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TENNESSEE REAL ESTATE PRACTICE SOLUTION
2026 SOLVED ITEMS CONFIRMED A+
◉ Adverse/negative Facts (must be disclosed to all parties). Answer: a. Anything that has a negative effect on the value of the property b. Anything that has a significant effect on the structural integrity of improvements c. Anything that has a negative affect on the health and safety of the occupants ◉ *Special Agent. Answer: The broker-because of limited authority granted ◉ In TN the relationship between client and agent is governed by.... Answer: Statutory law and written agreement ◉ *How are commission rates established?. Answer: Determined by the 2 parties ◉ *When has a broker earned commission?. Answer: When the agent has found a ready, willing, and able buyer acceptable to the seller
◉ When is commission collected?. Answer: When there is a closing ◉ A broker may share commission with.... Answer: 1. The affiliate broker (me)
- Another broker (even in another state only if the other broker doesn't conduct any negotiations in in TN) ◉ An Affiliate broker may receive compensation from?. Answer: The broker from the firm where they are affiliated ◉ *Anti trust laws. Answer: a. allocation of markets-geographically dividing the area by segment b. Price fixing-all to conspire to charge a minimum rate c. Boycotts- conspiring to put one of your competitors out of business ◉ *What is a listing contract?. Answer: - An employment contract between and seller and broker
- The listing creates a fiduciary relationship ◉ The listing is owned by?. Answer: The broker ◉ *Listings must be.... Answer: Written, signed by parties, have an expiration date, and a definite commission amnt
◉ Expiration of term. Answer: The specified time for the listing to be in effect has elapsed ◉ Cancellation by client. Answer: client has the right to withdraw/cancel the listing under certain circumstances ◉ Renunciation by agent. Answer: The listing can be cxld by agent if necessary (If client asks agent to do something illegal) ◉ Abandonment by agent. Answer: If firm went out of business and could no longer provide services contracted ◉ Death of either party. Answer: most contracts live on, but listings do not ◉ *Condemnation (PROCESS). Answer: The PROCESS used by govt to take private property and use it for public use ◉ *Eminent Domain (RIGHT). Answer: The right of the govt to take private property and use it for public use ◉ Importance of listings to the broker?. Answer: They are the lifeblood of the firm
◉ *What is property management?. Answer: The business of managing investment properties that others own ◉ *Primary objectives of property manager. Answer: 1. maximize owners profit
- maintain the property ◉ *How is the relationship between owners and property managers created?. Answer: Written contract called management agreement ◉ *The property manager is usually a. Answer: general agent ◉ Is property manager required to be licensed?. Answer: Yes if they perform rental or leasing functions ◉ **How are property managers usually paid?. Answer: A percentage of gross rents COLLECTED ◉ *Definition of a contract?. Answer: A legally enforceable promise that must be performed if breach of contract, law is the remedy ◉ ***Statute of Frauds. Answer: Part of state law that requires all R.E. contracts instruments such as deeds and certain leases to be in writing and signed to be legally enforceable. ***only requires lease
◉ Types of contracts- IMPLIED. Answer: A contract under which the agreement of the contract is demonstrated by their acts and conduct ◉ *Types of contracts- EXECUTED (best outcome). Answer: All parties have fulfilled their promise- contract is closed ◉ *Types of contracts- EXECUTORY. Answer: Something that remains to be done-contract is not closed ◉ Types of contract- VOID. Answer: no legal force or effect because it does not meet the essential elements of a contract ◉ Types of contract- VOIDABLE. Answer: Seems to be valid on the surface by may be rejected or disaffirmed by one or both (incompetent) of the parties ◉ *Types of contracts- UNENFORCEABLE. Answer: has all elements of a valid contract yet neither party can sue the other to force to force performance of it ◉ Types of contracts- BILATERAL. Answer: All parties to the instrument are legally bound to act as prescribed (a R.E. sales contract and listing agreement are examples of bilateral contract- there is no right rescission-once you sign, your obligated
◉ Types of contracts-UNILATERAL. Answer: only 1 party is bound to act (an option is an example of unilateral) ◉ Terminating contracts- PERFORMANCE. Answer: The way we want all contracts to end. There is a closing and it was executed completely ◉ Terminating contracts- RELEASE. Answer: The parties agree to go back where they were before the contract was entered into ◉ Terminating contracts- NOVATION. Answer: The substitution of a new contract for an existing agreement with the intent of extinguishing and the old contract ◉ Terminating contracts- BANKRUPTCY. Answer: Will terminate contract b/c that property is no longer in control of the seller ◉ the blueprint (contract template). Answer: We cannot draft contracts just fill in the blanks and mark the boxes ◉ *contracts must be written and signed by both parties b/c of the?. Answer: Statute of Frauds
- Relationship of the parties
- intention of the parties
- Adaptation of the article to the real property ◉ Possession. Answer: Specify date and time when property will change possession ◉ Prorating of taxes. Answer: Seller pays for the day of closing and final answers are rounded to the nearest dollar ◉ price. Answer: Must be stated in contract ◉ Closing date. Answer: must give a specific period of time on or before "date certain" ◉ Informal description. Answer: Street address ◉ Formal description. Answer: Completely identify the property enough for an independent surveyor to locate and find it ◉ *Lot and block # (AKA plat description). Answer: must include lot #, block #, and name of subdivision
◉ Metes and bounds. Answer: describes land by compass directions and distances starting and ending at the point called beginning ◉ Monuments (2 types). Answer: Manmade and natural ◉ *Govt rectangular survey description. Answer: Not used in TN.(established in 1785 by federal govt) provided a method for surveying and describing land by reference to principal, meridians, and baselines ◉ *Earnest money. Answer: Not essential element of contract, but you would like to get as much as possible. held in broker escrow account ◉ What is commingling?. Answer: Prohibited. Any money held by broker that belongs to others cannot be mixed or deposited into an acct. with the brokers money ◉ Disposition of earnest money by licensee. Answer: Dispersed at closing and is generally applied to the purchase price ◉ *Responsibility for risk. Answer: Uniform vendor and purchaser risk act. Will state who is responsible for property while under contract.
◉ personal property is also known as. Answer: Chattel and has mobility ◉ Annual plants/crops also known as. Answer: emblements ◉ Real property (lack of mobility). Answer: Cannot be readily moved ◉ Bill of Sale. Answer: Document used to transfer (convey)personal property ◉ Deed. Answer: Document used to transfer (convey) real property ◉ Perennial plants are. Answer: real property ◉ Converting real property to personal property is referred to as. Answer: Severance ◉ Freehold estates. Answer: Rights for a lifetime or more ◉ *2 types of inheritable freehold estates. Answer: 1. fee simple (indefeasible)- the best of all estates- contains the maximum possible rights of ownership, continues forever
- Determinable estate/defeasible (strings attached)- an estate that is subject to a special limitation if the condition or limitation is violated the original grantor automatically re-acquires full ownership of property ◉ Life estates (created by the acts of the parties). Answer: Grandad and aunt bea example ◉ *life tenant. Answer: A person in possession of a life estate ◉ *remainder man. Answer: The person who receives title to the property after the life tenant dies, the remainder man gets a fee simple estate ◉ *Reversion. Answer: The process that takes place when property reverts back to the original grantor or his heirs upon the death of the life tenant ◉ Rights and obligations of life tenant. Answer: a. Sell or lease (for the duration of their life) b. receive rents/profits c. Make reasonable repairs d. pay taxes e. may mortgage interest held
◉ What do condominiums and cooperatives have in common. Answer: Common maintenance fees ◉ Methods of acquiring ownership of property-INVOLUNTARY ALIENATION. Answer: without owners permission. foreclosure, condemnation, tax sale ◉ Methods of acquiring ownership of property-VOLUNTARY ALIENATION (including dedication/donate). Answer: with owners consent. Sell it, will it, gift it ◉ *Methods of acquiring ownership of property-ADVERSE POSSESSION. Answer: The open, visible, hostile, and notorious possession of someone else's property (must inspect your property) ◉ *Methods of acquiring ownership of property-BY WILL. Answer: testate=dies with a will when you die you appoint an executor (male) or executrix (female) Bequest- when you leave personal property in a will Devise- when you leave real property in a will ◉ *Methods of acquiring ownership of property-BY DESCENT. Answer: intestate=dies without will
the court will appoint an administrator (the legal process the court uses to determine who will inherit the property of the deceased ◉ *Methods of acquiring ownership of property-BY ACCRETION. Answer: The formation of land by natural forces ◉ Taxation-AD VALOREM vs. SPECIAL ASSESSMENT. Answer: 1.ad valorem=based on value
- Special assessment=taxes based on improvements provided by govt (sewers/sidewalks/streets) ◉ *Assessment role. Answer: A list of those property owners that benefit from and pay for the special assemssment ◉ Assessed Value (what we pay taxes on) formula. Answer: Official appraisal X assessment rate ◉ Annual taxes formula. Answer: Assessed value X tax rate ◉ Exemptions from property taxation. Answer: Churches, schools, govt bldgs., roads, parks. only privately owned properties pay taxes ◉ 1 mill=. Answer:.
◉ Ways to acquire easements-NECESSITY. Answer: Easement with necessity takes court action ◉ Ways to acquire easements-PRESCRIPTION. Answer: created when someone uses someone else's property w/o permission for the statutory period of time (20 years in TN) ◉ Types of easements-Easements Appurtenant. Answer: The run with the property ◉ Types of easements-Dominant Estate. Answer: The dominant estate using the servient estate ◉ Types of easements-Servient Estate. Answer: The servient estate serves the dominant estate ◉ Easements in gross. Answer: has no dominant estate ◉ Commercial easement in gross. Answer: utility easements (water, sewer) ◉ Personal easements in gross. Answer: gives an individual the right to access certain property in their lifetime
◉ *restrictive covenants. Answer: rules and regulations of a subdivision ◉ *deed restrictions. Answer: can be placed on any property outside of a subdivision ◉ General judgments. Answer: if your sued and lose and there is a monetary judgment, it becomes a general judgment against you ◉ *Specific judgments (mechanics lien). Answer: a statutory lien created in favor of contractors, laborers, and material suppliers who have performed work or furnished materials in the erection or repair of a building ◉ *tax liens. Answer: a charge against property created by operation of law-tax liens and assessments take priority over all other liens ◉ *Encroachments. Answer: a building or some portion of it such as a wall or fence that extends beyond the land of the owner and illegally intrudes onto some land of an adjoining owner or street alley ◉ Encumbrance. Answer: anything that limits the owners use of the property (easements, liens, restrictive covenants)
