Kentucky Property Management
Three of the fifty state items, over three printed subtopics: the requirement of a written agreement; procedures and guidelines; and the handling of security deposits. Property management is brokerage in Kentucky — KRS 324.010(1) includes it in the definition of real estate brokerage and 324.010(9) defines it separately — so a license is required unless one of the KRS 324.030(5) employee exceptions applies.
The written agreement
201 KAR 11:121 Section 10(1) provides that a principal broker or affiliated licensee shall not engage in property management without a current written property management agreement. Section 10(2) sets fourteen minimum contents: the full name and address of the brokerage company as registered with the commission; the client's name and address; the address of the real estate and the number of units; the effective dates and whether the client agrees to automatic annual renewal; the method for early termination; the amount or method of computing the broker's compensation; the amount or method of determining the minimum security deposit per unit; the name and address of the bank where the escrow or management account is held and, consistent with KRS 383.580(1), the account number — which must also appear in the lease; a provision in accord with KRS 383.580 governing return or retention of the security deposit, which must also appear in the lease; the conditions under which the broker may pay expenses; the date the broker will send the client an accounting; a copy of the lease form attached; the client's certification that he received a duplicate of the agreement and lease form; and both signatures with dates. The old standalone regulation, 201 KAR 11:245, was repealed.
Procedures, ledgers and accountings
KRS 324.111(7) requires a principal broker whose company engages in property management to maintain property management accounts separate from all other accounts, or to indicate specifically in all escrow records which funds are property management funds; 324.111(8) exempts a licensee's own rental property unless the principal broker requires otherwise. 201 KAR 11:121 Section 10(4) requires money received to be deposited into the broker's escrow or management account within three business days of receipt, and Section 10(6) requires a receipt to be given for it. Section 10(3) requires an owner ledger for each client and a unit ledger for each unit, and a ledger by tenant on the client's written request; Section 10(5) requires money received to be entered on the owner and unit ledgers; Section 10(7) requires expenses paid by the broker to be documented by invoice or receipt, by unit, and retained in his records. Section 10(9) requires a monthly accounting to the client of transactions by unit, on the date the parties determine, and Section 10(10) requires a final accounting covering everything since the last monthly one within sixty days of termination of the management agreement. Section 10(11) applies the unit-ledger and KRS 383.580 requirements to a broker who has an ownership interest in the managed property. Under KRS 324.160(4)(h) a licensee acting as property manager must render an accounting and remit all monies to the client strictly in accordance with the contract of employment.
Security deposits
KRS 383.580(1) requires a landlord of residential property who takes security deposits to hold them in an account used only for that purpose at a regulated bank or lending institution, and to inform prospective tenants of the location of the separate account and the account number. Subsection (2) requires the tenant, before tendering the deposit, to be given a comprehensive listing of existing damage with estimated repair costs, with a right to inspect, both parties signing, and any dissent stated specifically in writing. Subsection (3) requires the matching listing at the termination of occupancy. Subsection (4) is the sanction: no landlord is entitled to retain any portion of a deposit if it was not held in a separate account and the initial and final listings were not provided. Subsection (5) limits a tenant's District Court claim to items from which he specifically dissented; (6) lets the landlord, after thirty days, remove and apply the deposit where the tenant left owing the last month's rent and did not demand it back; (7) lets him remove and retain it where a refund notice to the tenant's last known address goes unanswered for sixty days. One scope point matters: KRS 383.580 sits inside the Uniform Residential Landlord and Tenant Act, and KRS 383.500 authorizes cities, counties and urban-county governments to enact KRS 383.505 to 383.705 in their entirety and without amendment — so the Act binds landlords only where it has been adopted. The licensee's duty is statewide regardless, because 201 KAR 11:121 Section 10(2)(h) and (i) and Section 10(8) require the management agreement, the lease and every deposit adjustment to follow KRS 383.580.
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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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