Kentucky Real Estate Broker Exam — All Questions

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.