Kentucky License Law Requirements for Contracts
Six of the fifty state items, over four printed subtopics: the statute of frauds; listing contracts; purchase contracts, including submission of offers, finance provisions and other required provisions; and licensee duties.
The statute of frauds
KRS 371.010 bars an action on certain promises unless the promise 'or some memorandum or note thereof, be in writing and signed by the party to be charged therewith, or by his authorized agent.' Two of its nine categories matter in practice. Subsection (6) covers any contract for the sale of real estate, or any lease of it for longer than one year — so a lease of a year or less falls outside. Subsection (8) covers any promise, agreement or contract for a commission or compensation for the sale or lease of real estate, or for assisting another in a sale or lease, which is why a Kentucky broker's fee arrangement belongs in writing. Subsection (9) covers commitments to lend money but expressly excludes consumer credit transactions and credit cards. Kentucky license law does contemplate oral brokerage agreements — 201 KAR 11:011 Section 1(9)(a)3. treats a person for whom a licensee performs acts of brokerage by oral agreement as a client, and 201 KAR 11:121 Section 5(1)(b) requires the Guide to Agency Relationships before a contemplated oral agreement — but 371.010(8) governs enforceability of the fee.
Listing contracts
201 KAR 11:121 Section 3(1) requires a listing contract completed by or at the direction of a licensee to include the listing price unless the sale is by auction; the date and time of signing for every signatory; the principal broker's first and last name and the full company name; the effective date and time of listing and of advertising if different; the date of expiration of the listing contract; the fee, compensation or other valuable consideration agreed; an address or general description sufficient to identify the parcel; the signatures and printed names of every party necessary to effect a sale, including any dower or curtesy considerations or the official representative of a legal entity; the client's special directions limiting or restricting showings; and date, time and initials for all changes made before acceptance. Section 9(6) forbids a principal broker to be party to an exclusive listing contract containing an automatic continuation beyond its fixed termination date, and KRS 324.160(7) makes obtaining or attempting to negotiate a net listing improper dealing. Section 3(8) makes non-compliance improper conduct under KRS 324.160(4)(u).
Purchase contracts and the submission of offers
201 KAR 11:121 Section 2(1) lists the services a principal broker under a written brokerage agreement owes unless the client waives them in writing: accept delivery of and submit all written offers without delay; accept all earnest money deposits presented; assist the client in developing, communicating, negotiating and presenting offers, counteroffers and notices until the transaction completes; and answer the client's questions about offers, counteroffers, notices and contingencies. Section 2(2)(a) adds Kentucky's distinctive step — the seller's licensee must send written notice, by electronic, text or other media, to the buyer's licensee of the date and time the offer was presented — and Section 2(3) makes a failure here gross negligence under KRS 324.160(4)(v). Section 3(2) requires an offer to contain the purchase price or a valid escalation clause with a maximum; the contract deposit amount, who holds it and when it must be delivered; date and time of signing; date and time the offer expires; an identifying address or description; the signatures of all parties making the offer and the printed name of the licensee who prepared it; date, time and initials for pre-acceptance changes; the closing date or range and when possession passes; and the proposed payment terms. Section 3(5) requires a financed contract specifically to state the manner of financing and the amount of any encumbrance and whether a seller, a commercial institution or someone else underwrites it — the requirement formerly in the repealed 201 KAR 11:040. Section 3(3) sets counteroffer requirements and Section 3(4) requires a back-up offer on property already under an executory contract to state in writing that it is contingent on that contract's nonperformance and what happens to the deposit.
Licensee duties around existing listings
201 KAR 11:121 Section 3(7)(a) forbids a licensee to contact a seller to obtain a subsequent listing before the current listing agreement expires. Paragraph (b) allows the conversation on three conditions together: the seller initiates the contact; the proposed listing contract states it shall not take effect until the current listing expires; and the licensee and seller properly complete and sign the Seller-Initiated Listing Form, KREC Form 403, incorporated by reference in Section 11. Nothing prohibits approaching a seller after cancellation or expiry. Two neighboring rules bite here as well. KRS 324.165(2) forbids any licensee, relocation firm or person acting for them to counsel another licensee's client on the manner in which the client may terminate or amend an existing listing contract, buyer agency agreement or other agency relationship, and 324.165(3) makes that improper conduct under 324.160(4)(u). KRS 324.160(4)(o) makes it a ground for sanction to negotiate or attempt to obtain a brokerage agreement knowing the consumer has a written outstanding contract granting exclusive agency to another broker. Section 3(6) requires any agreement for compensation from a licensee to his client, including rebates and inducements, to be in writing.
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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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