2019 Tennessee Code
Title 62 - Professions, Businesses and Trades
Chapter 13 - Tennessee Real Estate Broker License Act of 1973
Part 1 - General Provisions
§ 62-13-104. Exemptions -- Firm licenses for vacation lodging services.
(a)
(1) This chapter does not apply to:
(A) An owner of real estate with respect to property owned or leased by such person;
(B) An attorney-in-fact under a duly executed and recorded power of attorney from the owner or lessor;
(C) The services rendered by an attorney at law in the performance of duties as an attorney at law;
(D) A person acting as receiver, trustee in bankruptcy, administrator, executor or guardian, trustee acting under a trust agreement, deed of trust or will or while acting under a court order or instrument;
(E) A resident manager for a broker or an owner, or employee of a broker, who manages an apartment building, duplex or residential complex where the person's duties are limited to supervision, exhibition of residential units, leasing or collection of security deposits and rentals from the property. The resident manager or employee shall not negotiate the amounts of security deposits or rentals and shall not negotiate any leases on behalf of the broker; or
(F) A corporation, foreign or domestic, acting through an officer duly authorized to engage in a real estate transaction, where the transaction occurs as an incident to the management, lease, sale or other disposition of real estate owned by the corporation; however, this exemption does not apply to a person who performs an act described in § 62-13-102(4)(A), either as a vocation or for compensation, if the amount of the compensation is dependent upon, or directly related to, the value of the real estate with respect to which the act is performed.
(2) In addition, except as provided in subsection (b), no other provisions of this chapter or any rules and regulations promulgated pursuant thereto shall apply to vacation lodging services.
(b)
(1) As used in this section, unless the context otherwise requires:
(A) “Designated agent” means an owner, principal, officer or upper level manager of a vacation lodging service firm;
(B) “Person” means any natural person, corporation, company, partnership, firm or association; and
(C) “Vacation lodging service” means any person that engages in the business of providing the services of management, marketing, booking and rental of residential units owned by others as sleeping accommodations furnished for pay to transients or travelers staying no more than fourteen (14) days.
(2) Each vacation lodging service shall be required to have a vacation lodging service firm license but shall not be required to have a licensed real estate broker supervising the business. The application for the license shall be filed in the office of the real estate commission on forms that the commission may prescribe and shall be accompanied by a fee for the issuance of the license as specified in § 62-13-308.
(3)
(A) Vacation lodging service firm licenses for vacation lodging services shall be granted to all applicants who bear a good reputation for honesty, trustworthiness, integrity and competence to transact the business of providing vacation lodging services in a manner to safeguard the interest of the public and only after satisfactory proof of such qualifications has been presented to the commission. No license shall be denied any person because of race, color, religion, sex or national origin, handicap or familial status.
(B)
(i) Upon application for a firm license for a vacation lodging service and each renewal of the license, the firm shall designate one (1) individual from that firm who shall be individually licensed as a designated agent through the Tennessee real estate commission. Such designated agent shall be responsible for the completion of training programs to be taught by an individual in the vacation lodging services business or other person who meets qualifications set by the Tennessee real estate commission. Such training programs shall consist of instruction in the fundamentals of this subsection (b) and related topics. No person shall be licensed by the commission as a designated agent until such person completes the required eight-hour introductory course.
(ii) Every two (2) years, as a requisite for the reissuance of a firm license for a vacation lodging service and for reissuance of the designated agent license, the firm shall furnish certification that the designated agent for the firm has completed eight (8) classroom hours in training programs approved by the commission.
(iii) No examination shall be required for the issuance or renewal of a firm license for a vacation lodging service.
(C) Upon application for a firm license for a vacation lodging service and each renewal of the license, the firm shall provide proof of the establishment of the firm's escrow account satisfactory to the commission. Every firm shall, in accordance with the rules promulgated by the commission under § 62-13-203, keep an escrow or trustee account of funds deposited with the firm relating to vacation lodging services. The vacation lodging service shall maintain for a period of at least three (3) years accurate records of the account showing:
(i) The depositor of the funds;
(ii) The date of deposit;
(iii) The payee of the funds; and
(iv) Other pertinent information that the commission may require.
(D)
(i) No funds shall be distributed from the escrow/trustee account until the customer's stay is complete, unless the distribution is in accordance with terms disclosed to the renter in writing at the time of making the reservation or within a reasonable time thereafter not to exceed three (3) days, mailed to the renter through the United States postal service or transmitted to the renter via electronic mail, facsimile or other tangible form of communication. Commissions earned by the firm and the revenue due owners shall be disbursed at least monthly. Funds held in escrow shall be disbursed in a prompt manner without unreasonable delay.
(ii) A vacation lodging service may be exempt from the requirements of subdivision (b)(3)(C) by submitting with its application for a firm license renewal an irrevocable letter of credit from a state or national bank or state or federal savings and loan association having its principal office in this state or any state or national bank or state or federal savings and loan association that has its principal office outside this state and that maintains one (1) or more branches in this state that are authorized to accept federally insured deposits. The terms and conditions of any irrevocable letter of credit shall be subject to the approval of the commission. At the discretion of the bank or savings and loan association, the form of the irrevocable letter of credit shall be provided by the bank or savings and loan association and may be based on either the Uniform Commercial Code, compiled in title 47, chapter 5, or the ICC Uniform Customs and Practice for Documentary Credits (UCP 500). In lieu of the irrevocable letter of credit, the commission is authorized to accept equivalent security. The irrevocable letter of credit or equivalent security shall be in the amount of the vacation lodging service's average advanced monthly deposits or other lesser amount that is reasonably determined by the commission to protect the renters and owners. The commission may draw upon the irrevocable letter of credit or equivalent security to reimburse renters or owners for funds owed to them by the vacation lodging service. The commission shall offer the vacation lodging service a contested case hearing under the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, before drawing upon the irrevocable letter of credit or equivalent security if the vacation lodging service continues to maintain the letter of credit or equivalent security during the contested case hearing process. If the vacation lodging service does not continue to maintain the irrevocable letter of credit or equivalent security during the contested case hearing process and the irrevocable letter of credit or equivalent security is subject to expiring during the contested case hearing process, the commission may draw upon the irrevocable letter of credit or equivalent security before conducting the contested case hearing. Where the commission draws upon the irrevocable letter of credit or equivalent security before conducting a contested case hearing, the commission shall offer the vacation lodging service a prompt hearing to be conducted before it distributes the proceeds. A vacation lodging service firm working under an irrevocable letter of credit must submit satisfactory proof of such letter of credit by April 1 of each year. The commission may impose a penalty for failure to disclose such proof by such date.
(4) All firm and designated agent licenses for vacation lodging services shall expire two (2) years from the date the license was issued or renewed. The firm license and the license for the designated agent for the firm, and all renewals thereof, shall expire at the same time. If a license is issued to a designated agent following the date the firm license is issued or renewed, the license for the designated agent shall be issued or renewed so that it expires on the date the license of the firm is to expire. The commission is authorized to pro-rate the license for the designated agent or extend the date for the renewal of such a license to ensure the licenses expire concurrently. The licenses must be renewed on or before the expiration date by remitting to the commission the fee as set by the commission together with proof of the existence of the firm's escrow account satisfactory to the commission and certification of satisfactory completion of training pursuant to subdivision (b)(3)(B).
(5) Each vacation lodging service shall have an office at a fixed location with adequate facilities located to conform with zoning laws and ordinances. Within ten (10) days after any change of location of the office, the vacation lodging service shall notify the commission in writing of the new business address.
(6) Whenever any lodging rental customer or lodging rental owner 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 of providing vacation lodging services files suit upon the claim against the licensee in any court of record in this state and recovers judgment on the claim, the court may, as a part of its judgment or decree in such cases, if it deems it a proper case in which so to do, revoke the certificate of license granted under this chapter; and the certificate of license shall not be reissued to the licensee except upon the consenting vote of six (6) members in favor of reissuance.
(7)
(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 facts and, if warranted, hold a hearing for reprimand or for the suspension or revocation of a license.
(B) The commission has the 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 in this section, is found guilty of:
(i) Making any substantial and willful misrepresentation;
(ii) 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 the promise;
(iii) Pursuing a continued and flagrant course of misrepresentation or making of false promises through other persons, any medium of advertising or otherwise;
(iv) Misleading or untruthful advertising, including use of the term “realtor” by a person not authorized to do so, or using any other trade name, insignia or membership in any real estate association or organization of which the licensee is not a member. No vacation lodging service doing business under this subsection (b) may advertise or hold itself out as a full service real estate business. The authority of the business is limited to those activities described within this subsection (b);
(v) Failing, within a reasonable time, to account for or to remit any moneys coming into the licensee's possession that belong to others;
(vi) Failing to preserve for three (3) years accurate records of the firm's escrow account as prescribed by subdivision (b)(3)(C);
(vii) Failing to furnish a copy of any contract to provide vacation lodging services to all signatories of the contract at the time of execution;
(viii) Using or promoting the use of any contract to provide vacation lodging services for a residential unit that fails to specify a definite termination date;
(ix) 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 similar offense or offenses, or pleading guilty or nolo contendere to any such offense or offenses;
(x) Violating any federal, state or municipal law prohibiting discrimination in the rental of real estate because of race, color, religion, sex or national origin;
(xi) Violating this subsection (b) or the terms of any lawful order entered by the commission;
(xii) Engaging in the unauthorized practice of law; or
(xiii) Any conduct, whether of the same or of a different character from that specified in this subdivision (b)(7)(B), that constitutes improper, fraudulent or dishonest dealing.
(C) The director of the division of regulatory boards or the director's duly authorized representatives may, at all reasonable hours, examine and copy the books, accounts, documents or records that are relevant to a determination of whether a licensee has properly maintained and disbursed funds from escrow or trustee accounts required in this subsection (b). In the case of refusal to permit the access accorded by this subsection (b), 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. Refusal shall also constitute grounds for the commission to suspend or revoke a license.
(D) Whenever any licensee pleads guilty or is convicted of any criminal offense enumerated in this section, 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 hearing held pursuant to this section, the commission in its discretion may impose upon that licensee any sanction permitted by this section.
(8)
(A)
(i) Before refusing to issue a license or suspending or revoking an existing license upon the verified written complaint of any person setting out a cause of action under subdivision (b)(7), the commission shall, in writing, notify the accused applicant or licensee of its receipt of the complaint, enclosing a copy.
(ii) The accused applicant or licensee shall, within ten (10) days, file with the commission the applicant's or licensee's answer to the complaint, a copy of which shall be transmitted to the complainant.
(iii) If, after investigation, the commission determines that the matter should have a hearing, a time and place for the hearing shall be set.
(B) All notices and answers required or authorized to be made or filed under this subsection (b) may be served or filed personally, or by registered mail, to the last known business address of the addressee. If served personally, the time shall run from the date of service and if by registered mail, from the postmarked date of the letter enclosing the document.
(C) The affirmative vote of a majority of the commission shall be necessary to reprimand a licensee or revoke or suspend a license.
(D) In the event that the matter contained in the complaint has been filed or made a part of a case pending in any court in this state, the commission may then withhold its decision until the court action has been concluded.
(9)
(A) If a designated agent, as designated by a vacation lodging service firm, leaves or moves from the vacation lodging service firm, the firm or designated agent for such firm must notify the Tennessee real estate commission within ten (10) days of such action. The vacation lodging service firm must replace the designated agent within sixty (60) days of such action and notify the commission of the name of the new designated agent. During such time period, all rules or regulations related to a vacation lodging service firm shall remain in full force and effect with respect to such a vacation lodging service firm until a designated agent is replaced. Any obligation or duty required to be fulfilled by the designated agent shall be fulfilled by another person in the vacation lodging service firm.
(B) A designated agent may serve as a designated agent for multiple offices of the same vacation lodging service firm within a fifty (50) mile radius of the principal office of the firm, but may not serve as a designated agent for multiple firms.
(10) The Tennessee real estate commission is authorized to promulgate rules and regulations in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, to implement this subsection (b).
