Kentucky Real Estate Broker Exam — All Questions

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.