Kentucky Real Estate Salesperson Exam — All Questions

In a typical Kentucky residential sale handled by a licensee, the seller is generally expected to complete the:

• a.Uniform Settlement Statement
• b.Certificate of occupancy
• c.Broker cooperation agreement
• d.Seller's Disclosure of Property Conditions form✓

The Kentucky Real Estate Commission provides a Seller's Disclosure of Property Conditions form, which sellers generally complete for residential transactions involving a licensee. The seller discloses known conditions of the property; the licensee must not assist in concealing known defects. Honest disclosure protects consumers and the licensee alike.

Escrow money a Kentucky sales associate receives from a buyer must be:

• a.Delivered promptly to the principal broker for deposit in the broker's escrow account✓
• b.Sent directly to the Kentucky Real Estate Commission
• c.Held by the sales associate until the seller responds
• d.Deposited in the sales associate's personal account until closing

Client escrow funds must be handled through the principal broker's escrow (trust) account. A sales associate who receives money must deliver it promptly to the principal broker, who must keep it separate from personal and business funds. Commingling or converting escrow money is a serious violation of Kentucky license law.

A Kentucky principal broker's escrow account holding contract deposits must be:

• a.Kept inside Kentucky and identified in writing✓
• b.Held at any federally insured United States bank
• c.Registered with the Kentucky Department of Revenue
• d.Combined with the company's operating account

Escrow accounts must be separate from the individual or office account, maintained within the State of Kentucky, and identified to the commission in writing. The broker may place a deposit in an interest-bearing account, with the interest going to whoever the parties agree to in writing, and signs a permit letting the commission audit the accounts. Cite: KRS 324.111(1)-(2) and (5) (eff. June 25, 2009).

A contract deposit must reach the Kentucky principal broker's escrow account 'without unreasonable delay,' which the commission defines as within:

• a.Twenty-four hours of receipt
• b.Five business days of receipt
• c.Three business days of receipt✓
• d.Ten calendar days of receipt

For contract deposits or money belonging to others, 'without unreasonable delay' means within three business days of receipt by the principal broker or an affiliated licensee. A contract deposit is earnest money delivered after the offer or counteroffer is accepted and an executory contract exists. Cite: 201 KAR 11:011, Section 1(47)(a) and (16) (eff. 12-16-2019); KRS 324.111(1).

A Kentucky principal broker must notify the commission in writing of an escrow account overdraft, other than one caused by a bank service charge, if it is not corrected within:

• a.Twenty-four hours of the broker receiving notice
• b.Seventy-two hours of the broker receiving notice✓
• c.Ten days of the broker receiving notice
• d.Thirty days of the broker receiving notice

The statute gives the broker seventy-two hours from notice of the overdraft to fix it before a written report to the commission is required. Escrow violations can also trigger an emergency order: two or more alleged violations, or a single one over $500, warrants emergency action and the account can be frozen. Cite: KRS 324.111(1) (eff. June 25, 2009); 201 KAR 11:190, Section 7(2).

When a party to a Kentucky contract says it will not perform, the broker may start the deposit release process by certified mail and then distribute the deposit if no release or litigation follows within:

• a.Fifteen days of the mailing date
• b.Thirty days of the mailing date
• c.Ninety days of the mailing date
• d.Sixty days of the mailing date✓

The broker notifies all parties at their last known address by certified mail that the deposit will go to the party named in the letter unless everyone signs a written mutual release or someone starts litigation within sixty days of the mailing date. Releasing on that basis carries no penalty and no civil liability in Kentucky courts. Cite: KRS 324.111(6) (eff. June 25, 2009).

A Kentucky principal broker must preserve the transaction file, including the agency forms and the seller's disclosure, for:

• a.One year after the transaction closes or fails
• b.Three years after the transaction closes or fails
• c.Five years after the transaction closes or fails✓
• d.Seven years after the transaction closes or fails

The principal broker keeps one file per transaction, in hard copy or digital form, for five years following consummation or failure, containing the written offers, the record of money in and out, the listing and sales contracts or leases, closing sheets, the Seller's Disclosure of Property Condition, the Agency Consent Agreement, the Guide to Agency Relationships, and any timeshare records. Property management records are kept five years as well. Cite: 201 KAR 11:121, Section 9(1)-(2) (eff. 5-2-2023).

The listing agent must deliver the Kentucky Seller's Disclosure of Property Conditions form to a prospective purchaser within:

• a.Seventy-two hours of receiving a signed offer✓
• b.Twenty-four hours of the first property showing
• c.Ten days of receiving any written offer
• d.Five days before the scheduled closing

The seller completes and signs the form when the listing agreement is executed; the listing agent must deliver a copy to a prospective purchaser or representative within seventy-two hours of receiving a written and signed offer to purchase, and must solicit the buyer's signature or note the refusal on the form. For a property with no listing agreement, the completed form goes to the buyer within 120 hours of the executory contract. Cite: KRS 324.360(4)-(5) (eff. July 14, 2000).

The Kentucky Seller's Disclosure of Property Conditions form is NOT required for:

• a.A sale of a townhouse listed by a licensee
• b.A sale in which the buyer waives all inspections
• c.A sale of a home built more than fifty years ago
• d.An auction or a court-supervised foreclosure✓

The form is excused for a new home sold with a warranty, a sale of real estate at auction, and a court-supervised foreclosure. Nothing excuses it because of the building's age or an inspection waiver, and the commission's regulation reaches duplexes, triplexes, fourplexes, condominiums and townhouses as well as stand-alone houses. A licensee may not fill in any part of the form unless he or she owns the property or the owner requested it in writing on the form. Cite: KRS 324.360(7) and (9) (eff. July 14, 2000); 201 KAR 11:121, Section 4(1).

For Kentucky real estate advertising on the internet and social media:

• a.Only the account profile must carry the disclosure
• b.Each page or post is a separate advertisement✓
• c.One disclosure per website is enough
• d.Social media posts are exempt from these rules

Every individual viewable page or post counts as its own advertisement and must show the full registered name of the brokerage company, or of the principal broker with a clear designation of that status, in the header or otherwise visible without scrolling. If a page cannot carry it, the post needs a clear clickable link to one that does. An affiliated licensee's own name may not appear larger than the required company content. Cite: 201 KAR 11:105, Sections 2(2) and 3(2)-(3) (eff. 12-16-2019).

The Kentucky Civil Rights Act's owner-occupied exemption from the housing discrimination provisions reaches a building containing housing for not more than:

• a.Two families living independently of each other✓
• b.Three families living independently of each other
• c.Four families living independently of each other
• d.Six families living independently of each other

Kentucky's exemption is narrower than the federal one: it covers the rental of a unit in a building with accommodations for not more than two families living independently, where the owner or a family member lives in one of them, plus the rental of a single room where the owner or a family member resides. The federal Fair Housing Act's comparable exemption reaches buildings of four or fewer units. The exemptions also never cover a sale handled through a licensee. Cite: KRS 344.365(1) (eff. July 14, 1992).

A Kentucky broker charged with a housing discrimination violation argues the seller demanded it. Under the Kentucky Civil Rights Act, that argument is:

• a.A complete defense to the charge
• b.No defense at all✓
• c.A defense if the demand was in writing
• d.A defense that shifts liability to the seller

It is no defense to a violation by a real estate operator, broker, salesperson, financial institution or other covered person that the violation was requested, sought or otherwise procured by someone not subject to the chapter. Kentucky also directs its human rights commission to notify the Real Estate Commission of a blockbusting violation or a failure to comply with its orders. Cite: KRS 344.375 (created 1968); KRS 344.385(1).