Kansas Real Estate Broker Exam — All Questions

A Kansas broker works with a buyer but signs no agency agreement. Under BRRETA the broker is:

• a.A transaction broker, which is the act's default relationship✓
• b.An implied agent of the buyer under common-law principles
• c.A subagent of the seller until an offer is actually made
• d.Free of any duty to the buyer and owed none in return

K.S.A. 58-30,103(c) settles this in one sentence: a broker may be engaged as a transaction broker by oral or written agreement, and a broker shall be considered a transaction broker unless an agency relationship with the party to be represented is established under that section, or the broker works with a buyer or tenant as a subagent of the seller or landlord by accepting an offer of subagency. Kansas therefore supplies its own default and does not fall back on the common-law implied agency the second option describes, which is the single most important difference between Kansas agency law and the general principles taught on the national portion. Subagency exists here but only where an offer of subagency has been accepted, and K.S.A. 58-30,106(g) makes such an offer something the seller must authorize in writing, so it does not arise by itself. And the default is not a no-duty relationship: K.S.A. 58-30,113(b) still requires the transaction broker to perform the agreement, exercise reasonable skill and care, present all offers, account for money in a timely manner, keep the parties informed and disclose adverse material facts.

Under Kansas BRRETA, a 'transaction broker' is a licensee who:

• a.Must obtain written consent to represent both sides as a dual agent
• b.Represents the seller exclusively in every transaction handled
• c.Is barred from preparing any of the paperwork for a transaction
• d.Assists one or both parties without being the agent of either✓

K.S.A. 58-30,102(u) defines a transaction broker as a broker who assists one or more parties with a real estate transaction without being an agent or advocate for the interests of any party to the transaction, and says the term includes the broker's affiliated licensees. K.S.A. 58-30,113(a) states the same point from the other side: a broker engaged as a transaction broker shall not act as an agent for either party. Written consent to represent both sides describes dual agency, which is a different relationship and one K.S.A. 58-30,103(a) forbids outright in Kansas; the transaction broker sidesteps the conflict by not being an agent at all rather than by obtaining consent to it. Exclusive representation of the seller describes the seller's agent under K.S.A. 58-30,102(q). And neutrality is not paralysis: K.S.A. 58-30,113(b)(2)(E) expressly requires the transaction broker to assist the parties in complying with the terms and conditions of any contract, including closing the transaction.

A Kansas transaction broker's listing is already under contract when a second offer arrives. The transaction broker must:

• a.Present it, because offers go forward even under contract✓
• b.Present it only if the seller asked to see later offers
• c.Hold the offer until the first contract falls through
• d.Return it to the buyer's licensee without telling the seller

K.S.A. 58-30,113(b)(2)(A) says that exercising reasonable skill and care as a transaction broker includes presenting all offers and counteroffers in a timely manner, even when the property is subject to a contract of sale. The words 'even when' leave no room for holding an offer back or returning it unseen, and the obligation is not conditioned on the seller having asked. The comparison with statutory agency is where candidates go wrong. K.S.A. 58-30,106(a)(2)(A) requires a seller's agent to present all offers received before closing unless the seller instructs the broker in the agency agreement not to submit offers after one has been accepted, so the agent's version of the duty can be limited in the written agreement while the transaction broker's version, as drafted, is not. K.A.R. 86-3-23(a) fills in the surrounding practice: a listing agreement may say the broker need not keep marketing the property after acceptance, but acceptance by itself does not end the duty to submit offers. K.A.R. 86-3-23(b) adds that unless a later offer is contingent on termination of the existing contract, the licensee should recommend the seller obtain legal advice before accepting it.

Without the parties' consent, a Kansas transaction broker in a single-family sale may not reveal:

• a.That the title shows a mortgage never formally released
• b.That the roof leaked during the last heavy rainstorm
• c.That the property sits inside a special assessment district
• d.That the seller would take less than the asking price✓

K.S.A. 58-30,113(f) lists five things a transaction broker shall not disclose without the consent of all parties in a transaction other than commercial property or residential property of more than four units: that a buyer or tenant will pay more than the price or rate offered, that a seller or landlord will accept less than the asking price or rate, the motivating factors of any party, that a party will agree to financing terms other than those offered, and any personal confidence that would place the other party at an advantage. The other three options describe adverse material facts, which run the opposite way: K.S.A. 58-30,113(b)(2)(F) requires the transaction broker to disclose to prospective buyers and tenants all adverse material facts actually known, and names the physical condition of the property, material defects in the property and material defects in the title among them. The mirror rule is worth carrying into the exam: under subsection (g), on commercial property or residential property of more than four units those same price, motivation and financing facts may be disclosed unless the parties prohibit it, while personal confidences remain protected.

Under Kansas BRRETA, a licensee must give a consumer the brokerage relationships brochure:

• a.At the first practical opportunity in the relationship✓
• b.Only where the consumer is not represented by an attorney
• c.Within 30 days after the transaction has finally closed
• d.Only at the closing of the transaction, with the contract

K.S.A. 58-30,110(a)(2) states the timing as a standard rather than as a description of what the consumer has said or done: except in the situations listed in subsection (a)(3), a licensee shall furnish a prospective buyer or seller with the brochure at the first practical opportunity. That is deliberately early, because a consumer who does not yet know whether the licensee is a statutory agent or a neutral transaction broker cannot judge what is safe to say about motivation, timing or the most he or she will pay. A deadline after closing delivers the information when nothing can be done with it, and delivery at closing is barely better, since every negotiation has already happened. The duty does not turn on whether the consumer has a lawyer; it is owed to prospective buyers and sellers generally. Subsection (a)(4) then requires acknowledgment of receipt by the seller and buyer to be included in any contract for sale, and K.A.R. 86-3-26 adopts the Commission's 'real estate brokerage relationships' brochure by reference while allowing a firm to design its own containing at least the same information.

A Kansas licensee need not give a prospective buyer the brokerage relationships brochure when:

• a.The buyer is already working with a licensee from another firm
• b.The buyer has toured the property once with the seller present
• c.The transaction is the sale of the property by public auction✓
• d.The buyer says that the brochure is neither wanted nor needed

K.S.A. 58-30,110(a)(3) sets out six situations in which the brochure is not required, and a sale by public auction is one of them. The complete list is: the licensee is acting solely as a principal and not as an agent for another; the communication from the licensee is a solicitation of business; the transaction is the sale of commercial property or the sale of residential property of more than four units; the transaction is the sale of property by public auction; the licensee is only performing ministerial acts; or the customer or client has already received the brochure from the licensee's brokerage firm. The list is closed, so the other three options are not on it, and the sixth exception repays close reading, because it turns on receipt from the same firm and not on receipt from any licensee, which is what the first option would need. A consumer cannot waive the requirement by saying it is unwanted, and touring the property is not one of the listed events. K.S.A. 58-30,102(p) defines the ministerial acts that trigger the fifth exception, including answering questions about price or availability, setting an appointment to view, attending an open house, and referring a person to another broker.

In Kansas, a licensee acting as a dual agent for both buyer and seller is:

• a.Allowed with the informed written consent of both parties
• b.Allowed where the supervising broker signs the disclosure
• c.Prohibited: BRRETA bars a licensee from acting as a dual agent✓
• d.Barred only where the property exceeds four dwelling units

K.S.A. 58-30,103(a) says that except when acting as a transaction broker or solely as a seller, buyer, landlord or tenant, a broker shall act only as a statutory agent in any real estate transaction, and then adds the flat prohibition: a licensee shall not act as a dual agent or in a dual capacity of agent and undisclosed principal in any transaction. Kansas supplies no consent route out of that, which is exactly what distinguishes it from the consent-based dual agency taught on the national portion and permitted in many other states, so the first two options describe the wrong jurisdiction. The bar is not limited by property type either. Kansas handles the in-house transaction two other ways: under K.S.A. 58-30,109(a) the firm may act as a transaction broker with the informed consent of the seller client and the buyer client, evidenced by the transaction broker addendum adopted in K.A.R. 86-3-27, or under subsection (b) the broker may designate separate affiliated licensees as the agents of each side. K.A.R. 86-3-31(a)(2) treats allowing an affiliated licensee to engage in dual agency as a failure of supervision by the broker.

One Kansas firm has a designated agent for the seller and another for the buyer. Their supervising broker:

• a.Becomes a dual agent of both clients at the same time
• b.Acts as a transaction broker in that same transaction✓
• c.Must withdraw from the transaction entirely at that point
• d.Represents whichever of the two clients signed on first

K.S.A. 58-30,109(b)(1) lets a broker, personally or through a duly authorized licensed representative, designate in the written agency agreement one or more affiliated licensees to act as the legal agent of the buyer client or the seller client to the exclusion of all other affiliated licensees, and (b)(3) gives a seller's designated agent the duties in K.S.A. 58-30,106 and a buyer's designated agent the duties in K.S.A. 58-30,107. Paragraph (b)(4) answers this question directly: in any transaction involving a designated agent, the supervising broker of that designated agent shall act as a transaction broker, unless both buyer and seller are represented by designated agents supervised by the same branch broker, in which case the branch broker takes that role; either may instead appoint another affiliated licensee to act as the transaction broker. Becoming a dual agent is the one thing Kansas will not allow, under K.S.A. 58-30,103(a). The broker neither withdraws nor picks a side, and paragraph (b)(5) confirms that the relationship continues, since a designated agent may disclose a client's confidential information to that supervising or branch broker in order to seek advice for the client's benefit.

A Kansas broker who will represent a buyer must have the written agency agreement signed:

• a.Before the buyer is shown any property by that firm
• b.No later than the signing of an offer to purchase✓
• c.Within three days after the buyer's offer is accepted
• d.Before the buyer is handed the relationships brochure

K.S.A. 58-30,103(e) sets the buyer-side deadline: to establish an agency relationship with a buyer or tenant, a broker shall enter into a written agency agreement with the party to be represented no later than the signing of an offer to purchase or lease. The seller side is stricter, which is why the first option is a real trap rather than an obvious one: under subsection (d)(1) a broker intending to establish an agency relationship with a seller or landlord must have the written agreement before the licensee engages in any of the activities listed in K.S.A. 58-3035(f) on that owner's behalf, with a narrow exception in (d)(2) for property owned by a federal agency, where verbal authorization from the agency will do. Showing property is therefore not the trigger on the buyer side, and until the agreement exists the broker is a transaction broker by default under subsection (c). Three days after acceptance is too late to create an agency that governed the negotiation. And the brochure has its own timing rule in K.S.A. 58-30,110(a)(2) and is not tied to the agreement at all.

Under BRRETA, every Kansas agency or transaction brokerage agreement must state:

• a.The commission split with any cooperating brokerage
• b.An automatic renewal term of at least ninety days
• c.The lowest price the client is willing to accept
• d.A fixed date on which the relationship expires✓

K.S.A. 58-30,103(f) requires the agreement to set forth the terms and conditions of the relationship, including a fixed date of expiration, any limitation on the duty of confidentiality and the terms of compensation, and to refer to the duties and obligations under K.S.A. 58-30,106, 58-30,107 or 58-30,113 as applicable. It must be signed by the party represented and by the broker or an affiliated licensee, and a copy must be furnished to the client or customer when they sign. K.A.R. 86-3-8 then rules out the second option in terms: no written brokerage agreement may contain a provision that automatically extends the term beyond the expiration date. What a cooperating broker is paid is a matter for the broker to arrange under K.S.A. 58-30,105(d)(2), which requires the client's written agreement to the sharing but does not make the split a term of the client's own agreement. And the least a client would accept is confidential information within the meaning of K.S.A. 58-30,102(i), protected rather than recorded. Two further prohibitions sit in the same section: subsection (i) bars authorizing the broker to sign for the client or act as attorney-in-fact, and subsection (k) bars transferring the agreement to another broker without every party's written consent.

A Kansas listing agreement may not provide that the broker:

• a.May cooperate with and compensate other brokers
• b.Earns a commission if the seller finds the buyer
• c.Is paid the gross price less the seller's net proceeds✓
• d.Will market the property through a listing service

K.S.A. 58-30,103(j) says an agency agreement or written transaction brokerage agreement with a seller shall not provide that the broker's commission be based on the difference between the gross sales price and the net proceeds to the owner. That is the net listing, and Kansas bans it outright rather than regulating it, because it gives the broker a private interest in a higher price that the seller never sees. The other three are all permitted. K.S.A. 58-30,106(g) to (i) let a seller agree in writing that the broker may offer subagency, or cooperate with and compensate a buyer's or tenant's agent, or cooperate with and compensate a transaction broker, and subsection (j) then bars the broker from refusing to let another licensee show the property or from withholding a written offer unless the seller has instructed otherwise in writing. Payment even where the seller produces the buyer is the defining feature of the exclusive right to sell agreement defined in K.S.A. 58-30,102(m). Marketing through a listing service is ordinary practice, and K.S.A. 58-3037(f) exempts a multiple listing service wholly owned by a nonprofit association of brokers from the license act altogether.

After a Kansas transaction closes, the broker's duties to a former client are limited to:

• a.Accounting for money and keeping confidences confidential✓
• b.Nothing at all, once the commission has been received
• c.A one-year duty to answer questions about the property
• d.Whatever duties the multiple listing service imposes

K.S.A. 58-30,104(a)(2) says that except as otherwise agreed in writing, a broker owes no further duties to the client after termination, expiration or the closing of a transaction according to the parties' agreement, except to account for all moneys and property relating to the engagement and to keep confidential all confidential information received during it. The confidentiality obligation lifts only if the client permits disclosure by subsequent word or conduct, disclosure is required by law, or the information becomes public from a source other than the broker. Subsection (b)(2) applies the same surviving pair to a transaction broker and the parties it served. So duty does not simply end when the commission is paid, and there is no statutory one-year tail of any kind. A private listing service's rules are contractual obligations between its members, not the license law the Commission enforces. Subsection (a)(1) is worth reading alongside this one: the relationship runs from engagement until closing, or if the transaction does not close, until the earlier of the expiration date agreed in the agreement or any authorized termination.

A Kansas seller agrees to pay the buyer's broker. Under BRRETA that payment:

• a.Does not by itself create an agency with the seller✓
• b.Makes the buyer's broker a subagent of that seller
• c.Requires the buyer's consent again after the closing
• d.Must be reported to the Commission within ten days

K.S.A. 58-30,105(b) states the rule plainly: payment of compensation by itself shall not establish an agency between the party who paid the compensation and the broker or any affiliated licensee. Subsection (a) presumes compensation comes from the transaction and leaves the amount to the agency or transaction brokerage agreements made under K.S.A. 58-30,103, and subsection (c) allows the broker's compensation to be paid by the seller, the landlord, the buyer or the tenant, and by more than one of them if the parties consent in writing to the multiple payments at or before the time of entering into the contract, which is why consent after closing is the wrong moment. Subagency is not a by-product of who signs the check; it arises only where a seller has authorized an offer of subagency under K.S.A. 58-30,106(g) and the other broker accepts it, as K.S.A. 58-30,103(c)(2) contemplates. And nothing in the act requires the Commission to be told about a compensation arrangement, although K.S.A. 58-30,105(d)(3) does require written disclosure to the client of any financial interest the broker has in a brokerage firm receiving a referral fee.

What does a Kansas seller's agent owe a buyer who is a customer, not a client?

• a.The same loyalty that is owed to the seller client
• b.An independent inspection of the property's condition
• c.Verification of all the seller says about the house
• d.Disclosure of adverse material facts actually known✓

K.S.A. 58-30,106(d)(1) says a seller's or landlord's agent owes no duty or obligation to a customer except that the licensee shall disclose to any customer all adverse material facts actually known by the licensee, and then names examples: environmental hazards required by law to be disclosed, the physical condition of the property, material defects in the property, material defects in the title, and any material limitation on the client's ability to perform under the contract. Paragraph (d)(2) disposes of the other two active options by saying the agent owes no duty to conduct an independent inspection for the customer's benefit and no duty to independently verify the accuracy or completeness of statements made by the client or by a qualified third party. Loyalty is reserved to the client under subsection (a)(2), which requires the agent to promote the client's interests with the utmost good faith, loyalty and fidelity. Two qualifications matter in practice: paragraph (d)(5) still requires the care of a reasonably prudent licensee in any inspection or disclosure the agent actually makes, and subsection (e) lets the agent perform ministerial acts for the customer without breaching the agency or creating a new one.

A Kansas seller's agent learns the buyer already has an exclusive agreement with another broker. Direct negotiation with that buyer is allowed only after:

• a.Notifying the buyer's own broker of the intended contact
• b.The buyer's broker is offered a share of the commission
• c.The seller instructs the agent in writing to make contact
• d.The buyer signs the consent to direct negotiation form✓

K.S.A. 58-30,103(o) says that where a licensee knows a buyer or tenant has an agency agreement or written transaction brokerage agreement granting an exclusive brokerage relationship to another broker, the licensee shall not contact that buyer and shall not initiate negotiations, and may negotiate directly only with the informed consent of the buyer, evidenced by a consent agreement signed by the buyer before any such negotiation. The consent agreement must acknowledge the existing agreement and that the buyer may be liable for compensation under it, and K.A.R. 86-3-28 adopts the Commission's 'buyer's or tenant's consent to direct negotiation' form for the purpose. The consent has to come from the buyer, so notice to the other broker, an offer of compensation to that broker, and an instruction from the seller are all beside the point. Subsection (n) adds that a licensee shall not induce any party to break an agency or transaction brokerage agreement, and subsection (p) states the seller-side mirror: a licensee shall not contact or negotiate directly with a seller or landlord who has an exclusive agency or exclusive right to sell agreement with another broker, though an offer may be presented if that broker or transaction broker is present.