Difficulty: Medium

Average Score: 67%

Which of the following licensees need NOT carry errors and omissions insurance, according to Tennessee real estate laws?

Rationale

A licensee whose license is in retired status need NOT carry errors and omissions insurance, according to Tennessee real estate laws.

In Tennessee, licensees with a retired status are not actively engaged in real estate transactions, and as such, they are not required to maintain errors and omissions insurance, which is typically mandated for practicing licensees.

A (A principal broker of a corporate real estate firm.) YOUR ANSWER

Principal brokers, who manage real estate firms and oversee the activities of licensed agents, are required to carry errors and omissions insurance to protect against potential claims arising from their fiduciary responsibilities and the actions of their agents. This insurance is critical for maintaining compliance with state regulations.

C (A licensed affiliate broker whose firm carries liability insurance for all employees.) YOUR ANSWER

Even if a firm holds liability insurance, licensed affiliate brokers are individually responsible for obtaining their own errors and omissions insurance. This requirement ensures that each broker is protected against claims related to their specific transactions and actions in the real estate market.

D (An affiliate broker who works as a property manager and deals only with leasing contracts.) YOUR ANSWER

Affiliate brokers involved in property management, including those dealing exclusively with leasing contracts, must carry errors and omissions insurance. This coverage is essential for safeguarding against claims arising from their management activities and obligations to property owners and tenants.

Conclusion

In summary, only a licensee with a retired status is exempt from the requirement to carry errors and omissions insurance under Tennessee law. Active licensees, including principal brokers and those engaged in property management, must maintain this insurance to protect themselves and their clients from potential legal claims. This distinction highlights the importance of active engagement in real estate for insurance requirements.

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