Kansas Real Estate Broker Exam — All Questions

Absent a written agreement of all parties setting another date, a Kansas licensee must deposit an earnest money check:

• a.On the day the buyer signs the offer to purchase
• b.Within five business days after all parties sign✓
• c.Within ten banking days of the contract's acceptance
• d.At any time before the scheduled date of closing

K.S.A. 58-3062(a)(19) makes it a prohibited act to fail to deposit any check or cash received as an earnest money deposit, or as a deposit on the purchase of a lot, within five business days after the purchase agreement or lot reservation agreement is signed by all parties, unless all parties specifically provide otherwise by written agreement, in which case the licensee deposits on the date that agreement sets. The clock therefore starts when the last signature goes on, not when the buyer signs, which is why the first option is both stricter and wrong. Ten banking days appears nowhere in the act, and leaving the deposit until closing would leave client money outside the trust account for the life of the contract. The same five-business-day period runs where the contract names a different escrow agent: K.S.A. 58-3062(d) requires the listing broker, or the buyer's broker or the transaction broker in the cases it describes, to deliver the purchase agreement and the earnest money to that escrow agent within five business days and to keep a receipt showing the date of delivery in the transaction file.

How much of a Kansas broker's own money may sit in the broker's trust account?

• a.Up to $100, to pay expenses of maintaining the account✓
• b.Up to one month's operating costs for the brokerage
• c.Nothing at all, since any broker funds are commingling
• d.Whatever the depository sets as its minimum balance

K.S.A. 58-3062(a)(2) forbids misappropriating money required to be deposited in a trust account under K.S.A. 58-3061, converting it to personal use, or commingling a principal's money or property with the licensee's own, and then carves out one figure: nothing in the paragraph prohibits a broker from having funds in an amount not to exceed $100 in the broker's trust account to pay expenses for the use and maintenance of the account. Kansas fixes that number itself rather than leaving it to the bank, so an allowance keyed to whatever minimum balance a depository happens to require is not the rule. A month of operating costs is the very use the paragraph forbids, since paying firm expenses out of trust is conversion. And an absolute bar overstates the position: the $100 allowance exists precisely so that service charges do not eat into what the broker owes the parties. K.A.R. 86-3-18(a)(6) completes the picture by requiring a separate ledger, kept current, for any broker's funds held in the trust account, so the small permitted balance is visible on its face.

A buyer offers a promissory note instead of cash as earnest money. A Kansas licensee may accept it only if:

• a.The note is endorsed by a bank or savings and loan in Kansas
• b.The broker deposits an equal sum from the trust account
• c.The note matures on or before the scheduled closing date
• d.The seller is told before accepting and the contract says so✓

K.S.A. 58-3062(a)(18) makes it a prohibited act to accept anything other than cash as earnest money unless that fact is communicated to the owner prior to the owner's acceptance of the offer to purchase, and unless the fact is shown in the purchase agreement. Both conditions are required, and both are about the seller's information rather than the instrument's quality: the seller has to know what is actually backing the offer before deciding on it, and the record of the transaction has to show it. Nothing in the paragraph asks who endorses the note or when it matures, so a bank endorsement or a maturity date before closing does not cure the omission. Covering the note with the broker's own funds is worse than useless: K.S.A. 58-3062(a)(2) confines the broker's money in the trust account to $100 for account maintenance, and paying out of trust for a party's benefit is conversion. The five-business-day deposit deadline in K.S.A. 58-3062(a)(19) reaches 'any check or cash received', so a properly disclosed note is documented in the file rather than deposited.

Placing a 'For Sale' sign on a Kansas property is a prohibited act unless the licensee has:

• a.A signed listing agreement with any co-owner of the property
• b.Filed a copy of the listing with the Kansas Real Estate Commission
• c.Verbal permission from an occupant of the property to post it
• d.The written consent of the owner or the owner's authorized agent✓

K.S.A. 58-3062(a)(7) makes it a prohibited act to place a sign on any property offering it for sale or lease without the written consent of the owner or the owner's authorized agent. The statute names the form of the consent, so verbal permission does not satisfy it, and it names the source, so permission from an occupant who is neither the owner nor the owner's authorized agent is not permission at all. A listing signed by one co-owner is not consent from 'the owner' where others hold title, and in any event the paragraph is about the sign, not the listing. The Commission does not collect copies of listings and nothing in the act asks a licensee to file one. The neighboring paragraph is usually tested with this one: K.S.A. 58-3062(a)(8) forbids offering real estate for sale or lease without the knowledge and consent of the owner or the owner's authorized agent, or on terms other than those the owner authorized, so the sign rule is one instance of a wider principle that the owner controls what is offered and how.

K.S.A. 58-3062 requires a Kansas licensee to disclose closing costs to:

• a.The buyer when an offer is made and the seller when it is presented✓
• b.Both parties at the closing table before any funds change hands
• c.Both parties within three business days of contract acceptance
• d.Only the party the licensee represents, and only if asked to

K.S.A. 58-3062(a)(16) makes it a prohibited act to fail to inform both the buyer, at the time an offer is made, and the seller, at the time an offer is presented, that certain closing costs must be paid and the approximate amount of those costs. The duty therefore has two different moments built into it, one for each side, and both fall at the front of the negotiation rather than at the end. Disclosure at the closing table delivers the figures after every decision that depended on them has been taken, and a three-business-day window after acceptance has the same defect and appears nowhere in the section. The last option misreads the paragraph twice: it is owed to both the buyer and the seller regardless of who the licensee represents, and it is owed whether or not anyone asks. Notice that this duty sits in the prohibited acts section and so binds a licensee acting as an agent, as a transaction broker or as a principal, which the opening words of K.S.A. 58-3062(a) say expressly.

A Kansas salesperson receives an earnest money check from a buyer. The salesperson must:

• a.Deposit it in the salesperson's own account and tell the broker
• b.Endorse it to the seller if the seller is a customer of the firm
• c.Place it in the custody of the broker as soon as practicable✓
• d.Hold it until acceptance and then deliver it to the title company

K.S.A. 58-3062(b)(2) makes it a prohibited act for a salesperson or associate broker to fail to place, as soon after receipt as practicable, any deposit money or other funds entrusted to that licensee in the custody of the broker the licensee represents. The money moves to the broker, because it is the broker who is accountable for it: K.S.A. 58-3061(a) requires the broker to maintain the separate trust account into which all down payments, earnest money deposits and advance listing fees are deposited. A salesperson's own account defeats that arrangement whether or not the broker is told, and endorsing the check to the seller ignores that the deposit's destination is not yet settled, since K.S.A. 58-3061(g) allows disbursement only on the written authorization of buyer and seller, on a court order, or when the transaction closes. Where the contract names an outside escrow agent, K.S.A. 58-3062(d) still routes the delivery through the broker within five business days and requires a receipt in the file. The companion deadline in K.S.A. 58-3062(b)(6) gives the licensee 10 business days to submit to the supervising or branch broker any document that must be kept in the broker's transaction records.

At closing, a Kansas broker who handled the receipts and disbursements must:

• a.File a copy of the settlement sheet with the Commission's office
• b.Retain the only signed copy of the statement in the broker's file
• c.Deliver a complete, detailed closing statement to seller and buyer✓
• d.Have the statement reviewed by an attorney before it is signed

K.S.A. 58-3062(c)(2) makes it a prohibited act for a broker to fail to deliver to the seller, at the time the transaction is closed, a complete and detailed closing statement showing all of the receipts and disbursements the broker handled for the seller; to fail to deliver to the buyer a statement showing all money received from the buyer and how and for what it was disbursed; or to fail to retain true copies of those statements in the broker's files. The parties get statements and the broker keeps copies, so retaining the only signed copy inverts the second half of the rule, and K.A.R. 86-3-10(b) independently requires closing statements to be kept for three years. The duty is relieved only in one way, which the paragraph itself supplies: where an escrow agent furnishes the statements to the seller and the buyer, the broker's responsibility to them is discharged. Kansas does not require the statement to be filed with the Commission or reviewed by counsel, although K.A.R. 86-3-9 does require the broker to recommend that each client or customer retain an attorney for any legal questions in the transaction.

For a violation of the Kansas license act, KREC may impose a civil fine of up to:

• a.$500, and no more whatever the circumstances of the case
• b.$1,000 a violation, or $5,000 with aggravating circumstances✓
• c.$10,000 per violation once a full hearing has been held
• d.$2,500 per violation, plus the costs of the investigation

K.S.A. 58-3050(d)(1) lets the Commission, in addition to or in lieu of any other remedy and on a finding that a licensee violated the license act, BRRETA or the regulations under either, impose a civil fine not exceeding $1,000 for each violation. Paragraph (d)(2) raises the ceiling to $5,000 per violation where the Commission makes specific findings that aggravating circumstances exist and that the licensee misappropriated another person's funds, engaged in fraud or substantial misrepresentation, misstated the sale price or terms to a lender or other interested party, committed forgery or signed for another without a power of attorney, or intentionally failed to disclose known adverse material facts. Subsection (e) defines aggravating circumstances as conduct involving fraud or deceit together with substantial loss or risk of loss, substantial gain to the licensee, or a history of similar discipline. Investigation and prosecution costs are not an add-on ceiling as the last option suggests: K.S.A. 58-3050(m) recovers them out of the fine already imposed. And $10,000 belongs to the criminal track, where K.S.A. 58-3065(a) sets that maximum for a second or subsequent willful violation.