The Tennessee Real Estate Commission debated on Nov. 13 whether gift cards should be classified as cash equivalents and therefore prohibited in conjunction with real estate transactions.

Anna Matlock, associate general counsel with the Department of Commerce & Insurance, told the commission the draft rule would add language stating that a real estate licensee shall not give or pay cash rebates, cash gifts, gift cards, cash prizes or any similar cash-based incentive in connection with a transaction. Matlock pointed to the commission
uthority under Tenn. Code Ann. section 62-13-302(b) to regulate gifts, prizes and rebates.

Commissioners weighed common industry practices against the statute. Several members said they view gift cards as the functional equivalent of cash and warned that a broad rule is easier to enforce. Others argued broker-to-broker gifts at broker open houses and small closing tokens are customary marketing or thank-you gestures and not inducements to list. Commissioners repeatedly returned to a quid-pro-quo threshold: whether the gift is intended to induce a listing, sale or lease.

Several licensed brokers in the meeting explained how broker open houses often offer drawings or small giveaways to attract agents or public visitors and said those practices are marketing, not inducements. Matlock responded that non-cash gifts remain permitted under current gift-disclosure provisions, provided licensees comply with disclosure requirements (fair-market value, time and place, delivery). Gift cards, she said, are treated as cash because they represent a set monetary value.

The commission directed counsel to refine precise rule language and consider narrow exceptions (for broker open houses and bona fide closing gifts) for the December rulemaking hearing; Matlock said the revised language will be reviewable at that hearing.

The commission took no final vote on rule text at Wednesday
nd left the issue on the December agenda for formal rulemaking and public comment.