Kentucky Real Estate Salesperson Exam — All Questions

Kentucky requires a licensee to disclose in writing which party the licensee represents:

• a.Only after closing is complete
• b.Only if the consumer asks about representation
• c.Within 30 days after the transaction
• d.No later than when entering into a listing or buyer agreement, or before the buyer signs an offer to purchase✓

Kentucky requires written disclosure of the licensee's agency relationship at an early point in the relationship, such as when a listing or buyer representation agreement is signed or before a buyer signs an offer. Timely disclosure lets consumers understand who represents their interests before they commit or share confidential information.

In Kentucky, a licensee may act as a dual agent representing both the buyer and the seller only when:

• a.The principal broker approves it verbally
• b.Both parties give written consent to the dual agency✓
• c.The transaction is below a set price
• d.The two parties use different closing attorneys

Dual agency is permitted in Kentucky only with the informed written consent of both the buyer and the seller. Because a dual agent cannot fully advocate for either party, the licensee must not disclose one party's confidential negotiating information to the other and must obtain documented consent before proceeding.

Kentucky requires the commission's Guide to Agency Relationships to reach a prospective client at the earliest of three moments. One of those moments is:

• a.After the buyer's offer has been accepted in writing
• b.At the first showing of a listed property
• c.When the closing statement is prepared
• d.Before signing an agency consent agreement✓

The Guide (KREC Form 400) goes out at the earliest of three moments: before a contemplated written agreement to provide brokerage services for compensation, before a contemplated oral agreement, or before signing an agency consent agreement. The licensee must solicit the prospective client's signature and, if it is refused, document the delivery attempt with a date and time. Cite: 201 KAR 11:121, Section 5 (eff. 5-2-2023).

The Guide to Agency Relationships and the Agency Consent Agreement are NOT required in Kentucky for:

• a.The sale of a condominium unit
• b.An auction or a commercial transaction✓
• c.The lease of a single-family residence
• d.A sale handled by a licensed builder-developer

Both requirements carry the same two exclusions: a sale of real estate at auction and a commercial transaction. A commercial transaction means one other than the sale of a single-family residential property, a multifamily property of four units or less, or a single-family residential lot, so condominiums, house leases and builder-developer sales are not excluded. Cite: 201 KAR 11:121, Sections 5(4) and 6(4) (eff. 5-2-2023); 201 KAR 11:011, Section 1(10).

If the agency relationship a Kentucky licensee originally established with a client later changes, the licensee must:

• a.Note the change in the transaction file
• b.Report the change to the commission within ten days
• c.Obtain written consent to an updated agreement✓
• d.Tell the principal broker within ten days

The Agency Consent Agreement records the specific agency relationship proposed between the brokerage and the client, and it must be updated with fresh written consent whenever that relationship changes. The form of agency in the most recent agreement ends when the agreed services are provided or at closing. Cite: 201 KAR 11:121, Sections 6(3) and 6(5) (eff. 5-2-2023).

When a Kentucky principal broker sets up designated agency in a transaction, the principal broker:

• a.May not designate himself or herself as a designated agent✓
• b.May designate himself or herself for the seller only
• c.Must designate himself or herself for both parties
• d.May designate an unlicensed assistant to one party

The designation must be made in writing and communicated to all affiliated licensees, each designated agent must inform and obtain the consent of the party being represented, and the statute flatly bars the principal broker from designating himself or herself. A designated agent must be a licensee. Cite: KRS 324.121(1) (eff. June 25, 2009); 201 KAR 11:011, Section 1(19).

In a Kentucky brokerage practicing designated agency where one licensee represents the seller and another represents the buyer in the same sale, the dual agent is:

• a.Every licensee affiliated with the company
• b.Each of the two designated agents
• c.Nobody, because designated agency is not dual agency
• d.Only the principal broker or a designated manager✓

Designating separate licensees for buyer and seller confines dual agency to the principal broker or a designated manager working under that broker's direction, in a limited fiduciary capacity. That person must keep each party's confidential information in an individual file and may not disclose it to the other side. Cite: KRS 324.121(2) (eff. June 25, 2009); 201 KAR 11:011, Section 1(21).

Kentucky law provides that information known to one consumer, the principal broker, the designated manager, the firm, or its licensees in a real estate transaction:

• a.Is imputed to every licensee in the firm
• b.Is imputed only inside a designated agency firm
• c.Is not imputed as a matter of law to the others✓
• d.Is imputed to the cooperating brokerage as well

KRS 324.121(3) shuts off imputed knowledge: no exchange of information or knowledge between or among consumers, the principal broker, the designated manager, the firm or the licensees is imputed as a matter of law in any real estate transaction. That is what makes in-house designated agency workable. Cite: KRS 324.121(3) (eff. June 25, 2009).

Which of these is NOT one of the fiduciary duties a Kentucky licensee owes a client?

• a.Obedience to the client's lawful instructions
• b.Advancing funds on the client's behalf✓
• c.Reasonable care and diligence
• d.Accounting to the client for money

The commission lists six fiduciary duties to a client: loyalty, obedience to lawful instructions, disclosure, confidentiality, reasonable care and diligence, and accounting. Failing any of them is improper conduct. Advancing money on the client's behalf is not among them. Cite: 201 KAR 11:121, Section 1(1)(d) (eff. 5-2-2023).

The duties a Kentucky licensee owes a prospective client are:

• a.Good faith, fair dealing, and confidentiality✓
• b.Good faith and fair dealing only
• c.The full set of fiduciary duties owed a client
• d.No duty until an agreement is signed

A prospective client is owed good faith, fair dealing and the duty of confidentiality. A consumer, by contrast, is owed only good faith and fair dealing, and a client is owed the full six fiduciary duties. Cite: 201 KAR 11:121, Section 1(1)(e)-(f) (eff. 5-2-2023); 201 KAR 11:011, Section 1(14) and (34).

A Kentucky licensee's fiduciary duty of confidentiality, where it is owed:

• a.Ends when the agency agreement terminates
• b.Ends at the closing of the transaction
• c.Ends one year after the agreement terminates
• d.Survives termination of the agreement✓

The regulation states expressly that the fiduciary duty of confidentiality, if owed, survives termination of the Agency Consent Agreement. Confidential information is information that could materially compromise a client's or prospective client's negotiating position and is not required by law to be disclosed. Cite: 201 KAR 11:121, Section 1(2) (eff. 5-2-2023); 201 KAR 11:011, Section 1(13).