Kentucky Disclosures and Agency Issues
Eight of the fifty state items, over five printed subtopics: agency relationships, requirements and disclosure; disclosures of personal interests in real estate transactions; condominium seller certificates; seller disclosure of property condition; and other disclosure issues, which the bulletin glosses as stigmatizing factors.
When the agency disclosure is due
Kentucky ties the disclosure to agreements, not to assistance. 201 KAR 11:121 Section 5(1) requires the licensee to complete, time and date the commission's Guide to Agency Relationships and deliver it to the prospective client at the earliest of three moments: prior to entering into a contemplated written agreement to provide real estate brokerage services for compensation; prior to entering into a contemplated oral agreement to provide such services; or prior to signing an agency consent agreement. Section 5(2) requires the licensee to solicit the prospective client's signature acknowledging receipt, to keep a record of it, and, on a refusal, to document the delivery or attempted delivery with date and time. Section 5(3) lists what the completed form must contain, and Section 5(4) excepts sales at auction and commercial transactions. The older trigger — 'when specific real estate assistance is first given' — came from 201 KAR 11:400, 'Agency disclosure requirements,' which was repealed by 201 KAR 11:002 in the consolidation effective May 2, 2023. The word 'assistance' appears nowhere in 11:121, and study material still teaching the old trigger is teaching a repealed rule.
The Agency Consent Agreement
201 KAR 11:121 Section 6(1) requires the licensee, before entering a written agreement to provide brokerage services or completing or directing the completion of a contract, offer or lease, to complete and deliver the Agency Consent Agreement and obtain the prospective client's written consent to it. Section 6(2) requires the form to give the names of client, licensee and principal broker and the full company name; the specific agency relationship proposed between the principal broker, any affiliated licensee and the prospective client; if applicable, any known business, family or personal relationship the licensee has with another party to the contemplated transaction who is not a party to the agreement, with an explanation of its nature; and whether the transaction involves an unrepresented party. 201 KAR 11:011 defines those relationships — a business relationship is a mutual ongoing financial interest outside the current transaction, including prior representation of that party; a family relationship is any known familial one; a personal relationship is a platonic or nonplatonic friendship. Section 6(3) requires the agreement updated with fresh written consent if the relationship later changes, Section 6(4) excepts auctions and commercial transactions, and Section 6(5) terminates that form of agency on provision of the agreed services or at closing. The forms are KREC Form 401B and 401S, and the Guide to Agency Relationships is KREC Form 400.
Designated agency and dual agency
KRS 324.121(1) lets a principal broker designate one or more affiliated licensees to act for a seller or lessor, and one or more others for a buyer or lessee or prospective buyer or lessee, to the exclusion of all other affiliated licensees. The designation must be made in writing and communicated to all licensees affiliated with the principal broker; each designated agent must inform and obtain the consent of the party designated to; and the principal broker shall not designate himself or herself as a designated agent. KRS 324.121(2) explains why: where the broker designates licensees on both sides of the same transaction, only the principal broker or a designated manager working under his direction is deemed the dual agent, in a limited fiduciary capacity, and must keep each party's confidential information in an individual file maintained and accessed by himself only and disclose it to neither side. 201 KAR 11:011 Section 1(21) draws the contrast: in a firm that does not practice designated agency, dual agency means the principal broker and all affiliated licensees simultaneously represent both parties. KRS 324.121(3) provides that no exchange of information among consumers, principal broker, designated manager, firm or licensees is imputed as a matter of law, and (4) confirms that nothing in the section prevents a firm or licensee from entering a dual agency relationship. 201 KAR 11:121 Section 7(3) adds that, absent designated agency, every affiliated licensee has the same agency relationship as the principal broker in an in-house transaction, and Section 9(11) locks the confidential file.
Personal interests, condominiums, property condition and stigma
KRS 324.160(4)(e) sanctions acting for more than one party without the knowledge of all, and its three numbered rules govern self-dealing: a licensee shall not directly or indirectly buy property listed with him or with his broker, nor acquire an interest in it, without first indicating in writing on the offer to purchase his status as a licensee; before becoming a party to a purchase contract he shall disclose that status in writing to all parties on the contract or offer; and before selling or receiving compensation on property in which he owns an interest he shall disclose that interest in writing to all parties. KRS 324.160(4)(m) separately reaches acting as licensee and undisclosed principal. On condominiums, KRS 381.9203(1) requires the seller to furnish the declaration, bylaws, rules and a current signed certificate before execution of any contract of sale; (2) gives the association ten days after a written request to supply it; (3) makes the sales contract voidable by the purchaser until the certificate is provided and for five days thereafter or until conveyance, whichever first occurs, while protecting the unit owner and his agent from liability for the association's delay or errors; and (5) provides that failure to supply a certificate does not void a deed. 201 KAR 11:121 Section 4(2) requires the licensee to advise the client in writing of both rights. On property condition, KRS 324.360(4) has the seller complete and sign the form when executing the listing agreement and requires the listing agent to deliver a copy to any prospective purchaser or his representative within seventy-two hours of receiving a written and signed offer to purchase, soliciting the buyer's signature and recording any refusal; 324.360(5) gives a 120-hour rule for unlisted property; 324.360(7) exempts new homes sold with a warranty, auctions and court-supervised foreclosures; 324.360(9) makes it a violation for a licensee to complete any portion of the form unless he owns the property or the owner requested it in writing. The form is KREC Form 402; the old standalone regulation, 201 KAR 11:350, was repealed. Finally, KRS 324.162 provides that an agent representing a party has no affirmative duty to disclose information not required by KRS Chapter 324 or applicable federal law — Kentucky's answer on stigmatising factors — which removes a duty to volunteer without licensing misrepresentation, since KRS 324.160(4)(b) still reaches substantial misrepresentation or failure to disclose known defects substantially affecting value.
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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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