Kentucky Brokerage Activities and Requirements
Eighteen of the fifty state items — thirty-six percent of the Kentucky portion, the largest area by a wide margin — spread across fourteen printed subtopics: the broker/sales associate relationship including team and group management and rules (broker only), commissions, advertising, handling of monies, handling of documents, place of business, records, escrow accounts, improper conduct, unlicensed assistants, broker lien law, the zero (no-call) list, brokerage management (broker only), and unlicensed brokerage.
The broker/sales associate relationship, and teams
KRS 324.010(4) defines the principal broker as the single broker responsible for the operation of the company; 324.010(6) defines the sales associate as a licensee affiliated with a Kentucky principal broker who brokers under that broker's supervision; 324.010(11) defines the designated manager as a licensee who manages a main or branch office at the principal broker's direction. KRS 324.020(5) bars a sales associate from supervising another sales associate or managing an office except as authorized by 324.112(1) — a branch inside a hundred-mile radius, managed by a sales associate with two years averaging twenty hours a week — and 324.425, which lets the commission permit an affiliated sales associate to close a deceased or incapacitated principal broker's business for up to six months. 201 KAR 11:121 Section 7 makes the principal broker the owner of all written brokerage contracts, forms the agency relationship when he or a licensee acting for him signs with a client, and requires a departing licensee to turn over the Section 9 records immediately. On teams: 201 KAR 11:011 Section 1(39) defines a team as licensees affiliated with the same principal broker, led by a team leader, advertising under the same authorized assumed name. 201 KAR 11:121 Section 1(1)(g) makes joining one without the principal broker's written consent improper conduct. Section 9(7) requires written notice to the commission of the team's assumed name and team leader before any team advertising, and Section 9(8) requires company procedures, a designated team leader responsible alongside the principal broker and designated manager, a current roster of everyone on each team, and written notice to the commission of the team leader's name and license number. 201 KAR 11:105 Section 4 requires the assumed name to be registered and approved in writing by the principal broker, forbids reuse by more than one group in the company or any suggestion of independence from the principal broker, and requires a team or group name to end with the word 'team' or 'group'.
Commissions and advertising
KRS 324.020(4) forbids a broker to split fees with or compensate an unlicensed person, with three exceptions: a referral fee to a broker licensed outside Kentucky, a commission to an out-of-state broker under KRS 324.235 to 324.238, and payment to a licensed auctioneer collaborating on an auction sale of real estate. A licensee may accept compensation for licensed acts only from his own principal broker under a compensation agreement (324.160(4)(f)); paying for the names of prospective sellers or buyers is a ground for sanction (324.160(4)(s)); and obtaining or attempting to obtain a net listing — a stipulated net to the owner with the excess to the licensee, defined at 324.010(3) — is improper dealing under 324.160(7). On advertising, KRS 324.117(1) bars intentionally false, misleading or deceptive advertising, (3) lets a sales associate's name enter the firm name only after two years averaging twenty hours a week, and (4) requires the company or principal broker name in all advertisements of listed property whoever places them. 201 KAR 11:105 Section 2(2) requires every advertisement to carry the registered company name or the principal broker's name with a clear designation of that status; Section 3(2) forbids an affiliated licensee's name to appear larger than the required content, with carve-outs for hats, pens, notepads, apparel, name tags and charity sponsorship; Section 3(3) makes every viewable page or post a separate advertisement that must carry the content without scrolling or link clearly to a page that does; Section 3(6) refuses to let a logo substitute for the written name; Section 1 requires the owner's written consent to advertise a specific property; and Section 6 governs guaranteed sales plans.
Monies, escrow, documents and records
KRS 324.111(1) requires a principal broker to maintain an escrow account separate from individual or office accounts, in which all contract deposits and money belonging to others are deposited 'without unreasonable delay' — defined by 201 KAR 11:011 Section 1(47)(a) as within three business days of receipt by the principal broker or an affiliated licensee. The same subsection requires the account to be maintained within Kentucky, identified to the commission in writing, and any overdraft other than a bank service charge reported in writing if not corrected within seventy-two hours of notice. KRS 324.111(2) makes an interest-bearing account optional and gives the interest to whomever the parties agree in writing; (3) forbids checks drawn against uncollected deposits; (4) bars withdrawal until the contract terminates by performance, written agreement of all parties, or court order, except as (6) allows; (5) is the standing audit permit; (7) requires separate property management accounts or their specific identification in escrow records. KRS 324.111(6) is the release process: on notice that a party intends not to perform, the broker may write to all parties at their last known address by certified mail naming who will receive the deposit, and if no written mutual release and no litigation follow within sixty days of the mailing date he may release it without penalty and without civil liability. On paperwork, 201 KAR 11:121 Section 9(4) requires a copy of every document delivered to each party at the time of signing, and Section 9(5) a debit-and-credit closing statement to the client at closing unless another authorized party prepared it; KRS 324.160(4)(q) separately sanctions failing on demand to furnish a copy to a signatory. Section 9(1) requires the transaction file to be confidentially preserved, hard copy or digital, for five years following consummation or failure, and Section 9(2) applies the same five years to property management records.
Place of business, improper conduct and unlicensed activity
KRS 324.115(1) requires every Kentucky broker to maintain a definite place of business in the state, with a narrow reciprocity exception. KRS 324.112(1) forbids a branch office outside a hundred-mile radius of the main office without a broker managing it, (3) requires registration of any branch with the commission within ten days of creation, and (4) requires each licensee's license to be kept on file at the office where he is actively engaged. 201 KAR 11:121 Section 1(1) adds prohibitions to KRS 324.160: RESPA violations; refusing a prospective purchaser a viewing without the client's written, signed direction; offering property without written consent; failing the six fiduciary duties owed a client (loyalty, obedience to lawful instructions, disclosure, confidentiality, reasonable care and diligence, accounting); failing the good faith, fair dealing and confidentiality owed a prospective client, or the good faith and fair dealing owed anyone else in the transaction; joining a team without written consent; inducing a party to break a contract; and auction rules. Sections 1(3) to (5) expressly permit advertising the broker's fee, offering rebates and inducements, and using a registered nickname. On unlicensed help, KRS 324.030(6) allows an unlicensed person under a broker's supervision only to set appointments and give out general public information the broker specifically authorized, and 201 KAR 11:121 Section 9(9) makes the principal broker ensure any employee or unlicensed assistant complies with the chapter and 201 KAR Chapter 11. Unlicensed brokerage is a Class A misdemeanor for a first offense and a Class D felony afterwards (KRS 324.990(1)), the commission may seek injunctive relief (324.020(6)), and 201 KAR 11:210 Section 6(8) requires all fees earned from unlicensed activity to be returned before any license issues.
Broker lien law, the zero (no-call) list, and brokerage management
Kentucky's broker lien sits in the statutory-liens chapter. KRS 376.075(1) gives a real estate broker who performs services defined by KRS 324.010(1) a lien on the building, structure, land or project to secure his charges. KRS 376.075(3) denies the lien to anyone who has not contracted directly with the owner or the owner's agent; (8) requires a written listing or buyer-representation agreement plus services that procured a ready, willing and able party; (7) bars a lien on newly constructed residential real estate unless the purchaser agreed in writing to compensate the broker directly. The deadlines are strict: (4) dissolves the lien unless a sworn statement of the amount due is filed with the county clerk of the county where the property sits within six months after the broker ceases to provide services, and (5) dissolves it unless an action to enforce is brought within twelve months of that filing. On telephone solicitation, KRS 367.46955(16) confines residential solicitations to between 10 a.m. and 9 p.m. local time at the called person's location; (15) bars unsolicited calls to residential numbers on the national Do Not Call Registry; (14) bars calling a person who has said he does not wish to hear from that seller; and 367.46994(2) protects numbers on Kentucky's zero call list. KRS 367.46953 requires the caller to identify himself and the merchant immediately, identify what is being offered within thirty seconds and ask whether the consumer wants to hear more, and stop at once if the answer is no; KRS 367.46995(2) gives a defense to a caller who obtains the current zero call list in a timely manner and makes reasonable efforts to avoid it; and KRS 367.46951(2)(c) puts calls to a person with a prior or existing business relationship outside the definition. Finally, brokerage management: KRS 324.160(6), effective April 4, 2024, says no affiliate's violation holds the principal broker primarily liable unless he knew and did not prevent it, that the principal broker and any designated manager shall exercise adequate supervision over licensed affiliates and company employees, and that a failure to do so is itself a violation of the chapter. 201 KAR 11:121 Section 9(10) requires an information security system protecting confidential information, Section 9(11) locks the designated-agency confidential file, and Section 9(12) requires written notice to the commission of a designated manager's appointment within ten days.
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State-specific details
State exam facts
- State regulator
- Kentucky Real Estate Commission (KREC)
- Exam vendor
- PSI
- Prelicensing education
- 21 academic credit hours (12 in real estate, 3 of them a broker management skills course) or 336 classroom hours from a Kentucky-approved school (KRS 324.046(1)(a); 201 KAR 11:210 § 2(1)(a) splits the 21 as 9 real estate + 3 Broker Management + 9 approved electives)
- Passing score
- 75% correct on each portion
- Scored questions
- 125
- Time limit
- 240 minutes
Who regulates real estate brokers in Kentucky?
The Kentucky Real Estate Commission (KREC) licenses brokers and sales associates under KRS Chapter 324 and 201 KAR Chapter 11. KRS 324.281(5)(c) lets the Commission conduct the examinations or contract them out, and it contracts with PSI.
What experience do I need before the Kentucky broker exam?
KRS 324.046(1)(b) requires the applicant to have been engaged in the real estate business as a sales associate averaging at least 20 hours per week for 24 months prior to application — there is no lookback window, so the 24 months must immediately precede the application. KRS 324.046(4) lets the Commission cut it to one year for an applicant with an associate degree in real estate or a bachelor's with a real estate major or minor. Proof is a sworn notarized statement signed by the principal broker, or other documentation satisfactory to the Commission (KRS 324.046(3)); if a principal broker unjustly refuses to sign, the applicant may complain to the Commission.
How is the Kentucky broker exam structured?
PSI bulletin 2312 gives the broker exam as a 75-question general portion scored to 80 points in 150 minutes plus a 50-question Kentucky state portion worth 50 points in 90 minutes — 240 minutes in total — and says "In order to pass the examinations, you must receive a score of at least 75% correct." The portions are graded separately, and a candidate who passes one and fails the other retakes only the section failed, but must pass both within 4 months of passing the first.
What does the Kentucky state portion actually test?
PSI bulletin 2312's Kentucky State Content Outline splits the 50 broker items six ways: the Real Estate Commission (7), Requirements for a License (8), Brokerage Activities and Requirements (18), License Law Requirements for Contracts (6), Disclosures and Agency Issues (8) and Property Management (3). Brokerage Activities alone is 36% of the state exam, and now names team and group management and rules (broker only), broker lien law (KRS 376.075), the zero (no-call) list and unlicensed brokerage among its subtopics. Beware the copy of this bulletin hosted on proctor2.psionline.com: it is dated 7/1/2015, says the state portion is 40 items, and every area count in it differs from the live one.
Sources: https://krec.ky.gov, https://test-takers.psiexams.com/api/content/bulletin/2312, https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=38853, https://apps.legislature.ky.gov/law/kar/titles/201/011/
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