The joint venture by the Kentucky Real Estate Commission and the Kentucky Association of Realtors to amend Kentucky's licensing laws was a success, as Governor Paul Patton signed House Bill 677 into law on April 21, 2000. With the signing, effective date of the law is July 15, 2000.
The Commission would like to recognize and thank State Representative Jodie Haydon from Bardstown for sponsoring the bill. We appreciate his interest in the real estate industry and realize that we could not have gotten this bill passed without him.
If you will recall from the last issue, a lot of the changes were made to clean up the current language and make our laws more user-friendly. In this special edition we will cover the major changes from the bill. If you would like to see a copy of all of the changes, please logon to our website at www.krec.ky.gov and click on "House Bill 677." This link will provide you with the actual language of the full bill.
We understand it will take a few months to get used to the changes, so we have given you the information ahead of time. These statutes take effect on July 15, 2000, however, many require a regulation. The regulatory process will take some time to complete; therefore, some statutes will not be implemented on July 15. We anticipate that the regulations will be changed within the next 9-18 months. You will, of course, be informed in a timely manner of each regulation change.
The core course and other, pertinent legal courses will be amended and updated to reflect the changes in the laws. One sure fire way to get informed of the changes would be to attend a core course in your area.
Below are categorized summaries of the changes. As stated, these will take effect on July 15, 2000, unless otherwise noted.
EDUCATION
Broker Management Course: Every applicant for a broker's license will be required to complete a broker management skills course as part of their required hours. However, this statute requires a regulation to be passed which will outline the content of this course. The Commission's goal is to have this course in circulation by July 1, 2001. Until then, the course is not required of broker applicants. Reference KRS 324.046 (1)(a).
INSTRUCTORS
All instructors will be required to maintain a minimum rating in order to be certified to teach continuing education courses. This will require a regulation change and will probably be implemented January 1, 2001, since that is the beginning of the continuing education year. This is a new section of KRS Chapter 324.
CONTINUING EDUCATION
All licensees licensed prior to June 19, 1976 are exempt from continuing education requirements. This is a new section of KRS Chapter 324. All licensees will now be required to complete 3 hours of LAW continuing education each year rather than the 2 hours previously required. The old language was deleted and the new language will be a new section of KRS Chapter 324.
LEGAL
The Commission will now be able to dismiss frivolous cases without requiring answers by licensees. The Commission will send back complaints which do not allege a prima-facie case of license law violations. The Complainant will have ten days to supplement the complaint. If it still does not allege a prima-facie case after resubmittal, the case will be dismissed and will not require an answer. Reference KRS 324.151 (1).
The maximum fine for license law violations has been raised from $500 to $1,000. Reference KRS 324.160(1)(c)
Licensees may now receive an informal reprimand which means that it will not be published in the newsletter. Previously, only formal reprimands were given. Reference KRS 324.160(1)(f).
Licensees who are convicted of misdemeanor charges involving sexual misconduct may now be disciplined by the Commission. Reference KRS 324.160 (1)(j).
There will be a criminal background check required of all applicants for initial licensure. This will require a regulation change and will not be implemented until some time in 2001. Reference KRS 324.045(4).
SELLER'S DISCLOSURE OF PROPERTY CONDITIONS FORM
The Seller's Disclosure of Property Condition Form (SDF) must be delivered to the buyer's agent within 72 hours of the creation of a signed contract for listed property. Reference KRS 324.360 (4). For unlisted properties, the form must be delivered within 120 hours of the creation of the contract. Reference KRS 324.360 (5).
Licensees are now required to attempt to obtain the buyer(s) signature(s) on the SDF. If the buyer(s) refuse to sign it, then that refusal must be documented in the broker's official transaction file. Reference KRS 324.360 (4).
The general rule has been that the licensee may not complete the SDF. However, an exception has been carved out. If a seller requests the licensee to complete the form, and this request is documented in writing, then the licensee may complete the form. However, the Commission does not recommend this practice. The licensee will be held harmless for any representations on the completed form. Reference KRS 324.360(9).
UNLICENSED ASSISTANTS
Unlicensed assistants are now authorized by statute to set appointments for licensees and give out general public information authorized by the licensee, so long as they are under the supervision of a licensed broker. Reference KRS 324.030(6).
COMMISSIONER TERM LIMITS
Commissioners may now serve only two, consecutive four-year terms. However, this will only affect Commissioners appointed after July 15, 2000. Reference KRS 324.281(2).
ADVERTISING
KRS 324.117 has been amended to require advertising to be intentionally false, misleading or deceptive in order for disciplinary action to take place. Reference KRS 324.117(1).
The Commission has been directed to promulgate a regulation to govern Internet advertising. KRS 324.117(6).
House Bill 881, an amendment to KRS 324, allows a real estate sales associate's name to be included in the firm name after the associate has 2 years' experience with the firm. Reference KRS 324.117(3).
REFERRAL FEES
After-the-fact referral fees are now unlawful. Any entity which tries to extract such fees will be subject to the penalties outlined in KRS 324.990. This is a new section of KRS Chapter 324.
Comments from the Chair
by: Sue Teegarden, Chairman
As you have read, House Bill 677, the joint bill proposed by the Commission and the Kentucky Association of Realtors, was signed into law on April 21, 2000 by Governor Paul Patton. This bill encompasses many new changes which we hope will improve the practice of real estate in this Commonwealth and bolster the Commission's educational benefits for licensees throughout the state.
But this bill was not passed in a vacuum. There are so many people who deserve our thanks and praise for their tireless efforts to get this bill drafted, amended, completed and passed. The License Law Review Committee, for instance, began working on the proposed changes over a year ago. Members of this Committee include Dr. Bev McCormick, Steve Frank, Ginny Lawson and Scott Majors. They received no compensation, yet worked diligently for months to put together the bill's first draft. Commission staff members included Jeff Blair and Lee Harris.
Likewise, members from the Kentucky Association of Realtors put in countless hours reviewing the Commission's proposals, amending the proposed bill, adding and drafting new sections, lobbying the General Assembly, and attending legislative sessions. Members included Pat Hayden, Sue Ernst, Joy Amann, Jim Carloss, Glenn Acree, and Dan Lindblade. Without their efforts, it is unlikely that House Bill 677 would have passed, and we thank them most sincerely for their time and efforts!
Finally, the Commissioners would like to thank all of the staff at the Legislative Research Commission and in the General Assembly who provided insight and input into our proposals to come up with the final Act. And, of course, we want to thank Governor Paul Patton for signing the bill into law!
We now embark on the long and arduous journey through regulation changes. Numerous regulations will now have to be updated, added or amended to incorporate the statutory changes already in effect. We anticipate the process taking 9-18 months to be complete. There will be public hearings and opportunities for comment and input from the entire licensee community. If there are changes you feel are necessary, please contact the Commission and let your voice be heard.
From the Director's Desk
by: Norman Brown, Executive Director
As you know if you've read this far, the Commission is going to be implementing many new laws as of July 15, 2000. We know that it is going to require time and patience for all of us in the licensee community to understand the new laws. Therefore, we at the Commission are willing to do whatever we can to make the transition as smooth as possible.
To this end, we are offering ourselves for Board of Realtor meetings, licensee groups, etc. If you or others in your area are having difficulty incorporating the new laws into your daily practice or, if you'd just like to hear a presentation on the changes, we will be happy to visit and present a program designed to help all licensees understand the new laws.
We are currently working on a standardized PowerPointŪ presentation which can be presented statewide. That way, everyone is going to get the same information.
In addition, our Education Department is working on updating the core course and other law curricula to ensure that you are all receiving the most current information about the laws under which you practice.
And, as always, we are here for you if you ever have questions regarding any license law issues. Don't hesitate to utilize our services!
We think these changes will be advantageous to both licensees and consumers alike. We have made every effort to eliminate provisions that were not working and to add practical, timely provisions wherever possible. Also, we have attempted to standardize the language used throughout Chapter 324, so that every word used in the Chapter has a specific meaning which is used consistently. This should eliminate any confusion.
It was also necessary to add a provision about after-the-fact referral fees and Internet advertising, as those issues are very timely in the business and had not been addressed in any previous legislation.
Don't forget to use our fax-on-demand system. It is simple, convenient, helpful and operates 24 hours a day. For a catalog of available documents call 1-888-KRECFAX and request document #100. If you have a question, the answer is probably on our Fax-on-Demand. Give it a try today!
The Staff Spotlight for this newsletter is Jeff Blair, the Commission's General Counsel.
Jeff grew up in Louisville and attended St. Xavier High School, where he played football and baseball. He then attended Centre College for his undergraduate work and obtained his Juris Doctorate from Northern Kentucky University's Chase School of Law.
After law school, Jeff went into private practice in Louisville before working in Frankfort for the Natural Resources and Environmental Protection Cabinet. In 1996, Governor Paul Patton appointed Jeff to his current post at the Commission. In his four years at the Commission, Jeff has accomplished many goals. Recently, he updated the website with new and informative questions and answers. He has also started a legal chat room on the web for licensees to communicate with the Commission as well as others in the industry.
Jeff represents the Commission at all administrative hearings and is in the middle of writing regulations for the new statutes. Jeff says, "I enjoy working with the KREC staff, Commission members, legislators, licensees, consumer groups and cooperating with trade organizations to promote real estate brokerage in Kentucky."
In his spare time, Jeff enjoys running, swimming and bicycling. He even completed a Triathlon recently in Florida.
Searching for a licensee? Want to know your date of initial licensure? Logon to our website and you can find out all types of license information. You can do a brokerage firm search and find out what agents are with that company, who the principal broker is and the address. You can also do a licensee search and find out information such as whether the licensee is a sales associate or a broker, whether that licensee is active or in escrow, the license number, who the licensee is affiliated with and the date of initial licensure. The address is www.krec.ky.gov. Logon and view all of the helpful information available. New and informative items have been added recently, including House Bill 677.
A Fond Farewell to
Investigator George Mangold
The Commission wants to say goodbye to longtime lnvestigator George Mangold. George came to the Commission back in 1986 with a wealth of experience. He had just retired from the Bureau of Alcohol Tobacco and Firearms (BATF) after a distinguished twenty-one year career. He also worked as a Detroit Police Officer for ten years prior to joining the BATF.
In his fourteen years as a Commission Investigator, George has traveled to virtually every corner of the state. He has been dedicated to reporting and documenting the facts of real estate legal cases and has had an opportunity to work and speak with many licensees. With his background in law enforcement, George was a true asset to the Commission.
He is a friend to all who know him, and we hope you will join us in wishing him a happy and relaxing retirement. George, we thank you for your service. You will be missed.
Ohio & Kentucky
Recently, the Kentucky Real Estate Commission and the Ohio Division of Real Estate renegotiated their reciprocal agreement. The new agreement became effective on April 15, 2000. The agreement now requires applicants from either state to complete an approved pre-license course in Real Estate Law and then pass the state's license law portion of the exam. Another change in the agreement now requires Ohio principal brokers applying for reciprocity to have a physical office in the state of Kentucky. Each Commission can provide potential applicants with a list of providers who offer the required Real Estate Law course.
Illinois & Kentucky
The agreement with the Illinois Commission expired on December 31, 1999 because of changes in Illinois law. Kentucky will be attempting to renegotiate an agreement with Illinois as soon as their regulations become effective. Negotiations will begin early this summer.
Additional information on the specific requirements for licensing in each reciprocal state can be found on our web site at www.krec.ky.gov, on the fax-on-demand service at 1-888-KRECFAX (documents #300 & #301) and in the application package available from the Commission office.
Florida
(Florida requires passing state exam)
Indiana
Iowa
Missouri
Nebraska
North Carolina
Ohio
(Ohio requires Education & Testing)
South Carolina
South Dakota
Tennessee
West Virginia
SPECIAL THANKS
The Commission wants to recognize and thank all of the
licensee/legislators for their support in the passage of this bill.
| Charlie Borders Paul Herron Marshall Long Albert Robinson Larry Saunders Dale Shrout Charles Hoffman John Adams Kevin Bratcher Dwight Butler |
Phillip Childers Hubert Collins Danny Ford Susan Johns Lonnie Napier Fred Nesler Jon D. Reinhardt Ken Upchurch Pete Worthington Joseph Ballard |
James M. Thomas (Raywick) Case No. 99-0120:
Violation: Thomas was found in violation of KRS 324.160 (1)(a) for obtaining his license through false or fraudulent representations. Thomas failed to disclose numerous felony violations in his application for licensure.
Disposition: The Commission entered a Default Judgment against Thomas and revoked his license for: 1) failing to respond to a Complaint filed against him by the Commission as required by KRS 324.151 and 2) failing to appear at two pre-hearing conferences.
Kendall R. Hiser (Louisville) Case No. 99-0097:
Violation: Hiser entered into a settlement agreement with the Commission in which he stipulated to a violation of KRS 324.160(1)(q) by violating KRS 324.111, for misappropriating money belonging to another. Disposition: Hiser agrees to pay to the complainant the sum of $8,750.00 plus interest at the rate of ten percent (10%) per annum, beginning April 1, 1999, with payments in the amount of $350.00 per month. In the event that Hiser becomes more than thirty (30) days in arrears, the complainant may file a Motion with the Commission to revoke Hiser's license. In addition, Hiser's license is suspended for a period of sixty (60) days and he is to complete 24 hours of continuing education in addition to the hours already required by law.
Ben Robin Ray (Hopkinsville) Case No. 99-0089:
Violation: Ray entered into a settlement agreement with the Commission whereby he stipulated to a violation of KRS 324.360(5).
Disposition: Ray agreed to serve a probationary period for a period of one year. He is required to pay restitution to the Complainants in the amount of $3,000 within ten days of the date of the Final Order and then an additional $3,144 plus 7% interest within six months of the entry of the Final Order. Ray must also complete three (3) semester hours of continuing education in a real estate law course and also complete the core course (6 hours) during his probationary period. If Ray fails to abide by any of the provisions of his probation, his license will be automatically suspended without a further hearing.
Patrick Houlihan (Lexington) Case No. 99-0043:
Violation: The Commission adopted the Hearing Officer's Recommendations in this case. The Commission found Houlihan in violation of KRS 324.160(1)(r) for conduct which constitutes improper dealing.
Disposition: Houlihan's license was suspended until he has completed a specified number of continuing education hours as determined by the Commission and in topics specified by the Commission. Houlihan's license will remain suspended until he can provide written proof that he is competent to be a real estate broker in this Commonwealth. Houlihan is further ordered to contact the Commission only through written communications.
Russell Hinkle (Louisville) Case No. 99-0029:
Violation: Mr. Hinkle failed to abide by the Commission's Final Order.
Disposition: The Commission suspended Hinkle's license for a minimum of six months requiring Hinkle to pay a fine of $500 by January 17, 2000. Hinkle's license shall remain suspended until he pays the fine.
Michael Meers (Elizabethtown) Case No. 99-0167:
Violation: Meers entered into a settlement agreement with the Commission and stipulated to a violation of KRS 324.160(1)(j) for being convicted of a felony while holding a real estate license.
Disposition: Meers agreed to accept a formal reprimand from the Commission and to have his license placed on probation for a period of one year. During that time, if Meers is convicted of any further felony violations or found in violation of any licensing laws, he will be automatically suspended for a period of six (6) months. He also agreed to take nine (9) hours of continuing education in addition to the hours already required by law.
James Knifley and DeWayne Squires (Campbellsville) Case No. 98-0085:
Violation: The Commission found the Respondents in violation of 201 KAR 11:250 for failing to include necessary dates and times in the offer to purchase contract. The Commission adopted the Hearing Officer's Recommendations in part and issued their own Separate Findings of Fact and Conclusions of Law.
Disposition: The Commission ordered both Respondents to complete twelve (12) hours of continuing education in addition to any hours already required by law.
Once a deposit has been placed in an escrow account, it cannot be removed without performance on the contract, a court order or a mutual release signed by both parties.
Reciprocal licensees must deposit escrow account money into their Kentucky escrow account for transactions involving their Kentucky licenses.
If you have an interest-bearing escrow account, both parties must agree in writing to whom the interest accrues.
"Raise" the Garage?
Submitted by licensee, Jack McCarty
Back in the late 70's, while I was a staff appraiser for F.H.A. here in Kentucky, I learned a valuable lesson about how the words we say and use are sometimes not understood in a manner consistent with our intention.
While working in Northern Kentucky, I was assigned an appraisal for a residential property seeking financing under the F.H.A. mortgage insurance program. My inspection of this property revealed the home itself to be acceptable under existing F.H.A. guidelines; however, when I went out into the backyard, I observed a dilapidated, frame one-car garage which was leaning to the left to such a degree that it would make the Leaning Tower of Pisa look straight. I determined that this structure was not salvageable and therefore I made a repair requirement to "raze" the detached garage in order to obtain the desired F.H.A. insurance.
Approximately three to four weeks passed and I was again assigned to work in the Northern Kentucky area doing appraisals and checking repair requirements. In that particular batch of assignments was the case in which I required that the garage be torn down. I called the homeowner to set up a time to inspect this repair requirement and I could detect a slight air of disgust in his voice. I thought it somewhat peculiar that he asked me if I was the same young fella that came out to his house the first time. I told him that I was that person and continued to make an appointment to come out to his property the following afternoon.
When I arrived at the property the homeowner met me in the front yard and by the tone in his voice and certain comments made I suspected that something was not quite right. As we proceeded to go into the backyard, I looked in amazement when I saw the little frame garage still standing. In fact it was no longer leaning and was taller. Out of the corner of my eye I glanced back at the man just in time to hear him say "okay you blankity-blank college boy, I hope you realize how much trouble it was raising up that old no-count garage and putting those concrete blocks under it to make it taller. Did I raise it up tall enough to suit ya?" I was bewildered with what I should say next to this well- intentioned man. He did raise the garage, although my repair requirement ordered the garage to be razed. Finally, I knew I had to say something. I told the man that he did a fine job of raising the garage, since I didn't have the heart to tell the man I didn't want the garage to be taller but wanted it to be torn down.
As I got back into my car I signed off on the HUD/FHA repair inspection report that the garage had been raised not razed. No one at the HUD/FHA office ever questioned the changed spelling of the word razed on the report and I assume to this day that this property received its FHA mortgage insurance financing. Lesson Learned: Say what you mean but say it in a manner that's understandable to all.
Our thanks to Jack McCarty for sharing his story with us. If you have an interesting or unusual story for our newsletter, please write to Michelle Cameron at the Commission office. Stories will be published in future issues of the Real Estate News.
ACTIVE LICENSEES WHO HAVE NOT RENEWED FOR 2000/2001
The Commission has not received renewal payments for the following active licensees. If your name appears on this list and you want to renew your license, please call the Commission. Please note that this list is as of May 17, 2000.
PRINCIPAL BROKERS
Herschel Allen,
John Alvis,
Roy Anderson,
Cecil Arnold,
Philip Banawitz,
Steve Bartlett
William Bartlett II,
Ben Burress,
Robert Cambruzzi,
Thelma Chelf,
Charles Clark,
Don Conrad,
Ned Couch,
Harold Cox,
Doris Cundiff,
Judith Curtin,
John Denton Sr.,
Rowland Dietz,
Billie Dixon,
J. Thomson Dobbin,
David Droesch,
Carl Dunn,
David Francke,
Bobby Frizzell,
Franklin Gordon,
Don Graham,
Roger Gream,
Barbara Green,
Alex Hampton,
Leola Hayden,
R. Ellis Hayes,
Linda Jackson,
William Kennedy,
Miller Kimbrough Jr.,
Len Koogler,
George Lehmann III,
Erle Levy,
James Lynn,
Lucinda Matlock,
Robert McClelland,
Stanley Meyer,
Joan Milburn,
Marylyn Nelson,
Ronald O'Neal,
Nancy Paulin.
Ray Pippen Jr.,
David Pottinger,
James Pruett,
Ernest Ray,
Jim Schmidt,
Charles Shelton Sr.,
.James Sills,
Adrian Skees,
Albert Smither,
Mahlon Stead,
Terry Stevens,
Malcolm Tarbis,
Alma Taulbee,
Hubert Taylor,
George Thornbury,
Wayne Tiedge,
Jan Pedigo Todd,
Thomas Townes,
Martin Twist,
Winford Walker Jr.,
Billy Wallace,
James Washington,
Victoria Webster ,
R. Welch ,
Richard Whelen,
Dean Williams,
Henry Williams,
Mary Willyard,
Robert Young,
Joan Zwick.
ACTIVE SALES ASSOCIATES & BROKERS
Thomas Blankenship,
Kay Brown,
Marvin Copher,
Jane Curd,
Mary Denton,
Kell Dixon,
Jack Epperson,
Beverly Sue Eyre,
Lela Foreman,
Cathy Holman Griffith,
Robbie Sue King,
Donald Kohls,
Glynn Lafever,
Mike Morrison,
Ramona Nelson,
Samuel Seifert,
Fred B. Smith,
George B. Smith,
Robert H. Smith,
Tracy Taylor,
Charlotte Tays,
Samuel Tays,
Clarence Tays Jr.,
Bryan Wimsatt,
