil penalty of two thousand five hundred dollars ($2,500.00) will be

assessed.

Penalties and fees accrue until all requirements are met. Penalty fees will begin accruing on the first

day following the license expiration date and will be issued upon satisfaction of all requirements.

3. License Expired More than One (1) Year


A licensee seeking reinstatement of a license expired more than one (1) year must reapply for

licensure, meet current education requirements and pass all required examinations.

Effective April 4, 2013.

Commission Policy Statement Number 2012-CPS-004 The Tennessee Real Estate Commission’s position on interest-bearing escrow accounts is that they are

neither required nor prohibited. If used, however, the following guidelines shall be observed by all

licensees except vacation lodging services:

1. The licensee shall disclose to the payor that his deposit will be placed in an interest

bearing account;

2. As a depositor of the funds, the licensee does not own the funds or interest earned

thereon until properly disbursed to the licensee;

3. The licensee and payor shall execute a written agreement indicating the manner of

disposition of interest earned; and

4. The licensee shall keep a detailed and accurate accounting of the precise sum of

the interest earned for each separate deposit.

COMMISSION POLICY STATEMENT NUMBER 2012-CPS-001 EFFECTIVE DATE

MARCH 7, 2012

POLICY ON INTERNET ADVERTISING Application of Tennessee Real Estate Commission Rule 1260-02.12 (4)(c), which requires that listing

information be kept current and accurate, applies to “First Generation” advertising as it is placed by

the licensee and does not refer to such advertising that may be syndicated advertising of the original,

which is done by third parties outside of the licensee’s control and ability to monitor.


21 Ways To Lose Your License

62-13-310. Affiliate broker relationship to broker.

(a) Whenever the contractual relationship between a broker and affiliate broker is

terminated, the present broker shall immediately sign and date the change of affiliation form

prescribed by the commission. The affiliate broker may act under a contract with another

broker upon completion and transmittal to the commission of such form, accompanied by the

fee established pursuant to § 62-13-308. Such affiliate broker shall assure that the completed

form and fee are promptly transmitted, and that the affiliate broker’s license is prominently

displayed in the new broker’s principal place of business.

(b) Licensees may not post signs on any property advertising themselves as real estate

agents unless the firm’s name appears thereon in letters the same size or larger than those

spelling out the name of the licensee.

(c) Any unlawful act or violation of any of the provisions of this chapter by any affiliate

broker may not be cause for the suspension or revocation of the license of the broker with

whom the affiliate broker is affiliated. [Acts 1973, ch. 181, §§ 12(c), (e), 16(b); 1981, ch. 473,

§§ 10, 11; T.C.A., § 62-1324; Acts 1982, ch. 864, § 8; 1990, ch. 946, § 5.]

62-13-311. Revocation of license by court — Reinstatement.

Whenever any person, partnership, association, company, firm or corporation claiming to have

been injured or damaged by the gross negligence, incompetency, fraud, dishonesty or

misconduct on the part of any licensee following the calling or engaging in the business herein

described, files suit upon such claim against such licensee in any court of record in this state

and recovers judgment thereon, such court may as part of its judgment or decree in such cases,

if it deem it a proper case in which so to do, revoke the certificate of license granted hereunder,

and such certificate of license shall not be reissued to such licensee except upon the consenting

vote of six (6) of the members of the commission in favor of such reissuance. [Acts 1973, ch.

181, § 15; T.C.A., § 62-1325; Acts 1982, ch. 864, § 9.]

62-13-312. Discipline — Refusal, revocation or suspension of license —

Downgrading of licenses — Automatic revocation.

(a) The commission may, upon its own motion, and shall, upon the verified complaint in

writing of any person setting forth a cause of action under this section, ascertain the facts and,

if warranted, hold a hearing for reprimand, or for the suspension or revocation of a license.

(b) The commission shall have power to refuse a license for cause or to suspend or revoke a

license where it has been obtained by false representation, or by fraudulent act or conduct, or

where a licensee, in performing or attempting to perform any of the acts mentioned herein, is

found guilty of:

(1) Making any substantial and willful misrepresentation;

(2) Making any promise of a character likely to influence, persuade or

induce any person to enter into any contract or agreement when the

licensee could not or did not intend to keep such promise;


(3) Pursuing a continued and flagrant course of misrepresentation or

making of false promises through affiliate brokers, other persons, or any

medium of advertising, or otherwise;

(4) Misleading or untruthful advertising, including use of the term

‘‘Realtor’’ by a person not authorized to do so, or using any other trade name

or insignia or membership in any real estate association or organization,

of which the licensee is not a member;

(5) Failing, within a reasonable time, to account for or to remit any

moneys coming into the licensee’s possession which belong to others;

(6) Failing to preserve for three (3) years following its consummation

records relating to any real estate transaction;

(7) Acting for more than one (1) party in a transaction without the

knowledge and consent in writing of all parties for whom the licensee acts;

(8) Failing to furnish a copy of any listing, sale, lease, or other contract

relevant to a real estate transaction to all signatories thereof at the time of

execution;

(9) Using or promoting the use of any real estate listing agreement form,

real estate sales contract form, or offer to purchase real estate form

which fails to specify a definite termination date;

(10) Inducing any party to a contract, sale or lease to break such contract for

the purpose of substitution in lieu thereof a new contract, where such

substitution is malicious or is motivated by the personal gain of the

licensee;

(11) Accepting a commission or any valuable consideration by an affiliate

broker for the performance of any acts specified in this chapter, from any

person, except the licensed real estate broker with whom the licensee is

affiliated;

(12) Being convicted in a court of competent jurisdiction of this or any

other state, or federal court, of forgery, embezzlement, obtaining

money under false pretenses, bribery, larceny, extortion, conspiracy to

defraud, or any crime or any similar offense or offenses, or pleading

guilty or nolo contendere to any such offense or offenses;

(13) Violating any federal, state, or municipal law prohibiting

discrimination in the sale or rental of real estate because of race, color,

religion, sex or national origin;

(14) Violating any provision of this chapter, any rule duly promulgated and

adopted thereunder, or the terms of any lawful order entered by the

commission;

(15) In the case of a licensee, failing to exercise adequate supervision over

the activities of any licensed affiliate brokers within the scope of this

chapter;


(16) In the case of a licensee, failing within a reasonable time to complete

such administrative measures as may be required by the commission upon

the transfer or termination of any affiliate broker employed by the broker;

(17) Paying or accepting, giving or charging any undisclosed commission,

rebate, compensation or profit or expenditures for a principal, or in

violation of this chapter;

(18) Failing to disclose to an owner the licensee’s intention or true position

if the licensee, directly or indirectly through a third party, purchases for itself

or acquires or intends to acquire any interest in or any option to purchase

property which has been listed with the licensee’s office to sell or lease;

(19) Engaging in the unauthorized practice of law;

(20) Any conduct, whether of the same or a different character from that

hereinbefore specified, which constitutes improper, fraudulent or

dishonest dealing; or

(21) Violating any provision of the Tennessee Time-Share Act, compiled in

title 66, chapter 32, part 1, or any rule duly promulgated thereunder.

(c) The commission may, in addition to or in lieu of any other lawful disciplinary action against a

broker pursuant to this section, order that such broker be downgraded to “affiliate broker” status.

(d) The director of the division of regulatory boards or the director’s duly authorized

representatives may, at all reasonable hours, examine and copy such books, accounts, documents, or

records as are relevant to a determination of whether a licensee has properly maintained and disbursed

funds from escrow or trustee accounts required hereunder. In case of refusal to permit the access

accorded by this subsection, the director or the director’s authorized representatives may pursue the

remedies provided by § 4-5- 311(b) for disobedience to any lawful agency requirement for information.

Such refusal shall also constitute grounds for the commission to suspend or revoke a license.

(e) The sole purpose of this section is to provide guidelines for disciplinary actions taken by the

Tennessee real estate commission against licensees found guilty of the violations listed herein.

(f) Whenever any licensee pleads guilty or is convicted of any offense enumerated in this chapter,

the licensee must within sixty (60) days notify the commission of that conviction and provide the

commission with certified copies of the conviction. The licensee’s license shall automatically be

revoked sixty (60) days after the licensee’s conviction unless the licensee makes a written request to

the commission for a hearing during that sixty-day period. Following any such hearing held pursuant

to this section, the commission in its discretion may impose upon that licensee any sanction permitted

by this chapter.

(g) Whenever the commission revokes or suspends the license of a salesperson, an affiliate broker,

or a broker, then any school or instructor approval which the licensee holds shall also be revoked.

Whenever a licensee surrenders a real estate license, any school or instructor approval which such

licensee holds shall also be revoked. [Acts 1973, ch. 181,

§ 14; 1981, ch. 372, § 33; 1981, ch. 473, § 12; T.C.A., § 62-1326; Acts 1984, ch. 810, §

4; 1986, ch. 893, § 1; 1988, ch. 919, §§ 7-9; 1990, ch. 946, §§ 6, 7; 1994, ch. 595, § 1.]


RESIDENTIAL FORMS

100 Series

New Number

Form Name Old Number

RF 101 Exclusive Right to Sell Listing Agreement (Designated Agency) F87 RF 102 Exclusive Right to Sell Listing Agreement (Seller Agency) F88 RF 131 Lot/Land Exclusive Right to Sell Listing Agreement (Designated

Agency) F50

RF 132 Lot/Land Exclusive Right to Sell Listing Agreement (Seller Agency)

F95

RF 141 Exclusive Buyer Representation Agreement (Designated Agency) F3 RF 142 Exclusive Buyer Representation Agreement (Buyer Agency) F94 RF 143 Non-Exclusive Buyer Representation Agreement (Designated

Agency) F2

RF 144 Non-Exclusive Buyer Representation Agreement (Buyer Agency) F96 RF 151 Listing/Agency Mutual Release Agreement F82 RF 161 Agreement to Show Property F22

200 Series

New Number


RF 201 Tennessee Residential Property Condition Disclosure F16 RF 202 Tennessee Residential Property Condition Disclosure Update F16a RF 203 Tennessee Residential Property Condition Exemption

Notification F42

RF 204 Tennessee Residential Property Condition Disclaimer Statement F43 RF 205 Additional Required Residential Disclosures F85 RF 206 Lot/Land Seller's Property Disclosure F80 RF 207 Impact Fees or Adequate Facilities Taxes Disclosure F83 RF 208 Subsurface Sewage Disposal System Permit Disclosure F84 RF 209 Lead Based Paint Disclosure for Purchase F15 RF 210 Lead Based Paint Disclosure for Rental Property F86 RF 211 Green Features System Checklist F97

300 Series

New Number


RF 301 Working with a Real Estate Professional F1(b) RF 302 Confirmation of Agency Status F1(c) RF 303 Notification of Change in Agency Status F1(a) RF 304 Disclaimer Notice F14 RF 305 Personal Interest Disclosure and Consent F17 RF 307 Referral for Service Disclosure F46


400 Series

New Number


RF 401 Purchase and Sale Agreement F9 RF 403 New Construction Purchase and Sale Agreement F60 RF 404 Lot/Land Purchase and Sale Agreement F10 RF 421 Residential Lease Agreement for Single Family Dwelling F58 RF 461 Real Estate Offer Confidentiality Agreement F98 RF 481 Earnest Money Disbursement and Release of Purchase and Sale

Agreement F30

RF 482 Escrow Agreement F20 RF 483 Option Agreement F27

500 Series

New Number


RF 501 Condominium Legal Exhibit F19 RF 505 Pre-Construction Specification Exhibit F62 RF 506 Legal Description Exhibit to Lot/Land Purchase and Sale

Agreement NEW

600 Series

New Number


RF 601 Amendment to the Listing Agreement F81 RF 602 Short Sale Amendment to the Listing Agreement F49(b) RF 621 Addendum F45 RF 622 Back-Up Agreement Contingency Addendum F13 RF 623 Seller's Right to Continue to Market Property Addendum F34(a) RF 624 Seller's Notice to Buyer of Receipt of Acceptable Offer F34(b) RF 625 FHA / VA Addendum F47 RF 626 Temporary Occupancy Agreement for Buyer Prior to Closing

Addendum/Amendment F31

RF 627 Temporary Occupancy Agreement for Seller After Closing Addendum/Amendment

F32

RF 628 Assumption Agreement Addendum F18 RF 629 Resolution of Disputes by Mediation Addendum/Amendment F24 RF 630 New Construction Allowance Addendum F61 RF 631 Tenant Information for Residential Lease Agreement Addendum F59 RF 641 Amendment to Buyer’s Representation Agreement NEW RF 651 Counter Offer F8 RF 652 Counter Offer to Residential Lease Agreement NEW RF 653 Amendment to Purchase and Sale Agreement F6 RF 654 Repair/Replacement Proposal F4


RF 655 Repair/Replacement Amendment F5 RF 656 Notification F26 RF 657 Closing Date/Possession Date Amendment F7 RF 658 Buyer Authorization to Make Repairs and Improvements prior to

Closing Amendment F29

RF 659 Short Sale Amendment to Purchase and Sale Amendment F49(c) RF 660 Buyer's Final Inspection Amendment F41 RF 661 New Construction Change Order Amendment F12 RF 662 New Construction Walk Through List F63 RF 663 Multiple Offer Disclosure Notification F37 RF 664 Amendment to Lease Agreement NEW

700 Series

New Number


RF 701 Referral Agreement F28 RF 702 Compensation Agreement between Listing and Selling Broker F56 RF 706 Interpleader F21 RF 707 Special Stipulations F33 RF 708 Timeline Compliance Checklist for Purchase and Sale Agreement F64 RF 709 Request for Condominium Association Information F23 RF 710 Request for Information from the Tennessee Department of

Environment and Conservation Division of Ground Water Protection

F93

RF 711 Vendor List F36 RF 712 Get a Home Inspection and Property Survey F48 RF 713 Disclosure of Short Sale Information to Buyers and Sellers F49(a) RF 714 Water Supply and Waste Disposal Notification F55 RF 715 Additional Signature Blocks for Residential Documents NEW RF 716 Additional Signature Blocks for Residential Purchase and Sale

Agreement and Counter Offers NEW

COMMERCIAL FORMS

There are quite a few new commercial forms coming in 2015! For those who practice both

residential and commercial real estate, you will recognize many of the new forms which were

previously exclusively for residential transactions. These forms have now been modified so that they

can be used in commercial transactions.

100 Series

New Number


CF 101 Commercial Exclusive Seller Listing Agreement F66 CF 103 Commercial Exclusive Agency Listing Agreement F91 CF 104 Commercial Exclusive Open Listing Agreement F92


CF 121 Commercial Exclusive Leasing Agreement F67 CF 124 Commercial Open Listing Agreement (for Lease) F68 CF 151 Commercial Listing Mutual Release NEW CF 161 Agreement to Show Commercial Property NEW

200 Series

New Number


CF 201 Commercial/Industrial Real Property Disclosure F51 CF 209 Commercial Lead Based Paint Disclosure (for Purchase) NEW

300 Series

New Number


CF 305 Commercial Personal Interest Disclosure NEW CF 307 Commercial Referral for Service Disclosure NEW

400 Series

New Number


CF 401 Commercial Purchase and Sale Agreement F65 CF 402 Commercial Letter of Intent (for Purchase of Property) F78 CF 421 Commercial Lease Agreement (Single Tenant) F69 CF 422 Commercial Lease Agreement (Multi-Tenant) F70 CF 423 Commercial Letter of Intent (for Lease) F79 CF 441 Commercial Sublease Agreement F72 CF 442 Commercial Sublease Consent Agreement F73 CF 443 Commercial Lease Guaranty F74 CF 444 Commercial Lease Termination F75 CF 461 Commercial Mutual Non-disclosure and Confidentiality

Agreement F90

CF 481 Commercial Earnest Money Disbursement and Release of Commercial Purchase and Sale Agreement

NEW

CF 482 Commercial Escrow Agreement NEW CF 483 Commercial Option Agreement NEW

500 Series

New Number


CF 501 Exhibit A to Commercial Purchase and Sale Agreement (Legal Description)

F44

CF 502 Exhibit B to Commercial Purchase and Sale Agreement (Due Diligence Documents)

F52


CF 503 Exhibit C to Commercial Purchase and Sale Agreement (Additions to Seller's Closing Documents)

F53

CF 504 Exhibit D to Commercial Purchase and Sale Agreement (Seller's Warranties and Representations)

F54

CF 507 Exhibit A to Commercial Listing Agreement NEW

600 Series

CF 601 Amendment to Commercial Listing Agreement NEW CF 603 Amendment to Commercial Lease Agreement NEW CF 621 Addendum to Commercial Purchase and Sale Agreement NEW CF 623 Commercial Right to Continue to Market Property Addendum NEW CF 624 Commercial Seller's Notice to Buyer of Receipt of Acceptable

Offer NEW

CF 632 Commercial Lease Addendum NEW CF 651 Counter Offer to Commercial Purchase and Sale Agreement NEW CF 652 Counter Offer to Commercial Lease Agreement NEW CF 653 Amendment to Commercial Purchase and Sale Agreement NEW CF 657 Commercial Closing Date / Possession Date Amendment NEW CF 664 Amendment to Commercial Lease Agreement F71

700 Series

CF 701 Commercial Referral Agreement F57 CF 702 Commercial Compensation Agreement between Listing and

Selling Broker NEW

CF 703 Commercial Lease Commission Assumption Agreement F76 CF 704 Notice of Agreement to Pay Leasing Commission F11 CF 705 Release of Notice of Agreement to Pay Leasing Commission on

Commercial Property F77

CF 706 Commercial Interpleader NEW CF 707 Commercial Special Stipulations Language NEW CF 711 Commercial Vendor List NEW CF 715 Additional Signature Blocks for Commercial Documents NEW CF 716 Additional Signature Blocks for Commercial Purchase and Sale

Agreement and Counter Offers NEW