Kentucky Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

KRS 324.281 fixes the make-up of the Kentucky Real Estate Commission. The Governor appoints:

• a.Nine members, six of them licensees and three of them citizens at large
• b.Five members, all of them active real estate licensees of five years' standing
• c.Seven members, six of them active licensees of ten years' standing and one a citizen at large✓
• d.Eleven members, half named by the Governor and half by the Kentucky Association of Realtors board

KRS 324.281(1) is specific: the Governor appoints seven persons, at least six of whom have been residents for ten years and whose vocation for at least ten years has been that of an active real estate licensee, and one of whom shall be a citizen at large not associated with or financially interested in the business regulated. Terms run three years, no appointee after July 14, 2000 may serve more than two consecutive terms, a majority is a quorum, no more than four members may belong to one political party, and no two may live in the same county (324.281(2), (4)). The private trade association does have a role, but it is nomination rather than appointment: under 324.281(3) the Kentucky Association of Realtors supplies a list of at least three names within sixty days, the Governor may reject the list and ask for another, and if the association misses the deadline the Governor appoints without it. Five and nine are the sizes of other states' boards, not Kentucky's.

Which of the following does KRS 324.281(5) place on the Kentucky Real Estate Commission as a duty?

• a.Setting the commission rates licensees may charge consumers in the Commonwealth
• b.Conducting the licensing examinations, or contracting with an entity to conduct them✓
• c.Requiring every Kentucky licensee to join a local board or association of Realtors
• d.Regulating the business activities of not-for-profit condominium and homeowner associations

KRS 324.281(5)(c) makes it the commission's duty to 'conduct examinations for applicants eligible under this chapter or alternatively to contract with an entity to conduct examinations' — which is why PSI, not KREC, sits in the testing center. The rest of the subsection is of a piece: promulgate administrative regulations under KRS Chapter 13A, hold disciplinary hearings, conduct continuing-education seminars, investigate irregularities, and cooperate with other agencies. Rate-setting appears nowhere in KRS Chapter 324; what the chapter regulates is who may pay a fee to whom, in 324.020(4) and 324.160(4)(f). Community associations are expressly outside the commission's reach — KRS 324.2812 says nothing in the chapter or its regulations extends its jurisdiction to community association managers or to the management or business activities of not-for-profit townhouse, condominium, homeowner or neighborhood associations. And membership in a Realtor board is voluntary; the commission neither requires nor polices it.

How does the Kentucky Real Estate Commission acquire the authority to audit a principal broker's escrow accounts?

• a.The commission may audit only after a consumer files a sworn complaint alleging a shortage
• b.The commission obtains a warrant from the Circuit Court of the county where the office is located
• c.The principal broker signs a permit granting that permission upon licensure and at each renewal✓
• d.The commission asks the bank, which may release the records without notifying the broker

KRS 324.111(5) settles it in one sentence: 'Upon licensure and each renewal, the principal broker shall sign a permit giving the commission the permission to audit all his or her escrow accounts.' The broker consents in advance, as a condition of holding the license, so no court process is needed and the bank is not the gatekeeper. The commission's wider investigative powers point the same way: KRS 324.150(2)(d) lets it enter the office or branch office of any principal broker to inspect documents it requires to be kept there, and 324.150(2)(a)-(f) add subpoenas, oaths, examination of witnesses and witness fees. Nor does a complaint have to come first — 324.150(1)(a) lets the commission or its staff investigate a licensee on its own initiative, and reserves the mandatory investigation for a verified written complaint that states a prima facie case.

A Kentucky licensee is found by final order to have committed fraud violating KRS 324.160 and refuses to pay. What may the recovery fund pay out?

• a.Up to $50,000 per claimant, with no cap on combined payments against one licensee
• b.Whatever the Circuit Court awards, because the statutory fund carries no ceiling at all
• c.Up to $20,000 per claimant, with combined payments against one licensee capped at $400,000
• d.Up to $20,000 per claimant, with combined payments against one licensee capped at $50,000✓

KRS 324.410(1) sets both figures: the commission may pay an aggrieved person 'an aggregate amount not to exceed twenty thousand dollars ($20,000) per claimant with combined payments to all claimants against any one (1) licensee not to exceed fifty thousand dollars ($50,000).' Two further conditions ride along — the licensee must have refused to pay within twenty days of entry of the final order, and the amounts must be certain and liquidated. The $400,000 in the third choice is real but is a different number: 324.410(2) requires the commission to maintain the real estate education, research, and recovery fund at a minimum level of $400,000, investing only the excess. And the fund is not an insurer of judgments; 324.420(1) routes damages that cannot be accurately determined to the Circuit Court of the county where the violation took place, but the payout still stops at the statutory caps.

What is the largest fine the Kentucky Real Estate Commission itself may levy on a licensee under KRS 324.160(1)?

• a.$5,000
• b.$2,500
• c.$1,000✓
• d.$10,000

KRS 324.160(1)(c) authorizes the 'levy of fines not to exceed one thousand dollars ($1,000)' — a low ceiling by the standards of other states, which is why the rest of the sanction menu matters. The same subsection lets the commission suspend or revoke any license, place a licensee on probation for up to twelve months, require completion of academic credit hours in real estate courses, or issue a formal or informal reprimand, and it may order any or all of them together. A separate and larger exposure sits outside the commission: under KRS 324.990(2) a Circuit Court may fine a violator not less than $100 nor more than $1,000 or jail him up to six months, and must add to the fine the amount of any commission paid or received as a result of the violation, with each transaction treated as a separate offense. The other three figures appear nowhere in KRS Chapter 324.

Kentucky lets its commission move faster than the ordinary disciplinary process in one situation. Which?

• a.An advertisement believed misleading, which may be ordered withdrawn without any hearing
• b.An alleged escrow account violation warranting emergency action, heard under KRS Chapter 13B✓
• c.Any complaint filed by a member of the public, which suspends the license pending the hearing
• d.A licensee's failure to complete continuing education, which is punished by immediate revocation

The emergency route is written into four places for the same subject. KRS 324.150(1)(b) lets the commission conduct an emergency hearing 'when alleged escrow account violations warrant emergency action,' conducted under KRS Chapter 13B as it relates to emergency orders, and KRS 324.111(9), 324.151(4) and 324.170(3) each repeat the cross-reference. Everything else runs the ordinary way: KRS 324.170(1) requires the commission to order a hearing under KRS Chapter 13B before denying an application or ordering any disciplinary action, and where the licensee is a sales associate it must notify the principal broker by certified mail and order his attendance. KRS 324.200(2)-(3) then gives the final order to the executive director of the Kentucky Real Estate Authority, with an appeal to Circuit Court within thirty days and an automatic stay of discipline during the appeal. Missing continuing education is not revocation but automatic cancellation under 324.085(1)(a); and a complaint suspends nothing — KRS 324.151(1) requires it first to state a prima facie case.

The Kentucky Real Estate Commission may discipline a broker through its disciplinary process for:

• a.Commingling escrow funds or failing to supervise affiliated licensees✓
• b.Completing more continuing education hours each year than the law requires
• c.Negotiating the amount of the commission with a client before listing
• d.Belonging to a local board or association of Realtors in the licensee's market

The commission's authority runs through a specific route rather than through 'KRS Chapter 324' at large. KRS 324.111(1) creates the escrow duty, KRS 324.160(4)(h) reaches a licensee who fails to account for or remit money belonging to others, KRS 324.160(4)(t) reaches the violation of any provision of the chapter or any regulation under it, and KRS 324.160(6), effective April 4, 2024, provides that 'The principal broker and his or her designated manager, if any, shall exercise adequate supervision... The failure... shall constitute a violation of this chapter.' Commingling or converting escrow money and failing to supervise are therefore squarely within reach. Lawful acts are not: negotiating a commission with a client is ordinary practice and rates are negotiable, exceeding the continuing-education minimum is the opposite of a violation, and belonging to a local board of Realtors is voluntary membership in a private trade association the commission neither requires nor polices.

Which of these people must hold a Kentucky real estate license?

• a.A person whose only business is compiling rental availability data and selling it to tenants
• b.An attorney in fact consummating a sale for the owner under a duly executed power of attorney
• c.A person paid a fee to refer prospects to a brokerage for the purpose of securing buyers✓
• d.A regular salaried employee who leases his employer's own units as an incident to managing them

The definition does the work. KRS 324.010(1)(a) makes 'real estate brokerage' a single, multiple or continuing act of dealing in time shares or options, selling, buying, negotiating, engaging in property management, leasing, renting, 'or referring or offering to refer for the purpose of securing prospects' — for others, for a fee or other valuable consideration. Paid referral is inside the definition, and KRS 324.010(13) defines a referral fee as consideration of any kind paid or demanded for referring a potential buyer, seller, lessor or lessee. The other three are express exceptions. KRS 324.030(1) excuses an owner or lessor and his regular employees acting as an incident to managing the property; 324.030(2) excuses an attorney in fact acting under a duly executed power of attorney to consummate a contract; and KRS 324.980 puts a person engaged solely in compiling and categorizing rental availability information for a fee outside KRS Chapter 324 altogether.

To qualify for a Kentucky broker license, a sales associate must generally have:

• a.24 months averaging at least 20 hours a week, plus 21 credit hours✓
• b.An out-of-state real estate license held for at least one full year
• c.No experience, a higher application fee, and the broker examination
• d.A degree in accounting from an accredited college or university

Kentucky gates the broker license behind both time in the business and classroom work, and the experience half has three parts that are easy to miss. KRS 324.046(1)(b) requires the applicant to have 'been engaged in the real estate business as a sales associate averaging at least twenty (20) hours per week for a period of twenty-four (24) months prior to application.' There is no lookback window: the twenty-four months must immediately precede the application, so an applicant cannot count active months from years earlier and then sit out. Alongside it, KRS 324.046(1)(a) requires not less than twenty-one academic credit hours, twelve of them in real estate courses, three of which shall be a course in broker management skills; 201 KAR 11:210 Section 2(1)(a) splits the twenty-one into nine real estate hours, three of broker management and nine of approved broker electives. A higher fee measures nothing about readiness to supervise licensees or hold client money; merely holding another state's license for a year substitutes a credential for what Kentucky specifies; and an accounting degree, however handy for escrow recordkeeping, is not real estate education.

KRS 324.046(4) lets the commission cut the Kentucky broker experience requirement from two years to one. For whom?

• a.An applicant who completes the three-hour broker management skills course before applying
• b.An applicant with an associate degree in real estate, or a bachelor's with a real estate minor✓
• c.An applicant who has closed at least twenty-five transactions in the preceding twenty-four months
• d.An applicant who has held an active sales associate license in another state for at least four years

KRS 324.046(4) is narrow and academic: 'The commission may reduce the two (2) year experience requirement for applicants for a broker's license to one (1) year, if the applicant has an associate degree in real estate or a baccalaureate degree with a major or minor in real estate.' Note that it is permissive — the commission may reduce it — and that the qualifying credential must be in real estate, not merely from an accredited institution. The broker management skills course is not an experience substitute at all; it is three of the twenty-one academic credit hours required by 324.046(1)(a) on the education side of the gate. Out-of-state licensure runs through reciprocity instead, and 201 KAR 11:210 Section 3(3) still requires a reciprocal broker applicant to file a certification of licensure issued within the preceding ninety days, show twenty-one academic credit hours or their agreed equivalent, and pass the Kentucky law portion of the examination. Transaction counts appear nowhere in 324.046; Kentucky measures hours per week across months.

Kentucky licenses expire biennially. What happens to a licensee who misses the renewal date?

• a.The license turns inactive automatically, and no fee or education is owed to restore it to active status
• b.The license is revoked, and no new license may be issued for five years from the expiration date
• c.A fine of up to $200 is assessed before a new license issues, with reactivation possible within a year✓
• d.The license stays in force through a thirty-day grace period during which brokerage may continue

KRS 324.090(2) provides that 'A fine not to exceed two hundred dollars ($200) shall be assessed for failure to renew on time before a new license is issued,' and adds that neither failure to receive a renewal form nor failure of the mail is an adequate excuse. KRS 324.090(3) then reverts an unrenewed license to expired status, reactivatable before a lapse of one year on payment of delinquent fees; KRS 324.160(2) sets the parallel rule for a canceled license, renewable within one year of cancellation if the licensee pays all fees and meets active-licensure requirements. Renewal itself is due on or before March 31 through the Online Services Portal (201 KAR 11:210 Section 8(1)). There is no grace period for practicing: 324.160(2) and (3) forbid brokerage or compensation while a license is canceled or suspended, and KRS 324.990(1) makes unlicensed brokerage criminal while sparing the person who avails himself of 324.090(3). The five-year bar in the second choice belongs to revocation, under KRS 324.220.

How much continuing education does an actively licensed Kentucky agent owe, and what happens if the first-year share is missed?

• a.Twelve hours per biennial period, six in the first year, or the license is automatically canceled✓
• b.Twelve hours per biennial period, all of which may be taken in the second year without penalty
• c.Six hours per calendar year, none of which is required to be in the study of real estate law
• d.Twenty-four hours per biennial period, twelve of them in the first year, or the license is revoked

KRS 324.085(1)(a) requires twelve classroom or online hours of continuing education for the biennial license period and then adds the trap: 'Six (6) of the twelve (12) hours shall be completed in the first year of the biennial license period or the license shall be automatically canceled.' KRS 324.085(1)(b) requires six of the twelve to be in real estate law, and (d) lets the other six be commission-approved real-estate-related courses. 201 KAR 11:210 Section 11(1) restates the same duty annually — six hours a year, three in law and three elective, completed no later than December 31 of the first year of the renewal cycle, with credit given only if the education provider reports completion to the commission by 11:59 p.m. that day. The distinction between cancellation and revocation matters: cancellation is administrative and curable within a year, while revocation is a disciplinary sanction under 324.160(1)(b) carrying the five-year bar of KRS 324.220.

A person issued an initial Kentucky sales associate license must complete post-license education:

• a.96 commission-approved hours, matching the sales associate prelicense classroom requirement
• b.48 commission-approved hours, but only if the licensee intends to seek a broker license
• c.48 commission-approved hours within two years of receiving or activating the license✓
• d.30 commission-approved hours within one year of receiving or activating the license

KRS 324.085(2) requires a licensee issued an initial sales associate license after January 1, 2016 to complete forty-eight classroom or online hours of commission-approved post-license education, provided by an accredited institution or a commission-approved real estate school or broker-affiliated training program, 'within two (2) years of receiving or activating his or her license unless extended by the commission for good cause shown.' KRS 324.010(19) defines the term in the same figures. The consequence for missing it is severe and automatic: KRS 324.085(3) cancels the license of any licensee who fails to complete it, in accordance with the delinquency procedures set by regulation. Nothing about the requirement is conditional on the licensee's later ambitions; it attaches to the initial sales associate license itself. The ninety-six figure in the last choice is real but belongs to a different stage — it is the classroom-hour alternative to six academic credit hours in the sales associate prelicense requirement.

What errors and omissions coverage does Kentucky require, and what must a licensee do before going inactive?

• a.Coverage for principal brokers only, since affiliated licensees ride on the brokerage company's policy
• b.At least $100,000 per claim and $1,000,000 aggregate, plus a year of extended reporting period coverage✓
• c.At least $100,000 per claim and $1,000,000 annual aggregate, with no further obligation on going inactive
• d.At least $250,000 per claim and $500,000 annual aggregate, plus two years of extended reporting coverage

KRS 324.395(1) makes errors and omissions insurance mandatory for every licensee except one whose license is inactive under KRS 324.310(2), and then closes the exit: 'Inactive licensees shall obtain extended reporting period coverage insurance for one (1) year at the current minimum requirements then in effect prior to entering inactive status.' The minimums are set by 201 KAR 11:220 Section 1 — a limit of liability of not less than $100,000 for any one claim and an annual aggregate of not less than $1,000,000, each excluding the cost of investigation and defense. Section 2 adds firm-coverage aggregates of $1,000,000 for one to forty licensees and $2,000,000 for forty-one or more, and Section 3 caps deductibles at $2,500 for judgment or settlement and $1,000 for investigation and defense. A licensee may buy independently rather than join the commission's group policy, but must then file a Certification of Insurance Coverage, KREC Form 203, on issuance and each renewal.

Kentucky requires a national criminal history check through the FBI. When must it be completed?

• a.Within the twelve months before the commission receives the license application
• b.Only where the applicant discloses a felony conviction on the application form
• c.Within the ninety calendar days before the commission receives the license application✓
• d.At any point before the applicant sits the licensing examination, with no expiry date attached

KRS 324.045(5)(c) requires the applicant to 'complete the criminal history check within the ninety (90) calendar days prior to the date the license application is received by the commission,' and (d) requires him to return a signed affidavit within one hundred twenty days verifying that nothing on record prohibits licensure. The applicant requests the check himself, gives fingerprints to the FBI or the Kentucky State Police for submission, authorizes release of the results to the commission and pays the cost. 201 KAR 11:210 Section 6(1) adds that the report must be requested before taking the examination and is valid for only ninety days from the record report date — which is why a check with no expiry is not the Kentucky rule. The check is universal rather than triggered by disclosure: Section 6(3)(a) directs the commission to investigate a felony conviction within the previous ten years or a misdemeanor conviction within the previous five, which presupposes that every applicant has been checked.

Under KRS 324.020(5) a Kentucky sales associate may not supervise another sales associate or manage a brokerage office, except:

• a.When the principal broker will be out of the Commonwealth for more than thirty consecutive days
• b.When the sales associate holds a written power of attorney executed by the principal broker
• c.When every affiliated licensee at that office consents to the arrangement in writing
• d.To manage a nearby branch after two years' experience, or to close a deceased broker's business✓

KRS 324.020(5) states the prohibition and names its only two doors: 'Except as authorized in KRS 324.112(1) and 324.425, no sales associate shall supervise another licensed sales associate or manage a real estate brokerage office.' KRS 324.112(2) is the branch-office door — a sales associate with two years in the real estate business, averaging at least twenty hours per week for the twenty-four months prior, may manage a branch office inside a hundred-mile radius of the main office, while 324.112(1) forbids a branch outside that radius without a broker managing it. KRS 324.425 is the succession door: on the death or other incapacity of a principal broker with affiliated sales associates, the commission may in its discretion permit one of them to complete and close the existing business for a temporary period not exceeding six months. Absence, a power of attorney and colleague consent do none of this work; the restriction protects consumers, not the affiliated licensees, so they cannot waive it.

A Kentucky principal broker decides to permit teams. Before any team advertising runs, 201 KAR 11:121 requires:

• a.Written notice to the commission of the team's assumed name and of the team leader's license number✓
• b.A separate team license issued by the commission for each team operating inside the brokerage company
• c.Nothing further, so long as the principal broker's own name also appears in the advertisement
• d.Written consent from every other affiliated licensee in the brokerage company to the team

201 KAR 11:121 Section 9(7) is the advertising trigger: 'If a principal broker permits teams, a principal broker shall notify the commission in writing of the alternate or assumed name used by the team and the name of the team leader before permitting team advertising.' Section 9(8) sets out what else the broker owes when he authorizes team, group or other business arrangements — company procedures for advertising, agency relationships and confidential information and for team operations; designation of a licensee who is responsible along with the principal broker and designated manager, called the 'team leader' however the group labels itself; a current list of every licensee, employee and clerical staff member on each team; and written notice to the commission of the team leader's first and last name and license number. Kentucky issues no team license — 201 KAR 11:011 Section 1(39) defines a team as licensees affiliated with the same principal broker, led by a team leader, using the same authorized assumed name. Nor do colleagues get a veto; the authority is the principal broker's.

Kentucky regulates the alternate or assumed name a group of licensees advertises under. Which statement is correct?

• a.A team or group name may suggest the group works independently of its own principal broker
• b.A team or group name must end with the word 'team' or 'group' and be registered with the commission✓
• c.A team or group name may be adopted by the licensees themselves without the principal broker's approval
• d.A team or group name may be reused by several different groups inside the same brokerage company

201 KAR 11:105 Section 4(5) is blunt: 'If the alternate or assumed name applies to a team or group, the alternate or assumed name shall end with the word "team" or "group."' Section 4(2) requires the principal broker, before allowing any use of the name in advertising, to register it with the commission and ensure it is populated in the online services portal. The other three choices each invert a specific prohibition. Section 4(3)(b) forbids a name to be used by more than one group of licensees inside the same brokerage company unless the name is the company's own. Section 4(3)(a) forbids terms that may lead the public to believe the licensees are offering brokerage services independent of the principal broker, and Section 5(2)(c) separately makes such an impression deceptive advertising. And Section 4(1) requires the written approval of the principal broker, reinforced by 201 KAR 11:121 Section 1(1)(g), which makes it improper conduct to enter an ongoing team or group relationship without the principal broker's written consent.

Kentucky forbids a broker to split fees with an unlicensed person. Which payment does KRS 324.020(4) nevertheless allow?

• a.Paying an unlicensed personal assistant a percentage of each transaction she helped close
• b.Paying a mortgage loan officer for a list of the names of prospective sellers and buyers
• c.Paying a finder's fee to a past client who introduces a ready and willing buyer to the brokerage
• d.Paying a licensed auctioneer who collaborates with the broker on an auction sale of real estate✓

KRS 324.020(4) opens with the rule — 'No broker shall split fees with or compensate any person who is not licensed to perform any of the acts regulated by this chapter' — and then lists three exceptions: (a) a referral fee to a broker licensed outside Kentucky for referring a client, (b) a commission or other compensation to an out-of-state broker in compliance with KRS 324.235 to 324.238, and (c) payment to a licensed auctioneer for services rendered where an auctioneer and a real estate broker collaborate in conducting a sale of real estate at auction. Each of the wrong answers is separately sanctionable. Paying for the names of potential sellers or buyers is a ground for sanction under KRS 324.160(4)(s) except as 324.020(4) allows; paying anyone for services performed in violation of the chapter violates 324.160(4)(i); and a commission share to an unlicensed assistant is the core of what 324.020(4) forbids. Note too that a licensee may accept compensation only from his or her own principal broker, under a compensation agreement between them, per KRS 324.160(4)(f).

Every Kentucky real estate advertisement must display, in written text:

• a.The registered full name of the brokerage company, or the principal broker's name marked as such✓
• b.The brokerage company's logo, which may stand in for the company's registered written name
• c.The affiliated licensee's full name and Kentucky license number, in type no smaller than the headline
• d.The address and telephone number of the office where the transaction file will be kept

201 KAR 11:105 Section 2(2) requires every advertisement to include either the full name of the real estate brokerage company registered with the commission, or the full name of the registered principal broker with a clear designation of principal broker status. Section 3(1) requires that content to be in written text, clear and visible to a typical observer, and not false, misleading or deceptive. An affiliated licensee's own name is permitted rather than required, and Section 3(2)(a) caps it: the permitted content shall not appear larger than the required content — with carve-outs in 3(2)(b) for hats, pens, notepads, apparel, name tags and the sponsorship of charitable and community events. Section 3(6) forecloses the logo answer directly: 'A logo that does not contain written text of the content required by Section 2(2)... shall not constitute a substitute for the content required.' An office address is nowhere required, though Section 3(7) adds, for a licensee whose principal business location is outside Kentucky, a statement that he holds a Kentucky license and the regulatory jurisdiction of that location.

How does 201 KAR 11:105 treat a Kentucky licensee's social media posts?

• a.Each viewable page or post is a separate advertisement needing the required content, or a clear link to it✓
• b.Posts are exempt from the requirement if the licensee deletes them within thirty days of publication
• c.The licensee's whole account counts as one advertisement, so the profile bio alone may carry the content
• d.Social media is exempt, because the regulation reaches only print advertising and yard signage

201 KAR 11:105 Section 3(3)(a)1. states the rule that catches most licensees out: 'every individual viewable page or post shall constitute a separate advertisement.' Sub-paragraph 2. then requires each such advertisement to carry the Section 2(2) content in the page or post header, or visible without the observer scrolling or otherwise navigating to find it; paragraph (b) offers the fallback where a page cannot reasonably comply — a clickable direct link, clear, visible and identifiable as a link, to a page, post or profile that does display it correctly. That fallback is what makes the bio answer wrong: a profile may be the destination of the link, but it does not excuse the individual post. Section 3(4) adds that an advertisement with an audiovisual presentation needs an audible announcement or written display of the required content at the beginning. Section 3(5) is the only genuine safe harbor: online advertising true and accurate when made is not in violation — which is about later changes in fact, not about deletion.

A Kentucky sales associate receives a contract deposit. KRS 324.111(1) says such money goes into escrow 'without unreasonable delay.' What does that mean?

• a.By the closing date, so long as the funds remain traceable in the transaction file
• b.Within three business days of receipt by the principal broker or an affiliated licensee✓
• c.Within twenty-four hours of the offer being accepted in writing by the seller
• d.Within seven business days of receipt by the principal broker or an affiliated licensee

The statute uses the phrase and the regulation defines it. 201 KAR 11:011 Section 1(47)(a) provides that 'without unreasonable delay' means, 'For contract deposits or money belonging to others, within three (3) business days of the receipt by the principal broker or an affiliated licensee of the principal broker.' The clock therefore starts on the associate's receipt, not on the broker's, which is why a firm cannot buy time by routing checks slowly to the main office. Two neighboring definitions matter. Section 1(47)(b) gives the phrase a second, different meaning for the notice required by KRS 324.360(8) — seventy-two hours of the listing agent's receipt of a written and signed offer. And Section 1(16) defines a 'contract deposit' as earnest money delivered to a licensee after the offer or counteroffer is accepted and an executory contract exists. Closing is far too late: 324.111(4) bars withdrawal of contract deposits before the contract terminates, which assumes the money is already in the account.

Beyond keeping escrow money separate, KRS 324.111(1) imposes further requirements on a Kentucky principal broker's escrow account. Which is one of them?

• a.The account may be maintained in any state in which the brokerage company does business
• b.The account must be interest-bearing, with the interest earned accruing to the brokerage company
• c.The account must be reconciled monthly and the reconciliation filed with the commission
• d.An overdraft not caused by bank service charges must be reported if not corrected in 72 hours✓

KRS 324.111(1) packs three separate duties around the separation requirement: the escrow accounts 'shall be maintained within the State of Kentucky,' they 'shall be identified to the commission in writing,' and each principal broker 'shall advise the commission, in writing, if any overdraft occurs in the escrow account for any reason other than service charges instituted by the bank, and which is not corrected within seventy-two (72) hours of the broker receiving notice.' In-state is therefore mandatory, which disposes of the third choice. Interest is optional and does not belong to the firm: KRS 324.111(2) lets the broker place the deposit in an interest-bearing account or instrument and directs that 'The interest earned shall accrue to the person agreed to in writing by all parties.' KRS 324.111(3) adds that no checks shall be drawn against uncollected deposits. Kentucky imposes no monthly escrow reconciliation filing; what it imposes instead is the standing audit permit of 324.111(5).

A Kentucky sale collapses and buyer and seller both claim the deposit. KRS 324.111(6) lets the broker start a release process. What does it require?

• a.Interpleader in Circuit Court, the only route by which a Kentucky broker may disburse a disputed deposit
• b.Payment to whichever party's written demand reaches the broker first, with notice to the other party
• c.Written notice to the commission, which then decides which party is entitled to the disputed deposit
• d.Certified-mail notice naming who will take the deposit, with release permitted after 60 days of silence✓

KRS 324.111(4) is the default — no contract deposit is withdrawn until the contract is terminated by performance, by written agreement of all parties, or by court order — but it is expressly made subject to subsection (6), which the stem is asking about. On being notified that one or more parties intends not to perform, the broker may notify all parties at their last known address by certified mail that the deposit will be distributed to the parties specified in the letter unless all enter a written mutual release, or unless one or more initiate litigation, within sixty days of the mailing date. If neither happens, 'the broker may release the deposit to the party identified in the certified letter without penalty under this section and without civil liability in the courts of the Commonwealth.' So litigation is a route the parties may take, not the only exit for the broker. The commission adjudicates license violations rather than entitlement to money, and paying whoever asks first is exactly what 324.160(4)(h) reaches.

What does Kentucky require a principal broker or affiliated licensee to do with signed transaction paperwork?

• a.Deliver copies only to the client, a customer being owed no documents by the firm
• b.Deliver a copy of every document to each party executing it, at the time of signing✓
• c.Retain the originals and release copies only upon a party's written demand for them
• d.Deliver copies of the signed documents to the parties within ten days after closing

201 KAR 11:121 Section 9(4) requires that 'At the time of signing all documents, the principal broker, or an affiliated licensee of the principal broker, shall ensure that a copy of all documents are delivered to all parties executing the documents' where the document was provided or prepared by, or at the direction of, the firm. Section 9(5) adds a second delivery duty at the end of the transaction: a debit and credit type closing statement furnished to the client on closing, unless a financial institution, title agency, attorney or other authorized individual has prepared it. Waiting for a demand inverts the duty — KRS 324.160(4)(q) makes failing or refusing on demand to furnish a copy to a person whose signature is on the document a ground for sanction, which is a floor beneath the regulation, not a substitute for it. And the regulation says 'all parties executing the documents', so it reaches a customer as readily as a client. Section 8(2) requires anything received by fax or digital transmission to go immediately into the file.

A Kentucky principal broker opens a second office 140 miles from the main office. What does KRS 324.112 require?

• a.No separate registration is needed so long as the branch uses the company's registered name
• b.A sales associate with two years' experience may manage it, with registration due at the company's next renewal
• c.A broker must manage the branch, and the branch must be registered with the commission within ten days✓
• d.The branch must sit in the same county as the main office, no branch being permitted elsewhere

Distance is what decides it. KRS 324.112(1) provides that 'No principal broker shall maintain a branch office outside a one hundred (100) mile radius of the main office without having a broker managing the branch office,' and 324.112(2) allows a sales associate with two years' experience averaging at least twenty hours per week over twenty-four months to manage a branch only 'inside a one hundred (100) mile radius' — which this branch is not. KRS 324.112(3) then requires the principal broker to register any branch office with the commission within ten days of its creation, and 324.112(4) requires each licensee's license to be kept on file at the office where he is actively engaged and affiliated. Registration is separately reinforced by 201 KAR 11:210 Section 9(3), which requires notice of a branch office name or address change on Company Information Update Form, KREC Form 202. There is no county restriction; the general rule is KRS 324.115(1), that every Kentucky broker maintain a definite place of business in the state.

How long must a Kentucky principal broker preserve the file on a real estate transaction?

• a.Five years following the transaction's consummation or failure✓
• b.Seven years following the close of the calendar year of closing
• c.Three years following the transaction's consummation or failure
• d.Two years, or until the commission's next office audit, whichever is later

201 KAR 11:121 Section 9(1) requires the principal broker to 'confidentially preserve, either in hard copy or digital format, for five (5) years following its consummation or failure, records in one (1) file relating to any real estate transaction.' The list of what the file must hold is worth memorizing: written offers to lease or purchase, the acquisition and disbursement of any monies, listing and sales contracts or leases, closing sheets, Seller's Disclosure of Property Condition and Condominium Seller's Certificate forms, Agency Consent Agreement forms, Guide to Agency Relationships forms, and timeshare records. Note the trigger — consummation or failure — so a deal that dies still starts the clock, and the period does not run from a calendar year end. Section 9(2) applies the same five years to property management records, and Section 9(3) names who keeps them if the principal broker dies or is incapacitated. Nothing in Kentucky's rule is keyed to when the commission next audits the office.

201 KAR 11:121 Section 1 adds prohibitions to those in KRS 324.160. Which of these is one of them?

• a.Offering a rebate, discount or other inducement to a consumer to use the licensee's services
• b.Using a registered nickname in place of a first name on a document filed with the commission
• c.Refusing to let a prospective purchaser view listed property without the client's written direction✓
• d.Advertising the fee or other compensation the principal broker agrees to charge for his own services

201 KAR 11:121 Section 1(1)(b) forbids a licensee to 'Refuse or prohibit any prospective purchaser from viewing or inspecting real estate listed for sale or lease with the real estate brokerage company with which the licensee is affiliated, without the written and signed direction of the listing or leasing client,' adding that this shall not be construed to permit otherwise unlawful discrimination. The other three choices are the regulation's express safe harbours: Section 1(3) says advertising the principal broker's fee is not improper conduct, Section 1(4) says offering rebates, discounts or other inducements and truthfully advertising them is not improper conduct, and Section 1(5) says using a registered nickname in place of a first name is not improper conduct. The rest of Section 1(1) is the real list: RESPA violations, offering property without written consent, failing the six fiduciary duties owed a client — loyalty, obedience, disclosure, confidentiality, reasonable care and diligence, accounting — failing the duties owed a prospective client or any other party, joining a team without written consent, inducing a party to break a contract, and the auction rules in (i) and (j).

What may an unlicensed assistant working under a Kentucky broker's supervision do?

• a.Discuss the terms of an offer with a buyer where the licensee approved those terms in advance
• b.Receive a share of the commission on the transactions the assistant helped to bring in
• c.Show a listed property to a prospective buyer when the affiliated licensee is unavailable
• d.Contact the public to set appointments and pass on general information the broker authorized✓

The exception is real but narrow. KRS 324.030(6) takes outside the licensing requirement 'A nonlicensed person under the supervision of a licensed real estate broker who contacts the public for the purpose of setting an appointment for the broker to meet with them regarding buying or selling property and giving out general public information specifically authorized by the broker.' Everything beyond that runs into KRS 324.010(1), which makes negotiating a purchase, sale or exchange, or showing and offering property, acts of real estate brokerage requiring a license — so neither showing a property nor discussing offer terms falls inside the exception, however closely the licensee supervises. The compensation answer fails under KRS 324.020(4), which forbids splitting fees with an unlicensed person outside its three listed exceptions. And the responsibility runs upward: 201 KAR 11:121 Section 9(9) makes the principal broker ensure that any employee or unlicensed personal assistant, salaried or contracted, complies with KRS Chapter 324 and 201 KAR Chapter 11. The old standalone rule, 201 KAR 11:440, was repealed.

KRS 376.075 gives a Kentucky real estate broker a lien for unpaid compensation. What keeps that lien alive?

• a.Recording the listing agreement with the county clerk before the property is first marketed
• b.Filing a sworn statement with the county clerk within twelve months of ceasing services, then suing within six months
• c.Filing a claim with the commission, which then certifies the broker's lien to the county clerk
• d.Filing a sworn statement with the county clerk within six months of ceasing services, then suing within twelve months✓

Kentucky's broker lien lives in the statutory-liens chapter, alongside engineers, architects, landscape architects and land surveyors. KRS 376.075(4) dissolves the lien 'unless the claimant, within six (6) months after he ceases to provide services, files in the office of the county clerk of the county in which the property is situated a statement of the amount due,' with credits and setoffs, a description sufficient to identify the property, the owner's name if known, and whether the services were furnished by contract with the owner, a contractor or an architect, subscribed and sworn to. KRS 376.075(5) then dissolves it 'unless an action is brought to enforce the lien within twelve (12) months from the day of filing the statement.' Three further limits: 376.075(3) denies a lien to anyone who has not contracted directly with the owner or his agent; 376.075(8) requires a written listing or buyer-representation agreement plus services that procured a ready, willing and able party; and 376.075(7) bars a lien on newly constructed residential real estate unless the purchaser agreed in writing to pay the broker directly. The commission has no role in perfecting it.

A Kentucky licensee cold-calls for listings. Under KRS 367.46955, residential telephone solicitations may be made only:

• a.Between 8 a.m. and 9 p.m. local time at the calling licensee's location
• b.Between 9 a.m. and 8 p.m. local time at the called person's location
• c.At any hour, provided the caller identifies the brokerage within thirty seconds
• d.Between 10 a.m. and 9 p.m. local time at the called person's location✓

KRS 367.46955(16) makes it a prohibited practice to make telephone solicitations to a person's residence 'at any time other than between 10 a.m. - 9 p.m. local time, at the called person's location' — so the consumer's clock governs, not the caller's, which matters in a state that straddles two time zones. The thirty-second rule in the last choice is a real but separate duty: KRS 367.46953 requires the caller immediately on contact to state his actual name, the merchant's legal name, a contact number or address and the town and state he is calling from; within the first thirty seconds to identify what is being offered and ask whether the consumer wants to hear a sales presentation; and to discontinue immediately if the answer is no. Two list rules sit alongside: 367.46955(15) bars unsolicited calls to residential numbers on the national Do Not Call Registry, and 367.46994(2) protects numbers on Kentucky's zero call list. KRS 367.46995(2) then gives a defendant a defense where he obtains the current zero call list in a timely manner and makes reasonable efforts to avoid calling those numbers.

KRS 324.160(6) both shields and binds the Kentucky principal broker. In what way?

• a.He bears liability only for violations he committed himself, since supervision is left to company policy
• b.He bears liability only where the commission first proves he profited from the affiliate's violation
• c.He is not primarily liable for an unknown affiliate violation, yet poor supervision is itself a violation✓
• d.He bears strict liability for every act of every affiliated licensee, whether or not he knew of it

The subsection does two things in three sentences, and candidates who remember only the first half get it wrong. 'No unlawful act or violation of any provision of this chapter by any affiliated licensee of the principal broker shall be cause for holding the principal broker primarily liable, unless the broker has knowledge of the unlawful violation and did not prevent it. The principal broker and his or her designated manager, if any, shall exercise adequate supervision over the activities of licensed affiliates and all company employees to ensure that violations of this chapter do not occur. The failure of a broker or his or her designated manager to exercise adequate supervision of the licensed affiliates shall constitute a violation of this chapter.' The version effective April 4, 2024 is the one to learn. So Kentucky is neither strict-liability nor personal-acts-only, and profit is beside the point. 201 KAR 11:105 Section 2(1)(b) applies the same idea to advertising — the principal broker is liable for affiliates' advertising he knew or should have known breached his own written standards or the law — and 201 KAR 11:121 Section 9(10) requires him to run an information security system protecting confidential information.

What does Kentucky do to a person who practices real estate brokerage without a license?

• a.Treats it as a Class B misdemeanor for every offense, however many transactions are involved
• b.Treats it as a Class A misdemeanor for a first offense and a Class D felony for any subsequent offense✓
• c.Treats it as a civil matter, with a commission-assessed fine capped at $1,000 for each separate transaction
• d.Treats it as beyond reach, the commission's jurisdiction running only to its own licensees

KRS 324.990(1) provides that 'Any person engaging in real estate brokerage without a license shall be guilty of a Class A misdemeanor for a first offense and a Class D felony for any subsequent offenses,' sparing only the person whose lapse was a failure to renew a previously valid Kentucky license who avails himself of the remedial provisions of KRS 324.090(3). KRS 324.990(2) stacks a civil layer on top: a Circuit Court may fine a violator not less than $100 nor more than $1,000 or imprison him up to six months, or both, and on conviction must add the amount of any real estate brokerage commission paid or received, with each transaction a separate offense. The commission is not confined to licensees either — KRS 324.020(6) lets it seek injunctive relief in the Circuit Court where it sits or where the unlawful activity took place, and 201 KAR 11:210 Section 6(8) requires anyone who engaged in unlicensed brokerage to return all fees earned before any license is issued or reactivated.

Kentucky's statute of frauds, KRS 371.010, reaches real estate twice. Which pair must be written and signed by the party to be charged?

• a.A contract for the sale of real estate, and any lease of real estate whatever its length
• b.A contract for the sale of real estate, and a promise to pay a commission for a sale or lease✓
• c.A contract for the sale of real estate, and a promise to lend money for a consumer credit purchase
• d.A promise to pay a commission, and every oral arrangement a licensee makes with a prospective client

KRS 371.010(6) covers 'any contract for the sale of real estate, or any lease thereof for longer than one year' — note the carve-out, which is why a lease of a year or less is outside the statute and the second choice overstates it. KRS 371.010(8) is the provision that catches practitioners: 'any promise, agreement, or contract for any commission or compensation for the sale or lease of any real estate or for assisting another in the sale or lease of any real estate.' A Kentucky broker's fee arrangement therefore belongs in writing if he wants to sue on it. The closing words of the section supply the test — no action shall be brought 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.' Kentucky law does contemplate oral brokerage arrangements: 201 KAR 11:121 Section 5(1)(b) requires the Guide to Agency Relationships before a contemplated oral agreement. And KRS 371.010(9), on commitments to lend, expressly excludes consumer credit transactions and credit cards.