TN Real Estate Exam Flashcards

Q: How many questions are on the Tennessee affiliate broker exam, and what score do I need?

PSI's Tennessee exam has 120 total questions: 80 national and 40 Tennessee-specific, delivered as two separately timed, separately scored sections. You must score at least 70% on EACH portion - 56 of 80 national questions and 28 of 40 state questions - to pass; a strong score on one section cannot offset a weak score on the other.

Q: What are Tennessee's pre-licensing education requirements?

Affiliate broker candidates need 90 total classroom hours: a 60-hour 'Basic Principles of Real Estate' course completed before the exam, plus a 30-hour 'Course for New Affiliates' completed after passing but before TREC issues the license. Both must come from a TREC-approved provider.

Q: What happens if I fail one or both portions of the Tennessee exam?

You can reschedule as soon as the next day after a first failure. After a second failed attempt on the same portion, PSI requires a 30-day wait before you can retake it again, and that 30-day wait applies to each subsequent attempt. A passing score on one portion stays valid for 2 retakes of the failed portion or 1 year, whichever comes first, so you don't have to repeat a section you already passed.

Q: How much does it cost to get a Tennessee real estate license?

The PSI exam itself is $63 ($37 national + $26 state). Add roughly $111 for the TREC license application, an IdentoGO fingerprint/background check fee (about $35), and pre-license course tuition, and total upfront cost typically runs $300-$700+ depending on your education provider.

Q: Is the Tennessee real estate exam pass rate published?

TREC and PSI do not publish an official first-time pass rate for the Tennessee affiliate broker exam. Third-party test-prep providers cite unofficial estimates in the 40-60% range for the national portion and higher for the state portion, but treat these as directional, not authoritative, since they aren't sourced directly from TREC or PSI.

Question 1

Fee Simple Absolute

Accepted Answer

The most complete form of real property ownership - indefinite duration, freely transferable and inheritable, with no conditions attached. Contrast with a fee simple defeasible, which can automatically terminate if a stated condition is violated.

Question 2

Life Estate

Accepted Answer

Gives someone the right to possess and use property only for the duration of a measuring life (usually their own). At that person's death, ownership either passes to a named remainderman or reverts back to the original grantor (a reversion) - the deed language determines which.

Question 3

Joint Tenancy vs. Tenancy in Common

Accepted Answer

Joint tenancy requires equal shares and the four unities (time, title, interest, possession) and carries the right of survivorship - a deceased owner's share passes automatically to the surviving co-owners, bypassing probate. Tenancy in common allows unequal shares acquired at different times, and each owner's interest passes to their heirs, not the co-owners.

Question 4

The Government's Four Powers Over Private Land (PETE)

Accepted Answer

Police power lets government regulate land use for health/safety (zoning, building codes) without compensation. Eminent domain lets government force a sale for public use, but requires just compensation. Taxation creates a property tax lien if unpaid. Escheat returns property to the state when an owner dies with no will and no heirs.

Question 5

Metes-and-Bounds vs. Lot-and-Block Legal Descriptions

Accepted Answer

Metes-and-bounds traces a property's boundary using directions, distances, and monuments starting and ending at a defined point of beginning - common for irregular parcels. Lot-and-block simply references a lot number on a recorded subdivision plat map, which is faster to read but depends on that plat being on file.

Question 6

The Five Elements of a Valid Real Estate Contract

Accepted Answer

Offer and acceptance (mutual assent), consideration (something of value exchanged), legal capacity of the parties, a legal purpose, and - for real estate specifically - a written form. Missing any element makes the agreement void or unenforceable, not just voidable.

Question 7

Statute of Frauds

Accepted Answer

A legal requirement that contracts for the sale or long-term lease of real property must be in writing and signed to be enforceable in court. An oral agreement to sell a house, no matter how sincere, generally cannot be enforced.

Question 8

Bilateral vs. Unilateral Contract

Accepted Answer

A bilateral contract is a mutual exchange of promises - both parties are obligated the moment they agree (a typical purchase agreement). A unilateral contract is one party's promise in exchange for the other party's performance, not a promise - an open listing is unilateral because the seller only pays if a specific act (finding a buyer) actually happens.

Question 9

Void vs. Voidable Contract

Accepted Answer

A void contract has no legal effect from the start, as if it never existed (e.g., a contract for an illegal purpose). A voidable contract is valid and enforceable unless the party with the legal right to cancel it - often due to fraud, misrepresentation, or lack of capacity - chooses to void it.

Question 10

Option Contract

Accepted Answer

Gives a buyer the right, but not the obligation, to purchase a property at a set price within a set time window, in exchange for option money paid to the seller. Unlike a standard purchase contract, only the seller is bound to perform if the buyer exercises the option.

Question 11

Seller's Agent vs. Buyer's Agent

Accepted Answer

A seller's (listing) agent owes fiduciary duties exclusively to the seller and must negotiate the best price/terms for them. A buyer's agent owes those same fiduciary duties exclusively to the buyer. Neither may favor the other side's interests once representation is established.

Question 12

Dual Agency vs. Designated Agency

Accepted Answer

Dual agency is ONE licensee representing both the buyer and seller in the same transaction - it requires informed written consent because full fiduciary duty to both sides is impossible. Designated agency assigns two different licensees from the same firm, one to each party, so each client still gets undivided representation.

Question 13

Subagency

Accepted Answer

A subagent works for the listing broker (often through cooperating brokerages via MLS) but owes fiduciary duties to the SELLER, not to the buyer they're physically working with - a frequent exam trap since subagents are commonly mistaken for buyer's agents.

Question 14

Fiduciary Duties (OLDCAR)

Accepted Answer

Obedience (follow lawful client instructions), Loyalty (put the client's interests first), Disclosure (reveal material facts to the client), Confidentiality, Accounting (properly handle client funds and property), and Reasonable care/skill. These duties are owed only to a client, not to an unrepresented customer.

Question 15

Client vs. Customer

Accepted Answer

A client has signed an agency agreement and is owed full fiduciary duties (loyalty, confidentiality, disclosure). A customer has no agency agreement and is owed only honesty and fair dealing - a licensee still may not lie to or defraud a customer, but does not advocate for their interests.

Question 16

How Agency Relationships Terminate

Accepted Answer

Agency ends through: completion of the deal, expiration of the listing term, mutual agreement to cancel, revocation by the principal, renunciation by the agent, destruction of the property, or death/incapacity of either party. Terminating early without cause can expose a party to breach-of-contract liability.

Question 17

The Three Approaches to Value

Accepted Answer

Sales comparison approach adjusts recent comparable sales for differences - the primary method for residential appraisals. Cost approach estimates land value plus the cost to rebuild the structure minus depreciation - best for new or unique properties. Income approach capitalizes net operating income - used mainly for income-producing property.

Question 18

CMA vs. Appraisal

Accepted Answer

A Comparative Market Analysis (CMA) is an agent-prepared price estimate used for marketing and pricing strategy - it is NOT a legal opinion of value. An appraisal must be performed by a licensed/certified appraiser and is required by lenders before funding a mortgage.

Question 19

Choosing a Loan Type: Conventional vs. FHA vs. VA vs. USDA

Accepted Answer

Conventional loans aren't government-backed and typically need stronger credit/higher down payments. FHA loans are government-insured with low down payments but require mortgage insurance. VA loans serve eligible veterans/service members with no down payment required. USDA loans target low-income buyers in eligible rural areas, also with no down payment.

Question 20

Adjustable-Rate Mortgage (ARM)

Accepted Answer

An ARM's interest rate is fixed for an initial period, then adjusts periodically based on a market index plus a margin - payments can rise (or fall) after the fixed period ends. Contrast with a fixed-rate mortgage, where the rate and payment never change over the loan term.

Question 21

Truth in Lending Act (TILA)

Accepted Answer

A federal law requiring lenders to disclose the true cost of credit - including the Annual Percentage Rate (APR), finance charges, and total payments - in a standardized format so borrowers can compare loan offers on an apples-to-apples basis.

Question 22

RESPA (Real Estate Settlement Procedures Act)

Accepted Answer

A federal law requiring lenders to disclose closing/settlement costs to borrowers and strictly prohibiting kickbacks or unearned referral fees between settlement service providers (e.g., a lender paying an agent for referring business).

Question 23

General Warranty Deed vs. Special Warranty Deed vs. Quitclaim Deed

Accepted Answer

A general warranty deed guarantees clear title for the ENTIRE history of the property - the strongest buyer protection. A special warranty deed only guarantees against defects arising during the CURRENT owner's period of ownership. A quitclaim deed makes no guarantees at all - it transfers only whatever interest the grantor happens to hold, if any.

Question 24

Title Insurance

Accepted Answer

A one-time-premium policy that protects against financial loss from title defects (undisclosed liens, forgery, missing heirs) that existed before the policy date but weren't discovered until later. An owner's policy protects the buyer; a lender's policy protects the mortgage holder.

Question 25

Recording a Deed

Accepted Answer

Filing a deed at the county recorder's office creates constructive (legal) notice to the world of the new ownership, establishing priority against later claims. Recording is not what transfers title - a valid, delivered, and accepted deed does that - but skipping it puts the buyer at risk against later purchasers or lien holders.

Question 26

Material Fact vs. Puffery

Accepted Answer

A material fact is any information that could reasonably influence a buyer's decision or the price they'd pay (a known foundation crack, a title defect) and MUST be disclosed. Puffery is subjective sales opinion ('charming,' 'move-in ready') that isn't a factual claim and doesn't need to be substantiated.

Question 27

Lead-Based Paint Disclosure

Accepted Answer

Federal law requires sellers/landlords of housing built BEFORE 1978 to disclose known lead-based paint hazards, provide an EPA pamphlet, and give buyers a 10-day opportunity to test for lead before being bound to the contract. Housing built in 1978 or later is exempt because lead paint was banned that year.

Question 28

Fair Housing Act Protected Classes

Accepted Answer

Seven classes are protected under the federal Fair Housing Act: race, color, national origin, religion, sex, familial status, and disability. Many states and cities add further protected classes (e.g., sexual orientation, source of income) on top of the federal floor.

Question 29

Steering

Accepted Answer

The illegal practice of directing homebuyers toward or away from particular neighborhoods based on a protected class (e.g., only showing certain buyers homes in certain zip codes). It's a Fair Housing Act violation even if the agent believes they're being helpful.

Question 30

Gross Lease vs. Net Lease vs. Percentage Lease

Accepted Answer

In a gross lease, the landlord pays the property's operating expenses (taxes, insurance, maintenance) out of the rent collected. In a net lease, the tenant pays some or all of those expenses in addition to base rent. A percentage lease (common in retail) charges base rent plus a percentage of the tenant's sales.

Question 31

Loan-to-Value (LTV) Ratio

Accepted Answer

LTV = Loan Amount divided by Appraised Value (or purchase price, whichever is lower), expressed as a percentage. A higher LTV means a smaller down payment and higher lender risk - LTVs above roughly 80% typically trigger a private mortgage insurance (PMI) requirement on conventional loans.

Question 32

PITI

Accepted Answer

The four components of a typical monthly mortgage payment: Principal (reduces loan balance), Interest (cost of borrowing), Taxes (property tax, often escrowed), and Insurance (hazard insurance, sometimes PMI). Lenders use PITI, not just principal and interest, to qualify borrowers.

Question 33

Real Estate Math: Commission Split & Proration

Accepted Answer

Commission splits divide a transaction's total commission among the listing broker, buyer's broker, and their agents per their agreements - always calculate the full commission first, then apply the splits in order. Proration divides recurring costs (property taxes, HOA dues) between buyer and seller based on the exact closing date, so each party pays only for the days they actually own the property.

Question 34

TREC vs. PSI

Accepted Answer

TREC (Tennessee Real Estate Commission) is the state agency that writes and enforces license law, issues licenses, and disciplines licensees. PSI is the private testing vendor TREC contracts with to develop and administer the affiliate broker exam - PSI doesn't set licensing requirements, it just delivers the test.

Question 35

Affiliate Broker vs. Principal Broker

Accepted Answer

An affiliate broker is Tennessee's entry-level license - the affiliate must work under the supervision of a principal broker and cannot operate independently. A principal broker supervises affiliate brokers, holds the firm's trust/escrow account, and bears ultimate compliance responsibility for the office.

Question 36

Tennessee's 90-Hour Pre-License Education Path

Accepted Answer

60 hours of 'Basic Principles of Real Estate' must be completed BEFORE sitting the PSI exam. After passing both exam portions, candidates complete a 30-hour 'Course for New Affiliates' before TREC issues the license - 90 hours total across the two courses.

Question 37

Tennessee Exam Passing Math & Retake Rule

Accepted Answer

You need 56 of 80 correct on the national portion and 28 of 40 correct on the state portion - 70% on each section independently. If you fail, PSI lets you reschedule the next day after a first failure, but requires a 30-day wait between attempts starting with the second failure on the same portion.

Question 38

Tennessee's Broker-Name-in-Advertising Rule

Accepted Answer

Every real estate advertisement placed by a Tennessee affiliate broker must include the name of the firm/principal broker they're affiliated with - an ad that omits the supervising brokerage violates TREC advertising rules, regardless of the medium (print, online, yard sign).

Question 39

Team Names in Tennessee Advertising

Accepted Answer

A licensee team may market under a team name, but the team name can never substitute for or be confused with the actual brokerage name - the licensed firm name must still appear in the advertisement alongside the team branding.

Question 40

Blind Advertisement

Accepted Answer

An advertisement is 'blind' - and prohibited - when it fails to identify the sponsoring broker at all, making it look like the ad comes from a private seller or an unlicensed source. Tennessee requires the responsible brokerage to be identifiable in every ad.

Question 41

How Tennessee Affiliate Brokers Get Paid

Accepted Answer

Compensation must flow through the affiliate broker's principal broker/firm - an affiliate broker cannot accept a commission check or referral fee directly from a client, another agent, or a settlement provider. This keeps all compensation traceable through the firm's trust/operating accounts.

Question 42

Changing Broker Affiliation in Tennessee

Accepted Answer

When an affiliate broker moves to a new supervising firm, the change must be reported to TREC - the licensee cannot legally practice under the new firm, or continue practicing at all, until TREC's records reflect the new affiliation.

Question 43

Tennessee Record Retention Requirement

Accepted Answer

Brokerages must retain complete transaction records for 3 years after the transaction closes (or the listing expires), including offers, counteroffers, disclosures, and closing documents - not just the final signed contract.

Question 44

Escrow/Trust Account Compliance

Accepted Answer

Client funds (earnest money, security deposits) must be deposited promptly and kept in a dedicated trust account, completely separate from the brokerage's operating funds. Commingling trust money with company funds - even briefly - is one of the most serious violations TREC investigates.

Question 45

TREC's Right to Access Brokerage Records

Accepted Answer

TREC can require a brokerage to produce its transaction and trust account records on short notice - within 24 hours - as part of a routine audit or complaint investigation. A complete, well-organized transaction file for every deal makes this inspection straightforward instead of a scramble.

Question 46

First Substantive Contact Rule

Accepted Answer

Tennessee licensees must disclose which party they represent (or that they represent no one) at the first substantive contact with a consumer - before any meaningful discussion of the consumer's real estate needs, motivations, or finances takes place.

Question 47

Written Agency Confirmation Timing

Accepted Answer

Beyond the verbal disclosure at first substantive contact, Tennessee requires written confirmation of the agency relationship before the parties execute a contract - so all sides have a documented record of who represents whom by the time they're signing binding terms.

Question 48

Tennessee Designated Agency

Accepted Answer

When a buyer and seller in the same deal are both represented by the same firm, Tennessee allows the firm to name two different licensees - one 'designated' to each party - so each client still receives full, undivided representation instead of the firm defaulting to dual agency.

Question 49

Tennessee Dual Agency Consent

Accepted Answer

If a single Tennessee licensee represents both the buyer and seller in one transaction, that licensee must obtain informed WRITTEN consent from both parties, because dual agency inherently limits the full fiduciary duties (especially undivided loyalty) each side would otherwise receive.

Question 50

TREC Complaint & Discipline Process

Accepted Answer

A consumer or another licensee can file a complaint with TREC, which can trigger a formal investigation and, if warranted, a disciplinary hearing. Improper listing agreements, agency-disclosure failures, and escrow mishandling are common complaint triggers that can lead to license suspension or revocation.

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