1. Must licensees include their mailing
addresses and phone numbers in their print advertisements for listed
Print advertisements for listed properties must include either
the name of the real estate company where the licensee’s license is held or
the name of the real estate company’s principal broker and the principal
broker’s designation as such, pursuant to KRS 324.117 and 201 KAR 11:105.
2. If agents advertise their listed properties on Facebook, are
they required to satisfy the advertising requirements in KRS 324.117 and 201
3. Is it legal for a licensee to run a “coming
soon” advertisement for unlisted property?
ANSWER: No. To
advertise or promote property by any means, including the use of “coming soon”
signs/advertisements, a licensee must have a signed listing agreement that
satisfies the requirements of 201 KAR 11:250.
4. If a buyer’s agent is using a sign to advertise or promote
his or her participation in a sale, must the sign clearly state the licensee’s
role as a buyer’s agent in the sale; or, does that requirement not apply to signs
because they are governed by 201 KAR 11:250, Section 2, which does not include
ANSWER: Pursuant to 201 KAR 11:105, Section 1, a
licensee’s role as a buyer’s agent must be clearly stated in all
advertisements, including signage, if the licensee is advertising or promoting
his participation as a buyer’s agent in a sale.
Reminder: Pursuant to
Section 2 of the regulation, a licensee must have the written consent of a
property’s current owner in order to place a sign on the owner’s property.
1. What may licensees do to satisfy agency
disclosure requirements when they are dealing with customers or clients who are
landlords or tenants?
ANSWER: In response to an increase in the demand for
licensees to represent prospective landlords and/or tenants, the KREC has
created alternate Agency Disclosure Statements and Consumer Guide model
policies. The alternate forms are dated
December 2011 and can be accessed from the KREC’s website at www.krec.ky.gov
is it necessary to disclose that you are related to a buyer or seller?
ANSWER: In a dual agency transaction, a dual agent’s
personal, family, or business relationship with either the buyer or the seller
must be disclosed. Reminder: Dual agency can involve two agents in the
same brokerage or only one real estate agent.
1. Is a
Commission-issued license required to sell a business in KY?
ANSWER: No, if the transaction does not involve the
sale or lease of any real property.
OF BROKERAGE FIRMS
1. “I’m in the process of changing
brokerages. What can I tell my clients
that I have now about my change?”
ANSWER: In the absence of a
contract stating otherwise, listings
belong to principal brokers—not to their affiliated licensees. Therefore, if an agent changes principal
brokers, the original principal broker will have to agree to release the
listings or they will be retained by that broker. Legally, the agent may only inform the
principal broker’s clients that he or she is leaving. There should not be any discussions about how
to cancel or withdraw the listings, as that could constitute contract
1. Is a “One-Time Showing” agreement a listing
ANSWER: No, it is a commission agreement. (See:
Attachment 15d, which contains a copy of a KREC-approved “Residential One-Time
Showing Agreement” (Form L105) and a KREC-approved “Commercial One-Time Showing
Agreement” (Form L106)).
2. “When I read 201 KAR 11:250, it says to me
that no matter what type of change you have on a listing agreement, that change
must be signed by the seller. To me this
would include price reductions, extensions and all changes that may be made to
the original contract since the original contract was signed. Can you tell me if I am interpreting this
correctly? I am being told that e-mail
messages can be accepted for these types of changes.”
ANSWER: Pursuant to 201 KAR 11:250, Section 1(8), all
changes on a listing contract must be properly initialed, dated and timed.
3. Note: A private
attorney should be contacted for legal advice about:
of contract issues;
nonresident alien escheat statute (KRS 381.300);
c. Kentucky’s broker lien law (KRS 376.075);
vs. personalty (i.e., personal property) issues; and
“Time is of the essence” issues.
1. “We had a discussion
here at work about the disclosure of a death when selling a house/home, or
property in Kentucky. I was under the impression that it was a
state law that required disclosing information about the death upon selling.”
What does the law require?
ANSWER: Since June 24, 2003, KRS 324.162 has governed an agent’s
duty to disclose. As a result of that
law, real estate agents are not required to disclose, upfront, any stigmas
associated with a property, such as a murder, a suicide, or a violent crime
that has occurred at the property.
However, licensees are still required to answer any and all direct
questions in an honest manner, including questions regarding stigmas.
2. “If the basement of a vacant bank-owned property is full of
mold due to a faulty sump pump, should that information be disclosed on a
Seller’s Disclosure of Property Conditions Form?
ANSWER: Yes. Moreover, if
the mold has been remediated, that information should also be disclosed, with
3. “Do property condition reports pertain
to single family homes, or does it also apply to multi-family?”
ANSWER: Pursuant to KRS
324.360(1), the seller’s disclosure of conditions requirements apply to sales
and purchases involving single-family residential real estate dwellings only.
1. Can e-signatures be used in Kentucky?
ANSWER: Yes, pursuant to Kentucky’s
Uniform Electronic Transactions Act (KRS 369.101 to 369.120).
2. Does the “date and
time of signing” requirement in 201 KAR 11:250 apply in transactions using
electronic signature products such as DotLoop, DocuSign, and Authentisign?
1. If an agent puts his or her
license in escrow and has a transaction that is pending, can the agent still
receive the commission when it closes?
If a commission or fee was earned when the licensee’s license was active, then it
may be paid to the licensee even though the licensee’s license is in
2. May an escrowed licensee manage property for others for a
fee and/or refer clients to an active agent and be paid for that activity?
ANSWER: No. These are real estate brokerage
activities, as defined in KRS 324.010(1).
Consequently, to engage in them requires an active license.
FUNCTION REFERRAL OFFICE (“LFRO”)
1. “What are the KREC requirements
for becoming a License Referral Service?
I would like to offer this service to agents wanting an alternative to
ANSWERS: From a license law perspective, a LFRO, which
is a creation of the National Association of Realtors®, is simply another type
of real estate brokerage firm or company that must be registered with the
KREC. In other words, the KREC does not
distinguish between types of real estate brokerage firms. Therefore, a LFRO must have an escrow
account, a name, and a principal broker.
Again, it must be registered with the KREC. In addition, the affiliated licensees of a
LFRO must have an active license and E & O insurance coverage. They must also satisfy the annual continuing
education requirement to the same extent as other active licensees.
1. If a licensee submits his or her
client’s written offer at 5:00 p.m. on a Friday, may the listing broker refuse
to present the offer to his or her seller-client until Monday morning at 9:00
ANSWER: The KREC decides issues like this on a
case-by-case basis after it has reviewed and considered all relevant
facts. So, a complaint should be filed,
if it is believed that a licensee has violated 201 KAR 11:045, Section 2, by
failing to present, without delay, all written offers to his or her seller-client.
1. May a principal broker’s affiliated
licensee provide property management services for others for a fee,
compensation, or other valuable consideration, if the affiliated licensee has
an ownership interest in the property management company, but his or her
principal broker does not offer property management services?
ANSWER: No. Property management is a real estate
brokerage service that some, but not all, real estate brokerage companies
offer. To provide this service, a
property management company must have a principal broker, who may have
affiliated licensees. However, the
licensees who are affiliated with the property management company may not be
simultaneously affiliated with another real estate company or another principal
2. “Do I need a license to provide property management services
for others for a fee in Kentucky?”
3. May an affiliated agent work as
a licensee for a property management company while affiliated with the agent’s
principal broker, who is affiliated with a different real estate company.
1. When parties to a contract are disputing over earnest money that is
being held in a principal broker’s escrow account, must the principal broker
who is holding the funds initiate the release process in KRS 324.111(6)?
ANSWER: No. The
principal broker may, but is not required to, initiate the release process in KRS
2. Does a purchase contract
provision stating that “the earnest money will be returned if the buyer cannot
obtain financing” authorize a principal broker’s release of the funds from his
or her escrow account?
KRS 324.111(4) and (6) govern.
KRS 324.111(4) states: “None of
the contract deposits shall be withdrawn until the contract has been terminated
by performance, by agreement in writing between all parties, or by order of a
court of competent jurisdiction, except as permitted in subsection (6) of
this section.” (Emphasis added.)
Notably, on June 25, 2009, KRS
324.111(6) was amended to state, in relevant part, as follows: “Upon being notified that one (1) or more
parties to a contract intends not to perform, the broker may initiate the
Before the statute was amended on June 25, 2009, the provision
(above) included additional language, which was deleted because it created
confusion. The additional language that
was deleted is underlined in the following:
“Upon being notified that one (1) or more parties to a contract intends
not to perform, the broker may release the contract deposit as provided in
the contract or if no provision is made in the contract the broker may
initiate the release process.” (Emphasis
1. What happens to the purchase contracts, when an affiliated
licensee terminates his or her affiliation to become a principal broker of his
own real estate company?
ANSWER: Listing and pending
contracts are “owned” by the real estate company’s principal broker, in the
absence of a written agreement stating otherwise. Moreover, 201 KAR 11:145
Section 1. Unless there is a written contract stipulating
otherwise, a real estate salesman shall, upon termination of his affiliation
with a real estate broker, immediately turn over to the broker any and all
listing information obtained during his affiliation whether the information was
originally given to him by his broker or copied from the records of the broker
or acquired by the salesman during his affiliation.
2. An affiliated agent asked the
principal broker to release the agent’s license. The principal broker’s response to the agent
was, “I’ll think about it.” Can the
principal broker do that instead of releasing the license?
ANSWER: No. KRS 324.310 and 324.312, which govern, do not
allow the principal broker to merely
“think about it.” He or she must act
a Principal Broker have to be an owner of the company/ have an ownership stake
in the company to be licensed? Or can a Principal Broker just be an employee of
ANSWER: No. A principal broker may, but is not required
to, be an owner of the real estate company with which he or she is
affiliated. Nor is the principal broker required to have an ownership
stake in the company. As KRS 324.010(4) states: “’Principal broker’ means
a person licensed as a broker under KRS 324.046 who, in addition to performing
acts of real estate brokerage or transactions comprehended by that definition,
is the single broker responsible for the operation of the company with which he
or she is associated.”