Kentucky: the state portion of the broker examination

This chapter covers Kentucky law only. Agency theory, fair housing, RESPA and TILA, financing, valuation and the arithmetic are in the national portion you have just read. What follows is the 50 scored items that only a Kentucky candidate sits — in the order PSI prints them, and sized to what each area is actually worth.

1. What the Kentucky state portion actually is

Kentucky's examination is delivered by PSI under candidate information bulletin 2312, revision October 1, 2023. The broker paper, as the bulletin prints it:

The bulletin's own arithmetic does not reconcile — the General row shows 75 questions worth 80 points, but the combined row shows 125 points rather than 130. Do not try to fix it; what governs your day is 75 general questions plus 50 Kentucky questions, four hours, and the bulletin's pass standard: "In order to pass the examinations, you must receive a score of at least 75% correct."

Here is the Kentucky state content outline, with broker item counts. They sum to exactly 50:

More than a third of the Kentucky portion is one area. Brokerage Activities and Requirements is eighteen items across fourteen printed subtopics — the broker/sales associate relationship and teams, commissions, advertising, handling of monies, handling of documents, place of business, records, escrow accounts, improper conduct, unlicensed assistants, broker lien law, the zero (no-call) list, brokerage management, and unlicensed brokerage. It is worth more than the Commission and licensing areas put together. Two of its subtopics — team and group management, and brokerage management — are marked broker only in the bulletin. Note also that Requirements for a License drops from 10 items on the sales associate paper to 8 on the broker paper, and the Real Estate Commission area rises from 5 to 7: as a broker candidate you are asked more about the regulator and less about how to get licensed.

Three warnings about the source documents, and they matter more in Kentucky than almost anywhere.

First, do not study from the outline hosted on proctor2.psionline.com. That file is marked "Update 7/1/2015," says the state portion is 40 items, and every single area count differs from the live bulletin — Brokerage Activities 15 → 18, Contracts 4 → 6, and so on down the table. It is still a top web-search result. The live PSI bulletin is the authority.

Second, the bulletin publishes no statute or regulation references at all. The strings "KRS" and "KAR" appear nowhere in its twelve pages; its only reading list is nine national textbooks under Examination Study Materials. Every citation in this chapter is drawn from primary sources — KRS Chapter 324 and the surviving regulations in 201 KAR Chapter 11 — because the vendor supplies none.

Third, and most important: most of 201 KAR Chapter 11 no longer exists. In a consolidation effective May 2, 2023, regulation 201 KAR 11:002 repealed roughly thirty regulations, folding their substance into a single standards regulation. Exactly seven regulations survive the whole of 201 KAR Chapter 11:

201 KAR 11:121 is the consolidated regulation that absorbed the thirty repealed ones, and it is where most of the practice rules in this chapter now live. Everything else is gone: the financing-provisions rule (11:040), offers (11:045), net listings (11:050), records (11:062, 11:065), trust accounts (11:090, 11:095), closing statements (11:100), listings (11:110), property management (11:245, 11:250), the seller's disclosure form (11:350), background checks (11:430), personal assistants (11:440), the broker management course (11:450) — and, the one that causes most trouble, 201 KAR 11:400, "Agency disclosure requirements."

Any 11:4xx citation is presumptively dead. If a study guide, a flashcard or a practice explanation cites a 201 KAR regulation that is not one of the seven in the table above, it is citing a repealed rule — and, as § 6 below shows, at least one repealed rule's trigger language is still being taught word for word.

Finally, note that the bulletin itself is a 2023 document and Kentucky law has moved since. KRS 324.160 was amended effective April 4, 2024 (the supervision provision at subsection (6)) and KRS 324.085 was amended effective July 15, 2026. KRS 324.010 and 324.020 were amended effective June 29, 2023. Five of the seven surviving regulations carry a stated expiration of December 16, 2026 — which is the date to re-check before relying on a figure in practice.

2. Real Estate Commission (7 items, 14%)

The bulletin's subtopics: 1. General Powers — 1.a. Authority to issue licenses, 1.b. Examination and audit of records, 1.c. Administration of Education, Research, and Recovery Fund · 2. Enforcement Powers — 2.a. Investigations, hearings, and appeals, emergency suspension, 2.b. Sanctions (2.b.i. Fines, 2.b.ii. License suspension, revocation, and other action, 2.b.iii. Criminal action).

Membership and general powers

KRS 324.281(1): the Governor appoints seven persons, at least six of whom have been Kentucky 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 is 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 trade association nominates but does not appoint. § 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.

§ 324.281(5) lists the duties: promulgate administrative regulations under KRS Chapter 13A; hold disciplinary hearings; "conduct examinations for applicants eligible under this chapter or alternatively to contract with an entity to conduct examinations" — which is how PSI, not KREC, comes to sit in the testing center; conduct continuing-education seminars; investigate irregularities; and cooperate with other agencies.

The Commission's reach has a stated limit. KRS 324.2812 provides that nothing in the chapter or its regulations extends the Commission's jurisdiction to community association managers, or to the management or business activities of not-for-profit townhouse, condominium, homeowner or neighborhood associations. And note two things the Commission does not do: it does not set commission rates — what KRS Chapter 324 regulates is who may pay a fee to whom, at §§ 324.020(4) and 324.160(4)(f) — and it neither requires nor polices membership in a Realtor board, which is voluntary membership in a private association.

Examination and audit of records

The Commission does not need a warrant or a complaint to look at a broker's escrow accounts, because the broker consents in advance as a condition of licensure. KRS 324.111(5): "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." No court process, and the bank is not the gatekeeper.

KRS 324.150(1)(a) lets the Commission or its staff investigate a licensee on its own initiative, and makes investigation mandatory on a verified written complaint that states a prima facie case of a KRS 324.160 violation. KRS 324.150(2) supplies the tools: subpoenas for witnesses and documents, administering oaths, reviewing evidence, examining witnesses, witness fees, and — paragraph (d) — entry into the office or branch office of any principal broker to inspect documents the Commission requires to be kept there.

The Education, Research, and Recovery Fund

KRS 324.400 creates the fund in the State Treasury and funds it with a fee of up to $60 charged on original licensure and at each biennial renewal, on top of the license fees in KRS 324.287.

KRS 324.410(1) sets the caps: 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 conditions ride along — the licensee must have been found guilty of fraud violating KRS 324.160, must have refused to pay within twenty days of entry of the final order, and the amounts must be certain and liquidated. KRS 324.410(2) requires the Commission to maintain the fund at a minimum level of $400,000, permitting only the excess to be spent on education and research — a real figure that is not a payment cap.

On the claimant's side, KRS 324.420(6) bars recovery unless the action is commenced within one year of actual knowledge of the cause of action, and § 324.420(7) limits recovery to actual financial harm specifically and directly related to the property. KRS 324.420(3) then suspends or permanently revokes the licensee's license until the fund is reimbursed in full plus ten percent interest per annum, and § 324.420(5) subrogates the Commission to the claimant's rights. Damages that cannot be accurately determined go to the Circuit Court of the county where the violation took place under § 324.420(1), but the payout still stops at the statutory caps — the fund is not an insurer of judgments.

Enforcement, sanctions, emergency action and appeal

KRS 324.170(1) requires a hearing under KRS Chapter 13B before the Commission denies an application or orders any disciplinary action; where the respondent is a sales associate, the Commission must notify the principal broker by certified mail and order his attendance.

One shortcut exists, and it is about escrow. KRS 324.150(1)(b) authorizes an emergency hearing "when alleged escrow account violations warrant emergency action," conducted under KRS Chapter 13B as it relates to emergency orders — and §§ 324.111(9), 324.151(4) and 324.170(3) each repeat the cross-reference, which tells you how deliberate it is. Nothing else moves faster: a consumer complaint suspends nothing (KRS 324.151(1) requires it first to state a prima facie case), an advertisement believed misleading is not ordered withdrawn without a hearing, and missing continuing education is automatic cancellation under § 324.085(1)(a) rather than revocation.

The sanction menu — and Kentucky's low ceiling. KRS 324.160(1) permits: suspension or revocation of any license; the levy of fines not to exceed one thousand dollars ($1,000); probation for up to twelve months; required completion of academic credit hours in real estate courses; and a formal or informal reprimand. The Commission may order any or all of them together. $1,000 is a genuinely low ceiling by the standards of other states — Alabama's is $5,000 — which is why the rest of the menu, and the criminal layer below, do the heavy work.

Criminal exposure sits outside the Commission. KRS 324.990(1): unlicensed brokerage is a Class A misdemeanor for a first offense and a Class D felony for any subsequent offense, 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: a Circuit Court may fine not less than $100 nor more than $1,000 or imprison up to six months, or both, and on conviction must add the amount of any commission paid or received as a result of the violation — with each transaction a separate offense. The Commission is not confined to its own 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 § 6(8) requires anyone who engaged in unlicensed brokerage to return all fees earned before any license is issued or reactivated.

The final order and the appeal. Under KRS 324.200(2)–(3) the executive director of the Kentucky Real Estate Authority issues the final order, and an aggrieved party appeals to Circuit Court within thirty days — with discipline automatically stayed during the appeal. Compare Alabama, where an appeal expressly does not act as a supersedeas: Kentucky's stay is automatic.