If Vacation Lodging Service (VLS) licensees and real estate brokers are under the same supervisory commission, and if one reason for this is because both types of businesses (overnight rental company and a real estate office) are holding, in trust, as fiduciaries, other peoples' money ~ then why should ONE of these two not be afraid of the big bad wolf (Tennessee Real Estate Commission, or also fearfully known as TREC)?
Consider this: Yes, there was a time in the real estate business when there weren't enough title companies to go around (pre-1990's) and most Tennessee real estate brokers did hold all the earnest money usually given to the listing broker to hold on behalf of usually the buyer.
Brokers did draw the closing documents and do their own closings and dispersed large sums of money from their escrow accounts (even if the sale was funded by a bank!). If you take that community standard and couple it with the fact that, during that time period, almost all earnest money deposits were at least 10% of the purchase price (pre-buyer agency) ~ that was a dang lot of money lying around in escrow accounts in the State of Tennessee.
However, Tennessee real estate brokers had the fear of TREC instilled in their hearts. This was before the internet, so it must have just been a whisper campaign that TREC would come kill you if your escrow was out of balance EVEN ONE PENNY! You can take this to mean that brokers felt that TREC would have them killed over a penny.
At the time, the TREC folks must have been pig farmers and concrete plant owners, because brokers really were skeered. These days, most real estate brokers want the title companies to hold the earnest money deposit on a real estate transaction.
But, it begs a question: Why haven't VLS licensees been afraid of being killed over a penny? You say "well, they USED to be" and that is true ~ but why haven't they been respectful of other peoples' money and fearful of TREC since 2003?
To put it in perspective for you,
- if there are ONE million dollars sitting in real estate brokers' escrows, right now, on behalf of people from all over America anticipating the closing of their real estate purchase in Tennessee,
- there should be TEN million (or way more) sitting in escrow with the Vacation Lodging Service licensees.
This is money that should be sitting in VLS escrow coffers, every penny earmarked in some shape, form or fashion as
- guest advanced deposits,
- money due to owners for checked-out rentals,
- money due to the pest control guy and the rental company as commissions earned,
- money collected from the guests and owed to the tax authorities.
So, for every One million of real earnest money being held in escrow accounts around Tennessee, there should be TEN million of VLS's guest, owner, tax, and vendor peoples' money.
And how much is there really being held in Tennessee VLS escrow accounts that really belongs to someone else? I would be suprised if it was more than 50 cents.